<PAGE>
<PAGE>1=======================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - ----- EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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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 33-63274
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CHATWINS GROUP, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 74-2156829
- - ------------------------ ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
300 WEYMAN PLAZA, SUITE 340
PITTSBURGH, PENNSYLVANIA 15236
------------------------------------------------------------
(Address of principal executive offices, including zip code)
(412) 885-5501
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
----- -----
At July 31, 1996, 242,887 shares of common stock, par value $.01 per share,
were outstanding.
Exhibit index is on page 18.
Page 1 of 142 pages.
==============================================================================<PAGE>
<PAGE>2 CHATWINS GROUP, INC.
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheet at
June 30, 1996 and December 31, 1995 3
Condensed Consolidated Statement of Income for the
three and six months ended June 30, 1996 and 1995 4
Condensed Consolidated Statement of Cash Flows for
the six months ended June 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits 16
(b) Reports on Form 8-K 16
SIGNATURES 17
<PAGE>
<PAGE>3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE><CAPTION> CHATWINS GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
AT JUNE 30, 1996 AND DECEMBER 31, 1995
(in thousands)
At June 30, At December 31,
1996 1995
----------- --------------
(unaudited)
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 377 $ 357
Receivables, net 28,941 29,958
Inventories, net (note 2) 20,093 19,487
Other current assets 3,683 4,556
-------- --------
Total current assets 53,094 54,358
Property, plant and equipment, net 27,764 26,385
Amounts due from related parties - 3,523
Investments, net 13,485 13,209
Goodwill, net 4,989 5,015
Other assets, net 5,004 4,846
-------- --------
Total assets $104,336 $107,336
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current maturities of debt $ 128 $ 148
Trade payables 13,135 16,175
Amount due to related parties 1,331 2,924
Other current liabilities 10,483 9,179
-------- --------
Total current liabilities 25,077 28,426
Revolving Credit Facility 22,000 23,147
Senior notes due 2003, net 49,864 49,852
Other long-term debt 870 1,018
Other liabilities 4,743 4,713
-------- --------
Total liabilities 102,554 107,156
Commitments and contingent liabilities (note 5) - -
Minority interests 1,124 -
Redeemable preferred stock 7,342 7,114
Warrant value 210 210
Stockholders' equity (note 3) (6,894) (7,144)
-------- --------
Total liabilities and stockholders' equity $104,336 $107,336
======== ========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>4
<TABLE><CAPTION> CHATWINS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(in thousands, except share and per share information)(unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales $38,920 $50,632 $77,966 $94,248
Cost of sales 30,658 39,985 62,038 74,983
------- ------- ------- -------
Gross profit 8,262 10,647 15,928 19,265
Selling, general & administrative 5,064 5,504 10,228 10,761
Other expense, net 295 274 575 682
------- ------- ------- -------
Operating profit 2,903 4,869 5,125 7,822
Interest expense, net 2,351 2,441 4,758 4,815
------- ------- ------- -------
Income before income taxes and
equity in income of affiliate 552 2,428 367 3,007
Provision for income taxes 169 494 65 692
------- ------- ------- -------
Income before equity in income
of affiliate 383 1,934 302 2,315
Equity in income (loss) from
continuing operations of affiliate 23 - (200) -
Equity in income from discontinued
operations of affiliate 428 - 428 -
------- ------- ------- -------
Net income $ 834 $ 1,934 $ 530 $ 2,315
======= ======= ======= =======
Earnings applicable to common stock $ 720 $ 1,820 $ 302 $ 2,087
======= ======= ======= =======
Earnings (loss) per common share:
Before equity in income of affiliate $ 0.92 $ 6.21 $ 0.25 $ 7.13
Continuing operations of affiliate 0.08 - (0.68) -
Discontinued operations of affiliate 1.46 - 1.46 -
------- ------- ------- -------
Earnings per common share $ 2.46 $ 6.21 $ 1.03 $ 7.13
======= ======= ======= =======
Average equivalent common
shares outstanding 292,887 292,887 292,887 292,887
======= ======= ======= =======
See accompanying notes to condensed consolidated financial statements.
/TABLE
<PAGE>
<PAGE>5
<TABLE><CAPTION> CHATWINS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(in thousands)(unaudited)
Six Months Ended
June 30,
1996 1995
------- -------
<S> <C> <C>
Cash flow from operating activities:
Net income $ 530 $ 2,315
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 1,627 1,737
Amortization 500 543
Equity in net income of affiliate (274) -
Changes in assets and liabilities, net of
the purchase of a business:
Decrease (increase) in receivables 1,017 (5,637)
Increase in inventories (606) (2,515)
Increase (decrease) in trade payables (3,040) 4,654
Net change in other assets, liabilities
and minority interests 2,722 981
------- -------
Cash provided by operating activities 2,476 2,078
------- -------
Cash flow from investing activities:
Receipts from related parties 3,664 -
Investment in joint venture (150) -
Equity investment - (6,616)
Capital expenditures (3,010) (2,964)
------- -------
Cash provided by (used in) investing activities 504 (9,580)
------- -------
Cash flow from financing activities:
Issuance of debt 80 -
Repayments of debt (48) (1,738)
Repayments to related parties (1,793) -
Net borrowings (repayments) under revolver (1,147) 9,784
------- -------
Cash provided by (used in) financing activities (2,908) 8,046
------- -------
Effect of exchange rate changes on cash (52) -
------- -------
Net increase in cash and cash equivalents 20 544
Cash and cash equivalents, beginning of year 357 445
------- -------
Cash and cash equivalents, end of period $ 377 $ 989
======= =======
Noncash investing and financing activities:
Equity investment and related increases in note
payable and other long-term debt $ - $ 6,000
======= =======
See accompanying notes to condensed consolidated financial statements.
/TABLE
<PAGE>
<PAGE>6
CHATWINS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all normal recurring
adjustments considered necessary for a fair statement of the results of
operations have been included. The results of operations for the three and
six month periods ended June 30, 1996 are not necessarily indicative of the
results of operations for the full year. When reading the financial
information contained in this Quarterly Report, reference should be made to
the financial statements, schedules and notes contained in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995.
NOTE 2: INVENTORIES
<TABLE>
Inventories are comprised of the following (in thousands):
At June 30, At December 31,
1996 1995*
----------- --------------
(unaudited)
<S> <C> <C>
Raw materials $ 9,541 $10,918
Work-in-process 7,575 6,876
Finished goods 3,910 2,608
------- -------
Total inventories 21,026 20,402
Less: LIFO reserves (933) (915)
------- -------
Inventories, net $20,093 $19,487
======= =======
* Certain amounts have been reclassified for comparative purposes.
</TABLE>
<PAGE>
<PAGE>7
NOTE 3: STOCKHOLDERS' EQUITY
<TABLE>
The following represents a reconciliation of the change in stockholders'
equity for the six month period ended June 30, 1996 (in thousands):
Par Capital Accum-
Value in ulated
of Trea- Excess Notes Accum- Trans-
Common sury of Par Receiv- ulated lation
Stock Stock Value able Deficit Adjmt. Total
------ ----- ------- ------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
At January 1,
1996 $ 3 $(500) $1,664 $(1,001) $ (6,891) $(419) $ (7,144)
Activity
(unaudited):
Net income - - - - 530 - 530
Preferred stock
accretions - - - - (228) - (228)
Translation
adjustment - - - - - (52) (52)
--- ----- ------ ------- -------- ----- --------
At June 30,
1996 $ 3 $(500) $1,664 $(1,001) $ (6,589) $(471) $ (6,894)
=== ===== ====== ======= ======== ===== ========
</TABLE>
Earnings per share amounts are based on the weighted average equivalent
number of shares of common stock outstanding during the period. In
calculating earnings (loss) per common share, income before income taxes has
been adjusted for dividends earned on preferred stock for the three and six
month periods ended June 30, 1996 and 1995 of $114,000 and $228,000,
respectively, in each.
NOTE 4: RELATED PARTY TRANSACTIONS
The Company has a consulting agreement with Stanwich Partners, Inc. under
which $75,000 and $150,000 were recorded as expense in each of the three and
six month periods ended June 30, 1996 and 1995, respectively.
In May 1996, Reunion Industries, Inc. (Reunion) paid the Company $3.7
million in cash in final repayment, including interest, of the Oneida Advances
(as defined herein). The Company holds 38% of the outstanding common stock of
Reunion. Charles E. Bradley, Sr. (Mr. Bradley), Chairman of the Board of the
Company, is Reunion's President and Chief Executive Officer.
Contemporaneously with the $3.7 million cash payment received from Reunion,
the Company paid $1.7 million to Mr. Bradley in partial repayment, including
interest, of the Parkdale Note (as defined herein).
On January 6 and June 6, 1996, the Company made principal repayments of
$50,000 each, plus interest, of the Gesterkamp Note (as defined herein). The
Gesterkamp Note is owned by Mr. Franklin Myers, a director of Reunion.
NOTE 5: COMMITMENTS AND CONTINGENT LIABILITIES
The Company is involved in various litigation matters in the ordinary
course of business. In the opinion of management, settlement of these matters
and other contingent matters will have no material effect on the Company's
financial position. The Company has no adverse commitments at June 30, 1996.<PAGE>
<PAGE>8
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
General
Through September 14, 1995, the Company's organizational structure
included six divisions that design, manufacture and market metal products, a
wholly-owned subsidiary that manufactured high volume, precision plastic
products and provided engineered plastic services, an oil and gas division and
an equity investment in Reunion Industries, Inc. (Reunion), formerly Reunion
Resources Company. In 1995, the combined operations of the six metal
manufacturing divisions accounted for approximately 85% of the Company's net
sales and approximately 91% of the Company's operating income before corporate
office expenses. As discussed below, several significant changes to the
Company's structure transpired in 1995.
On June 20, 1995, the Company acquired 1,450,000 shares (Reunion Common
Stock), or approximately 38%, of the issued and outstanding shares of common
stock of Reunion from Parkdale Holdings Corporation N.V. (Parkdale), and
purchased 75,000 warrants to purchase shares of Reunion common stock from P.
Dean Gesterkamp (Gesterkamp Warrants) (such transactions collectively referred
to herein as the "Chatwins Acquisition"). The aggregate purchase price
consisted of $5.8 million paid in cash and a $5.8 million promissory note
(Parkdale Note) issued to Parkdale, and $0.3 million paid in cash and a $0.2
million two-year promissory note issued to P. Dean Gesterkamp (Gesterkamp
Note). Subsequent to its acquisition of Oneida on September 14, 1995 (see
below), Reunion is primarily engaged in the manufacture of high volume,
precision plastics products and providing engineered plastics services.
Additionally, with the merger of Oneida and Rostone, Inc. (Rostone) (see
below), Reunion also compounds and molds thermoset polyester resins. Reunion
also has real estate development and wine grape agricultural operations in
Napa County, California. Reunion was also engaged in producing and selling
crude oil and natural gas in the United States until May 24, 1996, when
Reunion sold substantially all of its oil and gas assets to a Houston-based
corporation for approximately $8.0 million in cash and a $2.2 million note.
Of the $8.0 million in cash proceeds, Reunion used approximately $5.1 million
to pay in full related-party indebtedness, which included $1.4 million owed to
Charles E. Bradley, Sr. (Mr. Bradley), Reuniuon's President and Chief
Executive Officer and Chairman of the Board of the Company, and $3.7 million
owed to the Company as a result of the acquisition of Oneida by Reunion. The
Company's investment in Reunion is being accounted for under the equity method
of accounting. The Company's proportional share of Reunion's operating
results is included in the accompanying condensed consolidated statement of
income for the three and six month periods ended June 30, 1996 as equity in
income (loss) of affiliate. See "Results of Operations" and "Liquidity and
Capital Resources."
On September 14, 1995 (Sale Date), the Company, through its wholly-owned
subsidiary, Chatwins Holdings, Inc. (CHI), sold its holdings of all of the
issued and outstanding shares of common stock and preferred stock of Oneida
Molded Plastics Corp. (Oneida) to Reunion, 38% of the common stock of which is
owned by the Company. Oneida was a wholly-owned subsidiary of the Company
which manufactured high volume, precision plastic products and provided
engineered plastic services. The total purchase price received by the Company
was $3.1 million in cash.
Through August 31, 1995, the Company had made advances to Oneida
totalling $4.9 million (Oneida Advances). The liabilities of Oneida upon its
sale to Reunion included the Oneida Advances. In November 1995, the Company <PAGE>
<PAGE>9
received $1.6 million in cash from Reunion in partial repayment, including
interest from September 1, 1995, of the Oneida Advances. In May 1996, Reunion
paid the Company $3.7 million in cash in final repayment, including interest
from November 1995, of the Oneida Advances. See below and "Liquidity and
Capital Resources."
The Company owns 49% of a holding company, CGI Investment Corporation
(CGII), which owned 100% of the outstanding preferred stock and approximately
94% of the fully diluted common stock of Rostone. On February 2, 1996, CGII
acquired the minority interest in Rostone's common stock it did not already
own. Rostone compounds and molds thermoplastic polyester resin (bulk and
sheet molding compound) primarily for the electrical distribution market and
business machine market. On December 22, 1995, Rostone and Oneida entered
into a merger agreement (Merger Agreement) whereby Rostone was subsequently
merged into Oneida, which is owned by Reunion, and, as the surviving
corporation, Oneida's name was changed to Oneida Rostone Corp. (ORC). In the
merger, ORC purchased all of the issued and outstanding preferred and common
stock of Rostone, including the preferred and common stock of Rostone held by
CGII. See "Liquidity and Capital Resources."
In December 1995, the Company entered into a joint venture agreement with
China Metallurgical Import & Export Shanghai Company (CMIESC) and Wanggang
Township Economic Development Corporation (Wanggang) to form the Shanghai
Klemp Metal Products Co., Ltd. (Shanghai Klemp). The joint venture will
provide metal grating to the expanding construction industries in China and
nearby countries. See "Liquidity and Capital Resources."
Results of Operations
Six Months Ended June 30, 1996 Compared to
Six Months Ended June 30, 1995
Net sales for the first half of 1996 totalled $78.0 million, compared to
$94.2 million for the first half of 1995. Sales for the first half of 1995
included $18.3 million from Oneida, which was sold in September 1995.
Excluding Oneida's sales, sales for the first half of 1996 increased $2.0
million, or almost 3%, over the first half of 1995. Sales increased at all
significant divisions of the Company except for Auto-Lok, whose sales were
down approximately $1.3 million from 1995's first half. By division, sales
increased $0.2 million at Alliance, $1.3 million at Hanna, $0.5 million at CPI
and $1.5 million at Klemp. The increase in sales at Alliance was primarily
due to a backlog reduction in the first quarter of 1996 while the increases at
Hanna and CPI were due to increased marketing efforts resulting in higher
volume. The increase in sales at Klemp included $1.1 million at the Company's
Klemp de Mexico subsidiary due to an improving Mexican economy. The decrease
in sales at Auto-Lok is primarily due to a softening in the markets for Auto-
Lok's products.
Gross profit for the first half of 1996 was $15.9 million, compared to
$19.3 million for the first half of 1995. Gross profit for the first half of
1995 included $3.2 million from Oneida. Excluding Oneida's first half 1995
gross profit, first half 1996 gross profit decreased $0.2 million, or 1%.
Gross profit margin decreased to 20.4% in the first half of 1996, compared to
21.2% in the comparable 1995 period, excluding the gross profit and sales of
Oneida. Gross profit and gross profit margin in the first half of 1996
compared to the first half of 1995 improved at the CPI and Klemp divisions and
the Company's Klemp de Mexico subsidiary, but declined at the remaining
divisions of the Company. The improvements at CPI were primarily due to
higher volume and cost reductions due to labor productivity improvements while
the improvements at Klemp and Klemp de Mexico were primarily due to higher <PAGE>
<PAGE>10
volumes. The declines at Auto-Lok were primarily due to lower volume as a
result of a softening in the markets for Auto-Lok's products. The declines at
Alliance were primarily due to a decline in second quarter volume as well as a
change in product mix from higher margin fabrication sales to lower margin
engineered products caused by a change in customer demand. The declines at
Steelcraft were primarily due to unfavorable labor and overhead variances.
Hanna's gross profit margin decreased to 19.6% in the first half of 1996 from
24.3% in the first half of 1995. Hanna's gross profit margin was affected by
competitive pressures in the hydraulic cylinder industry which resulted in
sales price compression and a change in product mix to lower margin specialty
cylinders caused by a change in customer demand, in addition to manufacturing
inefficiencies caused by the harsh weather conditions in the midwest during
the first quarter of 1996.
Selling, general and administrative (SGA) expenses for the first half of
1996 were $10.2 million, compared to $10.8 million for the first half of 1995.
SGA expenses for the first half of 1995 included $1.7 million from Oneida.
Excluding Oneida's SGA expenses, first half 1996 SGA expenses increased $1.1
million compared to first half 1995. SGA expenses as a percentage of sales,
excluding the SGA expenses and sales of Oneida, increased to 13% in the first
half of 1996 compared to 12% in the 1995 first half. The increase in SGA
expenses primarily relates to additional expenses incurred in connection with
increased marketing and sales efforts, both domestically and internationally.
Other expense for the first half of 1996 was $0.6 million, compared to
$0.7 million for the first half of 1995, a net decrease of $0.1 million. The
primary reason for this decrease was the devaluation of the Mexican Peso
during 1995, which resulted in foreign currency transaction losses at the
Company's Mexican subsidiary in the first half of 1995 which did not recur in
the first half of 1996.
Interest expense, net, for the first half of 1996 was $4.8 million, which
was approximately equal to interest expense, net, for the first half of 1995.
Interest expense for the first half of 1995 included $0.4 million related to
Oneida. Excluding Oneida's interest expense, first half 1996 interest expense
increased $0.4 million over first half 1995. The increase is primarily due to
a higher level of debt during the first half of 1996 as a result of the
issuance of the Parkdale and Gesterkamp Notes in June 1995 to fund a portion
of the purchase price of the Reunion Common Stock and Gesterkamp Warrants, and
a higher level of average borrowings under the Company's revolving credit
facility (Revolving Credit Facility) with Congress Financial Corporation
(Congress) to fund both the remaining portion of the purchase price of the
Reunion Common Stock and Gesterkamp Warrants and an increase in the average
level of net working capital in the first half of 1996 compared to the first
half of 1995.
There was a tax provision of less than $0.1 million in the first half of
1996, compared to a tax provision of $0.7 million in the first half of 1995.
The tax provisions were attributable to the pre-tax incomes in each period.
The equity in income (loss) from continuing operations of affiliate in
the first half of 1996 relates to the Company's June 1995 investment in
Reunion and represents the Company's proportionate share of Reunion's results
from continuing operations for its first half of 1996. There was no equity
income or loss in the first half of 1995.
The equity in income (loss) from discontinued operations of affiliate in
the first half of 1996 relates to the Company's June 1995 investment in
Reunion and represents the Company's proportionate share of Reunion's results
from discontinued operations for its first half of 1996.
<PAGE>
<PAGE>11
Three Months Ended June 30, 1996 Compared to
Three Months Ended June 30, 1995
Net sales for the second quarter of 1996 totalled $38.9 million, compared
to $50.6 million for the second quarter of 1995. Sales for the second quarter
of 1995 included $9.2 million from Oneida, which was sold in September 1995.
Excluding Oneida's sales, sales for the second quarter of 1996 decreased $2.5
million, or 6%, compared to the second quarter of 1995. Sales decreased $2.2
million at Alliance, $1.5 million at Auto-Lok, and $0.1 million at Steelcraft,
while increasing $1.2 million at Klemp and $0.3 million at Hanna. Sales
decreased slightly at CPI. The decrease in sales at Alliance was primarily
due to a decrease in the level of orders beginning in late 1995 and continuing
into 1996 as compared to the same periods in prior years while the decrease in
sales at Auto-Lok was due to a softening in the markets for Auto-Lok's
products. The increase at Hanna was due to increased marketing efforts
resulting in higher volume. The increase in sales at Klemp was primarily due
to an increase in sales at the Company's Klemp de Mexico subsidiary due to an
improving Mexican economy.
Gross profit for the second quarter of 1996 was $8.3 million, compared to
$10.6 million for the second quarter of 1995. Gross profit for the second
quarter of 1995 included $1.7 million from Oneida. Excluding Oneida's second
quarter 1995 gross profit, second quarter 1996 gross profit decreased $0.6
million, or almost 8%. Gross profit margin decreased to 21.2% in the second
quarter of 1996, compared to 21.6% in the comparable 1995 period, excluding
the gross profit and sales of Oneida. Gross profit and gross profit margin in
the second quarter of 1996 compared to the second quarter of 1995 improved at
the CPI and Klemp divisions, but declined at the remaining divisions of the
Company. The improvements at CPI were primarily due to cost reductions from
labor productivity improvements while the improvements at Klemp were primarily
due to higher volume. The declines at Auto-Lok were primarily due to lower
volume as a result of a softening in the markets for Auto-Lok's products. The
declines at Alliance were primarily due to a decline in second quarter volume
as well as a change in product mix from higher margin fabrication sales to
lower margin engineered products caused by a change in customer demand. The
declines at Steelcraft were primarily due to unfavorable labor and overhead
variances. Hanna's gross profit margin decreased to 21.6% in the second
quarter of 1996 from 22.9% in the second quarter of 1995. Hanna's gross
profit margin was affected by competitive pressures in the hydraulic cylinder
industry which resulted in sales price compression and a change in product mix
to lower margin specialty cylinders caused by a change in customer demand.
SGA expenses for the second quarter of 1996 were $5.1 million, compared
to $5.5 million for the second quarter of 1995. SGA expenses for the second
quarter of 1995 included $0.8 million from Oneida. Excluding Oneida's SGA
expenses, second quarter 1996 SGA expenses increased $0.4 million compared to
second quarter 1995. SGA expenses as a percentage of sales, excluding the SGA
expenses and sales of Oneida, increased to 13% in the second quarter of 1996
compared to 11% in the second quarter of 1995. The increase in SGA expenses
primarily relates to additional expenses incurred in connection with increased
marketing and sales efforts, both domestically and internationally.
Other expense for the second quarters of 1996 and 1995 were each $0.3
million.
Interest expense, net, for the second quarter of 1996 was almost $2.4
million, compared to over $2.4 million for the second quarter of 1995.
Interest expense for the second quarter of 1995 included $0.2 million related
to Oneida. Excluding Oneida's interest expense, second quarter 1996 interest
expense increased $0.1 million over second quarter 1995. The increase is
primarily due to a higher level of debt during the second quarter of 1996 as a
result of the issuance of the Parkdale and Gesterkamp Notes in June 1995 to <PAGE>
<PAGE>12
fund a portion of the purchase price of the Reunion Common Stock and
Gesterkamp Warrants, and a higher level of average borrowings under the
Revolving Credit Facility to fund both the remaining portion of the purchase
price of the Reunion Common Stock and Gesterkamp Warrants and an increase in
the average level of net working capital in the second quarter of 1996
compared to the second quarter of 1995.
There was a tax provision of $0.2 million in the second quarter of 1996,
compared to a tax provision of $0.5 million in the second quarter of 1995.
The tax provisions were attributable to the pre-tax incomes in each period.
The equity in income (loss) from continuing operations of affiliate in
the second quarter of 1996 relates to the Company's June 1995 investment in
Reunion and represents the Company's proportionate share of Reunion's results
from continuing operations for its second quarter of 1996. There was no
equity income or loss in the second quarter of 1995.
The equity in income (loss) from discontinued operations of affiliate in
the second quarter of 1996 relates to the Company's June 1995 investment in
Reunion and represents the Company's proportionate share of Reunion's results
from discontinued operations for its second quarter of 1996.
Liquidity and Capital Resources
General
The Company manages its liquidity as a consolidated enterprise. The
operating divisions of the Company carry minimal cash balances. Cash
generated from the divisions' operating activities generally is used to repay
previous borrowings under the Revolving Credit Facility, as well as other uses
(e.g. corporate headquarters expenses, debt service, capital expenditures,
etc.). Conversely, cash required for the divisions' operating activities
generally is provided from funds available under the Revolving Credit
Facility. Although the Company operates in relatively mature markets, it
intends to continue to invest in and grow its businesses through selected
capital expenditures as cash generation permits. Management believes that all
required principal and interest payments, as well as capital expenditures,
will be met by cash flows from operations and/or borrowings under the
Revolving Credit Facility, if necessary. While Oneida was a subsidiary of the
Company, its liquidity was managed separately. Prior to its sale, Oneida had
a $5.0 million credit facility with Congress. This facility consisted of a
term loan and a revolving loan. In addition to advances to Oneida from the
Company, this facility provided a primary source of liquidity to Oneida.
Prior to March 4, 1994, the Company had a $20.0 million revolving credit
facility with Heller Financial, Inc. On March 4, 1994, the Company refinanced
this facility into the Revolving Credit Facility under which Congress agreed
to make revolving loans to the Company of up to $20.0 million, subject to
compliance with various covenants, representations and warranties, and
contingent upon there being no events of default, all as defined in the Loan
and Security Agreement (Loan Agreement) between Congress and the Company. The
Maximum Credit (as defined in the Loan Agreement) under the Revolving Credit
Facility was temporarily increased to $26 million on June 20, 1995 in
connection with the Chatwins Acquisition, permanently fixed at $25 million on
October 18, 1995 and temporarily increased to $27.5 million on May 1, 1996.
At June 30, 1996, the Company was in compliance with all covenants and there
were no events of default under the Revolving Credit Facility. Borrowings
outstanding under the Revolving Credit Facility at June 30, 1996 totalled
$22.0 million.
Borrowings under the Revolving Credit Facility bear interest at an annual
rate of the Philadelphia National Bank Prime Rate plus 1.5%. The facility <PAGE>
<PAGE>13
also contains an unused line fee of 0.5% and a $5,000 monthly servicing fee.
The Loan Agreement was originally scheduled to expire on March 4, 1997 and was
renewable annually thereafter. However, the Company and Congress made various
amendments to the Revolving Credit Facility, discussions of which follow.
On June 20, 1995, the Company acquired the Reunion Common Stock in the
Chatwins Acquisition. The purchase price consisted of $5.8 million in cash
and the Parkdale Note. On September 14, 1995, Mr. Bradley purchased the
Parkdale Note from Parkdale and the Company made a partial repayment of the
Parkdale Note as required by the terms thereof equal to the $3.1 million
proceeds from the sale of Oneida. In May 1996, the Company made a partial
repayment of the Parkdale Note totalling $1.7 million, including interest
thereon, primarily from the $3.7 million in cash received by the Company from
Reunion in full payment of the Oneida Advances. In a letter agreement dated
June 18, 1996, the Company and Mr. Bradley agreed to extend the maturity date
of the Parkdale Note to December 31, 1996. In connection with the purchase of
the Reunion Common Stock, the Company purchased the Gesterkamp Warrants. The
purchase price for the Gesterkamp Warrants totalled $0.5 million and consisted
of $0.3 million paid in cash and the Gesterkamp Note. Subsequent to its
issuance, the Gesterkamp Note was purchased by Mr. Franklin Myers, a director
of Reunion. Pursuant to the terms of the Gesterkamp Note, the Company made
principal repayments of $50,000, plus interest at 10% per annum, on each of
January 6 and June 6, 1996. Such repayments, plus interest, will continue
semi-annually until the Gesterkamp Note is repaid.
The cash portions of the above transactions were funded with borrowings
under the Revolving Credit Facility. To accommodate the additional
borrowings, the Revolving Credit Facility was amended to provide a temporary,
90-day increase in the Maximum Credit to $26.0 million from $20.0 million,
which included a temporary $4.0 million overadvance availability. This
temporary increase was originally scheduled to expire on September 18, 1995.
However, on September 14, 1995, Congress and the Company further amended the
Revolving Credit Facility to extend the expiration date to October 18, 1995.
Subsequent to September 14, 1995, Congress and the Company further amended the
Revolving Credit Facility to permanently increase the Maximum Credit to $25.0
million, reduce the temporary $4.0 million overadvance availability to $1.5
million, and extend the expiration date of the temporary overadvance
availability to January 15, 1996. As of December 31, 1995, all borrowings
under the temporary overadvance availability had been repaid by the Company.
On May 1, 1996, the Revolving Credit Facility was amended to provide a
temporary, 97-day increase in the Maximum Credit to $27.5 million from $25.0
million, which includes a temporary $2.5 million overadvance availability.
The proceeds from this temporary increase in the Maximum Credit were used for
various purposes, including the Company's May 1, 1996 interest payment on its
senior notes. During the temporary, 97-day increase period, the temporary
$2.5 million overadvance availability was required to be reduced in weekly
increments in amounts ranging from $150,000 beginning on May 20, 1996 to
$250,000 ending on August 5, 1996. The Company made repayments pursuant to
the required reductions on May 20 and 27, 1996, totalling $0.3 million.
However, on May 28, 1996, contemporaneously with the receipt of $3.7 million
in cash from Reunion in final repayment of the Oneida Advances, as required,
the Company repaid $2.0 million of the temporary $2.5 million overadvance
availability and, by June 10, 1996, all amounts borrowed under the temporary
$2.5 million overadvance availability had been repaid by the Company.
Additionally, as part of this amendment, the expiration date of the Loan
Agreement was extended to June 30, 1998 and is renewable annually thereafter.
The Company owns 49% of CGII, which owned 100% of the outstanding
preferred stock and approximately 94% of the fully diluted common stock of
Rostone. On February 2, 1996, CGII acquired the minority interest in
Rostone's common stock it did not already own. On December 22, 1995, Rostone <PAGE>
<PAGE>14
and Oneida entered into the Merger Agreement whereby Rostone was subsequently
merged into Oneida, which is owned by Reunion, and, as the surviving
corporation, Oneida's name was changed to ORC. In the merger, ORC acquired
from CGII all of the issued and outstanding preferred and common stock of
Rostone. The Merger Agreement provides for the payment of merger proceeds of
up to $4.0 million ($2.0 million in 1997 and $2.0 million in 1998) to CGII
contingent upon Rostone's achieving specified levels of earnings before
interest and taxes in 1996 and 1997. However, under the terms of ORC's loan
facility with Congress, all such payments may only be made from equity
contributions Reunion may provide to ORC.
Since Rostone's preferred stock was pledged by CGII to the Company to
secure the Company's December 1993 loan of $1.35 million to CGII, any merger
proceeds will be paid to the Company until the debt and related interest is
paid in full. The amount due the Company related to this loan was $1.6
million at June 30, 1996. Any merger proceeds in excess of the amount due the
Company will be payable to CGII and allocated among CGII's remaining
creditors, one of which is the Company.
CGII's primary assets remaining after the sale of Rostone are two notes
receivable from affiliates of the Company and a minimal amount of cash, the
sum of which total $0.6 million. The Company is entitled to any proceeds from
these assets.
Under the equity method of accounting, the carrying value of the
Company's investment in CGII at June 30, 1996 was $0.9 million.
In December 1995, the Company entered into a joint venture agreement with
CMIESC and Wanggang to form Shanghai Klemp. The joint venture will provide
metal grating to the expanding construction industries in China and nearby
countries. During the first quarter of 1996, the Company satisfied its
investment obligation to make contributions of assets, primarily machinery, to
the joint venture with an estimated fair market value totalling approximately
$1.9 million. Shanghai Klemp's manufacturing facilities are located in
Wanggang Township, Pudong New Area, Shanghai. Production is expected to begin
during 1996.
At December 31, 1995, the Company had net operating loss carryforwards
for tax reporting purposes of approximately $6.7 million, which are scheduled
to expire beginning in 2005. The ultimate realization of this benefit depends
on the Company's ability to generate sufficient taxable income in the future.
While the Company believes that the benefit of such net operating losses will
be fully or partially realized by future operating results, prior losses and a
desire to be conservative prompted management to leave on its books at
December 31, 1995, a valuation reserve for a portion of such future benefits,
in accordance with Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes."
Operating Activities
Operating activities provided $2.5 million of cash during the first half
of 1996, compared to cash provided of $2.1 million in the first half of 1995,
an increase of $0.4 million. This increase in cash provided is primarily the
result of net working capital (defined as receivables, inventories and trade
payables) increasing only $2.6 million in the first half of 1996 compared to
an increase in net working capital of $3.5 million in the first half of 1995,
resulting in an increase in operating cash provided in the first half of 1996
of $0.9 million and an increase of $1.7 million from changes in other assets
and liabilities, partially offset by a decrease in income before depreciation,
amortization and equity income of $2.2 million.
<PAGE>
<PAGE>15
Investing Activities
Investing activities provided $0.5 million of cash during the first half
of 1996, compared to cash used of $9.6 million during the first half of 1995,
an increase in cash provided of $10.0 million. This increase in cash provided
is the result of $6.6 million of cash used in June 1995 for the Reunion
Acquisition which did not recur in the 1996 first half in addition to the
receipt of $3.7 million of cash received by the Company from the repayment of
the remaining portion of the Oneida Advances, including interest, by Reunion.
These increases were partially offset by almost $0.2 million of cash used in
the first half of 1996 to satisfy the cash portion of the Company's investment
obligation in the Shanghai Klemp joint venture.
Financing Activities
Financing activities during the first half of 1996 used $2.9 million in
cash, compared to $8.0 million of cash provided from financing activities
during the first half of 1995, an increase in cash used of $10.9 million.
This increase in cash used is primarily the result of a decrease of $1.1
million in the level of net borrowings under the Revolving Credit Facility
during the first half of 1996 compared to an increase of $9.8 million in the
first half of 1995. Although repayments of debt were approximately equal in
the first half of 1996 compared to the first half of 1995, the 1996 first half
included the May 1996 payment of $1.7 million to Mr. Bradley in partial
repayment of the Parkdale Note and payments totalling $0.1 million to Mr.
Franklin Myers in partial repayment of the Gesterkamp Note.
<PAGE>
<PAGE>16
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following exhibits are filed herewith in accordance
with Item 601 of Regulation S-K:
Exhibit No. Exhibit Description
----------- -------------------
10.7 Agreement, dated June 1, 1996, between
CP Industries, Inc. and United Steelworkers
of America on behalf of Local #1514-01.
10.8 Agreement, dated June 1, 1996, between
CP Industries, Inc. and United Steelworkers
of America on behalf of Local #1514.
10.44 Agreement, dated June 14, 1996, between
The Alliance Machine Company and Local
Union No. 2361 United Steelworkers of
of America AFL-CIO.
10.51 Letter Agreement dated June 18, 1996
between Chatwins Group, Inc. and Charles E.
Bradley, Sr. extending the maturity date
of the Parkdale Note to December 31, 1996.
10.52 Joint Venture Agreement by and among
Klemp de Mexico, S.A. de C.V. and
Consolidated Fabricators, Inc.
10.53 Second Amendment dated March 25, 1996
to Lease Agreement dated May 31, 1994
between RTF Properties, L.P. and
Chatwins Group, Inc.
10.54 Third Amendment dated June 10, 1996
to Lease Agreement dated May 31, 1994
between RTF Properties, L.P. and
Chatwins Group, Inc.
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
<PAGE>
<PAGE>17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
Date: August 12, 1996 CHATWINS GROUP, INC.
--------------- (Registrant)
By: /s/ Joseph C. Lawyer
-------------------------------
Joseph C. Lawyer
President and Chief
Executive Officer
By: /s/ John M. Froehlich
-------------------------------
John M. Froehlich
Vice President, Chief Financial
Officer and Treasurer
(chief financial and accounting officer)
<PAGE>
<PAGE>18
EXHIBIT INDEX
Exhibit No. Exhibit Description Page No.
----------- ------------------- --------
10.7 Agreement, dated June 1, 1996, 19
between CP Industries, Inc.
and United Steelworkers of
America on behalf of Local #1514-01.
10.8 Agreement, dated June 1, 1996, 40
between CP Industries, Inc.
and United Steelworkers of
America on behalf of Local #1514.
10.44 Agreement, dated June 14, 1996, 63
between The Alliance Machine Company
and Local Union No. 2361 United
Steelworkers of America AFL-CIO.
10.51 Letter Agreement dated June 18, 1996 96
between Chatwins Group, Inc. and
Charles E. Bradley, Sr. extending the
maturity date of the Parkdale Note
to December 31, 1996.
10.52 Joint Venture Agreement by and among 98
Klemp de Mexico, S.A. de C.V. and
Consolidated Fabricators, Inc.
10.53 Second Amendment dated March 25, 1996 133
to Lease Agreement dated May 31, 1996
between RTF Properties, L.P. and
Chatwins Group, Inc.
10.54 Third Amendment dated June 10, 1996 136
to Lease Agreement dated May 31, 1996
between RTF Properties, L.P. and
Chatwins Group, Inc.
27 Financial Data Schedule 142
<PAGE>
<PAGE>19
TABLE OF CONTENTS
Article Page*
1 Purpose 1
2 Management 2
3 Existing Working Conditions 3
4 Contracting Out 4
5 General Principles 5
6 Union Shop 6
7 Grievance Procedure 7
8 Safety and Health 9
9 Hours of Work 11
10 Overtime and Holidays 12
11 Vacations 14
12 Seniority 15
13 Military Service 20
14 Severance Allowance 20
15 Rates of Pay 22
16 Sick Leave 24
17 Termination 26
Appendices
A Letter of Agreement on Misc. Matters 27
B Manning Agreement 28
C Standard Biweekly Salary Rate 30
D Memorandum - Service Bonus 31
E Memorandum - Benefits 32
F Letter of Agreement - 1996 33
* Page references are to the original, signed agreement and not the
"EDGARized" version of the agreement as filed herein.
<PAGE>
<PAGE>20
AGREEMENT
This Agreement is between CP Industries, Inc. (Company) and the United
Steelworkers of America on behalf of Local #1514-01 (Union). The Company
recognizes the Union as the exclusive collective bargaining representative of
all salaried clerical and technical employees for whom the Union is certified
by the National Labor Relations Board as the exclusive collective bargaining
representative. This agreement applies only to operations at the Christy Park
Plant in McKeesport, PA. Any future business ventures which may be pursued
and/or obtained by CP Industries, Inc. will be considered separate entities
and not subject to the provisions of this Agreement.
ARTICLE 1
PURPOSE
The purpose of this agreement is to establish rates of pay, hours of work and
other conditions of employment promoting a cooperative relationship among all
employees, ensuring uninterrupted operations and achieving the highest level
of employee performance consistent with safety, good health and sustained
effort.
ARTICLE 2
MANAGEMENT
2.1 The Company retains the exclusive right to manage the business and to
direct the work force. These rights include the right to hire, suspend or
discharge for proper cause, or transfer, and the right to relieve employees
from duty because of lack of work or for other legitimate reasons.
2.2 A supervisor will not perform work normally done by a bargaining unit
employee except in the following types of situations: experimental and/or
demonstrational work, work under emergency conditions where interference with
operations, injury, or damage to material or equipment could occur, and work
under existing circumstances would be unreasonable to assign to bargaining
unit employees or is negligible in amount. Work incidental to supervisory
duties or a job normally performed by a supervisor, even though similar to
duties in bargaining unit jobs, shall not be affected by this provision.
2.3 If a supervisor performs work in violation of the above and the
employee who would have done the work and who has realized a loss of earnings
can be identified, the Company shall pay that employee the applicable standard
hourly wage rate for the time involved or for four hours, whichever is
greater.
2.4 An employee who is assigned as a temporary supervisor will not issue
discipline to employees, provided that this provision will not prevent a
temporary supervisor from relieving an employee from work for the balance of
the turn for alleged misconduct. An employee will not be called by either
party in the grievance procedure or arbitration to testify as a witness
regarding any events involving discipline which occurred while the employee
was assigned as a temporary supervisor.
2.5 Crew leader assignments will be made at the discretion of management;
however, such assignments will not be made for a period exceeding four
consecutive months.
<PAGE>
<PAGE>21
ARTICLE 3
EXISTING WORKING CONDITIONS
A. Identified specific practices or customs in effect as of the date of
this agreement will remain in effect except as they are changed or eliminated
by mutual agreement or, if the basis for the existence of such practice or
custom is changed or eliminated, the Company will have the right to void same.
When such a change or elimination is made by the Company, any affected
employee shall have recourse to the grievance procedure to have the Company
justify its action. A three month period of time will be provided following
the effective date of this agreement for the parties to agree to which, if
any, practices exist. Any claimed practice, custom, or condition not
identified and agreed to during this time will not be recognized.
ARTICLE 4
CONTRACTING OUT
4.1 The Company intends to use its employees when reasonable and
practicable for work on its property. The following shall govern the various
types of contracting out situations:
A. Where the practice has been to perform clerical and technical work
within the plant by bargaining unit employees, such will continue unless
otherwise agreed to.
B. Where the practice has been to contract out such work, it may continue
unless otherwise agreed to.
C. Where such work has been performed within the plant under some
circumstances by bargaining unit employees and under some circumstances by
contractors, such contracting out shall be permissible under circumstances
similar to those under which contracting out has been the practice unless
otherwise agreed to.
4.2 A joint committee will be established to discuss problems which may
arise concerning the application of this Article. The Union representative(s)
will be notified when the Company decides to contract out work for performance
in the plant; such notice will be in advance of contracting out except where
emergency requirements preclude same.
4.3 Should the Union representatives on the committee believe discussion
is necessary, they shall request a meeting within 5 days after notice is given
and a meeting shall be held within 3 days thereafter. If the matter is not
resolved, a grievance challenging such action may be filed, if initiated
within 30 days from the date of the Company's notice. If the Company fails to
notify the Union on matters covered by paragraphs 4.2 and 4.3 and the reason
was not due to an emergency situation, and such failure deprived the Union of
a reasonable opportunity to suggest practicable alternatives, the Board of
Arbitration shall have the authority to fashion a remedy appropriately.
ARTICLE 5
GENERAL PRINCIPLES
5.1 The provisions of this agreement will be applied to all employees
without regard to race, color, religious creed, national origin, sex or age.
<PAGE>
<PAGE>22
5.2 There will be no Union activity on Company time. There will be no
strikes, work stoppages, slow-downs, or other acts which would interrupt or
impede operations. No officer or representative of the Union shall authorize,
instigate, aid, or condone any such activities.
5.3 The Company agrees there will be no lockouts.
5.4 The right of the Company to discipline an employee for a violation of
this agreement shall be limited to the failure of such employee to discharge
his responsibilities as an employee and may not in any way be based upon the
failure of such employee to discharge his responsibilities as a representative
or officer of the Union. The Union has the exclusive right to discipline its
officers and representatives. The Company has the exclusive right to
discipline its officers, representatives and employees.
ARTICLE 6
UNION SHOP
6.1 Each employee in the bargaining unit on the date of this agreement and
each person who becomes an employee shall, as a condition of continued
employment, be required to be a member of the Union on the 30th day following
the date of this agreement or the beginning of his employment, whichever is
later.
6.2 The Company agrees to deduct, upon written authorization signed by the
employee, initiation fees and/or monthly dues from employees' earnings. The
amount of monthly dues shall be twice the employee's current hourly vacation
rate.
6.3 The Union shall indemnify and save the Company harmless against any
and all claims, demands, suits or other forms of liability that shall arise
out of or by reason of action taken or not taken by the Company for the
purpose of complying with any of the provisions of this article.
ARTICLE 7
GRIEVANCE PROCEDURE
1. Differences between the parties as to interpretation or application of,
or compliance with, the provisions of this agreement should be addressed in an
expeditious and effective manner. The following procedure for processing
grievances will be applied:
A. An Employee and/or his grievance committeeman will discuss complaints
or grievances with his immediate supervisor within ten (10) calendar days
after the occurrence or non-occurrence of the event prompting the grievance,
or the date on which such event should reasonably have become known.
B. If the issue remains unresolved, a grievance must be filed in writing,
signed by the employee and his grievance committeeman, and submitted to his
supervisor no later than ten (10) calendar days after a response from the
supervisor. The written grievance will set forth the specific alleged
infraction, facts relating thereto, and the contractual provisions claimed to
have been violated. A grievance not conforming to this format will not be
appropriate for processing.
C. A meeting will be held with a Company representative from the area <PAGE>
<PAGE>23
involved at mutually agreeable times. If an answer is not provided within ten
(10) calendar days thereafter, the grievance will be granted.
D. Should the grievance remain unresolved, it may be appealed within ten
(10) calendar days for a hearing before the President and/or his
representatives, the Grievance Committee and a Representative from the
International Union, if desired. Meetings will be held at mutually agreeable
times after the appeal is received. The resolution of grievances up to and
including this level will be without prejudice to the position of either
party. For any unresolved grievance, a summary of pertinent points discussed
will be prepared by the Company and jointly signed.
E. In the event the grievance is not settled, it may be appealed to an
arbitrator mutually selected by the parties, provided such is so appealed
within thirty (30) calendar days after (D) above.
F. Hearings before an arbitrator will be held within thirty (30) calendar
days after (E) above.
G. An arbitrator will have jurisdiction and authority only to interpret,
apply, or determine compliance with this agreement and may not add to, detract
from, or alter this agreement.
H. The costs of arbitration will be equally shared by the parties.
I. If a grievance is not appealed in accordance with the above, it shall
be considered settled on the basis of the last decision made.
7.2 A Grievance Committee will be designated by the Union and will number
no more than two employees, one of whom will be the Chairman.
7.3 In all instances where the Company believes an employee's conduct
justifies discharge, he will first be suspended for not more than five (5)
calendars days and notified in writing that he will be discharged at the end
thereof. During such five day period, if the employee believes his proposed
discharge is unjust, he may request a hearing and discussion of the offense
before the head of his department. Within five (5) calendar days thereafter,
the suspension will be affirmed, modified, extended, revoked or converted to
discharge.
Should the determination result in discharge, the employee may file a
grievance within five (5) calendar days after notice. A hearing before the
President and/or his representatives will be held and decision rendered within
ten (10) calendar days. This decision may be appealed to arbitration and
heard in the manner set forth above. Additionally, the Arbitrator will not
have jurisdiction to modify the degree of discipline imposed should it be
determined that the employee has been suspended or discharged for proper
cause.
ARTICLE 8
SAFETY AND HEALTH
8.1 The safety and health of all employees is of great concern to the
Company and Union of CP Industries, Inc. and all employees will accept
"safety" as a part of their individual responsibility.
8.2 The Company will make all necessary repairs and adjustments to assure<PAGE>
<PAGE>24
the safety of all its employees and shall comply with all applicable State and
Federal regulations regarding job safety and health. The Union agrees to
cooperate fully in providing a safe work environment.
8.3 Protective devices and other equipment deemed necessary by Management
to protect employees from accidents and health hazards shall be provided by
the Company. On July 1, 1997 and July 1, 1999, each employee, other than
probationary employees, who is required to wear safety shoes or metatarsals
will be provided an allowance of $40.00 to purchase safety shoes for wear at
the plant.
8.4 The Company welcomes suggestions from all employees or from the Union
which offer practical and feasible ways of improving plant safety. An
employee may submit safety suggestions through his immediate supervisor.
8.5 The Company reserves the right to adopt reasonable plant rules and may
impose appropriate discipline for the violation of such rules. Employees of
CP Industries must recognize that compliance with safety rules and regulations
is a condition of employment. To be effective, all employees must be
constantly on the lookout for any condition or action which might be unsafe or
careless. Both the Union and the Company agree to promote all rules necessary
to insure safety on the job.
8.6 Both the Company and the Union agree that failure to report accidents,
even if minor in nature, can result in a loss of a life or limb to other
workers and also disrupt the efficient operation of the plant.
8.7 Consequently, employees are required to immediately report to their
supervisor any accident or injury, major or minor, which may occur to them.
If then directed by his supervisor, the employee will report immediately for
medical treatment.
8.8 A Joint Union - Management Safety and Health Committee will be
established.
ARTICLE 9
HOURS OF WORK
9.1 The normal weekly work hours shall be 40 and shall be scheduled
normally on five (5) successive days.
9.2 The normal daily work hours shall be 8 and the parties recognize that
business conditions could require daily hours in excess of 8. These hours
shall be consecutive except for lunch periods in accordance with existing
practices; employees currently having a one hour lunch break.
9.3 The final right to arrange working schedules rests with Management in
order to avoid adversely affecting the work and such schedules may be changed
to suit the varying conditions of the business.
9.4 An employee who is called for jury service or subpoenaed as a witness
shall be excused from work without deduction from salary for the days on which
he serves. Service includes required reporting whether or not he is used.
The employee will present proof that he did serve or report as a juror or was
subpoenaed and reported as a witness.
<PAGE>
<PAGE>25
ARTICLE 10
OVERTIME AND HOLIDAYS
10.1 Overtime at the rate of 1-1/2 times the regular rate of pay shall be
paid for hours worked in excess of eight (8) hours in a workday or forty (40)
hours in a week.
10.2 Payment of overtime rates shall not be duplicated for the same hours
worked.
10.3 The designated holidays are: January 1, Good Friday, Memorial Day,
July 4th, Labor Day, Thanksgiving Day, the day after Thanksgiving Day, the day
before Christmas Day and Christmas Day. If the calendar holiday is on Sunday,
the holiday shall be the following Monday.
10.4 For hours worked on any designated holiday, an overtime rate of
2-1/2 times an employee's regular rate of pay will be paid.
10.5 An eligible employee who does not work on a designated Holiday will be
paid eight (8) times his current hourly vacation rate. If, however, he is
scheduled to work and fails to report or perform work, he will be ineligible
for pay unless his absence was due to sickness or because of death in the
immediate family (parents including in-laws, children, brother, sister, spouse
and grandparents) or because of similar good cause.
10.6 An eligible employee is one who: (a) Performs work or is on vacation
in the payroll period in which the Holiday occurs; or if he is laid-off for
such payroll period, performs work or is on vacation in both the payroll
period preceding and the payroll period following the payroll period in which
the Holiday occurs; and (b) Works as scheduled or assigned both on his last
scheduled workday prior to and on his first scheduled workday following the
Holiday unless he has failed to so work because of sickness or because of
death in the immediate family or because of similar good cause.
10.7 When a Holiday occurs during an eligible employee's scheduled
vacation, he shall be paid for same in addition to his vacation pay. Such
payment shall also apply to (1) an employee whose vacation has been scheduled
prior to his layoff and who thereafter is laid off and takes his vacation as
scheduled, or (2) an employee who is not at work at the time his vacation is
scheduled, but who thereafter returns to work and is then absent from work
during a Holiday week because of his scheduled vacation. However, an employee
who is not at work at the time of scheduling his vacation and is not working
at the time his vacation commences, is not eligible for Holiday pay for such
Holiday occurring during his vacation.
ARTICLE 11
VACATIONS
11.1 Each employee who has attained at least six months of continuous
service, and who in any calendar year has performed work in such calendar year
or who, during the last pay period closed during the year immediately
preceding such calendar year: (a) has performed work or, (b) was on vacation
from work or, (c) was receiving sick leave salary continuance or, (d) was
receiving sick and accident benefits after salary continuance has been
exhausted, shall receive vacation in accordance with the following:
<PAGE>
<PAGE>26
<TABLE><CAPTION>
Years of Continuous Service Weeks of Vacation
<C> <C>
Less than 6 months None
6 months but less than 1 1
1 but less than 6 2
6 but less than 15 3
15 but less than 23 4
23 or more 5
</TABLE>
Vacations will be taken on a calendar week basis.
11.2 Vacations will, so far as practicable, be granted at times most
desired by employees (longer service employees being given preference as to
choice); but the final right to allot vacation periods and to change such
allotments is exclusively reserved to the Company in order to insure the
orderly operation of the plant.
11.3 Vacations may be scheduled throughout the calendar year; however, the
Company may designate certain weeks as vacation shutdown periods.
11.4 Each employee granted a vacation under this Article will be paid at
his average rate of earnings per hour for the first two of the last four
closed and calculated pay periods worked by the employee preceding the first
week of the actual vacation period. Hours of vacation pay for each vacation
week shall be the average hours per week worked by the employee in the first
two of the last four pay periods worked by the employee preceding the first
week of the actual vacation period, but not less than forty (40) hours per
week nor more than forty-eight (48) hours per week.
11.5 The average rate of earnings per hour shall be computed by:
A. Totaling pay received for all hours worked (total earnings, excluding
premium for overtime, holiday, Sunday and shift differential) and pay for
unworked holidays, and
B. Dividing such earnings by the total of hours worked and unworked
holiday hours which were paid for.
ARTICLE 12
SENIORITY
12.1 The parties recognize that promotional opportunity and job security in
event of promotions, decrease of forces and recalls after layoffs should
increase in proportion to length of continuous service.
12.2 It is understood and agreed that the provisions of the Manning
Agreement of the 6/1/96 hourly settlement agreement between CPI and the USW
are applicable in this agreement and will provide the guidelines for
administration of work assignments and mobility of the work force to the
extent stated therein. The Manning Agreement is referenced as Appendix B and
is modified to recognize the existing clerical and technical departments: (A)
Production Engineering Planning, (B) Accounting, and (C) Maintenance. The
Production Engineering Planning Department has two separate units.
12.3 Plant continuous service shall be used for all purposes in which a <PAGE>
<PAGE>27
measure of continuous service is utilized, except vacation preference purposes
where continuous combined corporation service will apply. In the event two or
more employees have identical plant continuous service, the tie will be broken
on the basis of continuous combined corporation service. If they are the
same, the tie will be resolved with the employee having the earliest birth
date being recognized as the senior employee.
12.4 It is understood and agreed that in all cases of:
A. Promotion the following factors as listed below shall be considered;
however, only where factors "1" and "2" are relatively equal shall continuous
service be the determining factor:
1. Ability to perform the work,
2. Physical fitness,
3. Continuous service.
B. Decrease in forces or recalls after layoffs the following factors as
listed below shall be considered; however, only where both factors "1" and "2"
are relatively equal shall continuous service be the determining factor:
1. Ability to perform the work,
2. Physical fitness,
3. Continuous service.
12.5 Continuous service shall be calculated from date of first employment
or reemployment following a break in continuous service.
12.6 Continuous service shall be broken by:
A. Quit
B. Discharge, provided that if the employee is rehired within six (6)
months the break in continuous service shall be removed.
C. Termination in accordance with Article 14 - Severance Allowance.
D. Absence in excess of two years, except as provided in 12.7 and 12.8
below.
12.7 If an employee is absent because of layoff or physical disability in
excess of two (2) years, he shall continue to accumulate continuous service
during such absence for an additional period equal to (i) three years, or (ii)
the excess, if any, of his length of continuous service at commencement of
such absence over two years, whichever is less. Any accumulation in excess of
two years during such absence shall be counted, however, only for purposes of
this Article and shall not be counted for any other purpose under this
agreement. In order to avoid a break in service within the above period after
an absence in excess of two years, an employee absent because of layoff or
physical disability must report for work promptly upon termination of either
cause, provided, in the case of layoff, the Company has mailed a recall notice
to the last address furnished to the Company by the employee.
12.8 Absence due to a compensable disability incurred during course of
employment shall not break continuous service, provided such individual is
returned to work within thirty (30) days after final payment of statutory
compensation for such disability or after the end of the period used in
calculating a lump-sum payment.
12.9 New employees and those hired after a break in continuity of service
will be regarded as probationary employees for the first six biweekly pay <PAGE>
<PAGE>28
periods of actual work and will receive no continuous service credit during
such period. Probationary employees may be laid off or discharged as
exclusively determined by Management. Probationary employees continued in the
service of the Company subsequent to the first six biweekly pay periods of
actual work shall receive full continuous service credit from date of original
hiring.
12.10 When a decrease in force continues to the point at which a grievance
committeeman would otherwise be laid off, he shall be retained in active
employment (for such hours per week as may be scheduled for an employee on the
job to which he is assigned) for the purpose of continuity in the
administration of this Agreement in the interest of employees and the Company
so long as a work force is at work in the plant area which he represents on
the grievance committee. In any event, no grievance committeeman shall be
retained in employment under this paragraph unless work which he can perform
is available in the plant area which he represents on the grievance committee.
12.11 The principles set forth in the preceding paragraph shall apply on a
plant-wide basis to employees who hold the following office: President or
Vice-President. This applies only if not in conflict with the National Labor
Relations Board's ruling. When there are not sufficient jobs available to
provide employment in accordance with both this paragraph and the preceding
paragraph, priority shall be given to employees covered by the preceding
paragraph.
12.12 The Company shall make available for review by the local union
concerned lists showing the relative continuous service of each employee in
each seniority unit. Such lists shall be revised by the Company from time to
time, as necessary, to keep them relatively up-to-date. The seniority rights
of individual employees shall in no way be prejudiced by errors, inaccuracies,
or omissions in such lists.
12.13 The procedure outlined below will govern assignments to permanent job
vacancies if and when Management determines that such a vacancy exists and is
to be filled:
Within a given line of progression, a vacancy within such line
would be filled by employees occupying jobs immediately below that
job, by job class, on the basis of plant service. Then, to fill
the ensuing vacancy in that job, employees in the next lower level
job would be offered promotion. This procedure would continue
until there remained a vacancy at the entry level job. At this
point, for departments where more than one line of progression exists,
employees in other lines may submit applications for the posted entry
level job. In the end, a department entry level job would be filled
on a plant-wide basis. In department where all jobs are part of one
line of progression, the entry level job will be posted and filled
on a plant-wide basis. An entry level job will be posted for a
period of seven (7) calendar days. Vacancies not filled within 45
days will be reposted. A successful bidder may decide to return to
his former incumbent position within 45 days and such return will be
without loss of his seniority standing. In such case, other
applicants will be considered.
<PAGE>
<PAGE>29
ARTICLE 13
MILITARY SERVICE
13.1 Employees who enter military service shall receive all rights and
privileges accorded them by the laws of the United States.
13.2 Employees called for encampment of the National Guard or Reserve shall
receive the difference in their service pay and average rate of earnings (as
calculated for vacation pay) for hours they would have worked for up to a
maximum of two (2) weeks per year.
ARTICLE 14
SEVERANCE ALLOWANCE
14.1 If the Company, in its sole discretion, decided to permanently close
the plant or a department thereof, an employee with three (3) or more years of
continuous Company service whose employment is terminated because he was not
entitled to nor offered other employment shall be eligible for severance
allowance in accordance with the following scale:
<TABLE>
<CAPTION>
Continuous Company Service Weeks of Severance Allowance
<C> <C>
3 years but less than 5 years 4
5 years but less than 7 years 6
7 years but less than 10 years 7
10 years or more 8
</TABLE>
14.2 A week's severance allowance shall be the employee's vacation rate as
calculated pursuant to Article 11. Payment shall be made in a lump sum at the
time of termination and acceptance of same shall terminate employment and
continuous service for all purposes.
14.3 An employee who is offered employment in another department of the
plant shall not be entitled to severance allowance. If, however, he transfers
and such transfer results directly in the permanent displacement of some other
employee, the latter shall be eligible for severance allowance provided he
otherwise qualifies.
14.4 Severance allowance shall not be duplicated for the same severance and
any payment received from other sources shall be deducted from the amount to
which the employee may be entitled under this article.
14.5 An employee whose employment would otherwise have been terminated may
elect to be placed on layoff for thirty (30) days during which time he shall
decide whether to remain on layoff or take severance allowance. If he elects
to continue on layoff, severance allowance is permanently waived. Moreover,
any SUB payments received during this time shall be deducted from any
severance allowance to be paid.
ARTICLE 15
RATES OF PAY
15.1 The standard biweekly scale of rates for the respective job classes
shall be those set forth in Appendix C and shall continue in effect without <PAGE>
<PAGE>30
change until the expiration date of this Agreement. Although reference is
made herein to a biweekly salary rate, it is agreed and understood that the 80
hour "guarantee" previously recognized has been eliminated. Employees may be
scheduled on a weekly basis, in which case the biweekly salary rate is divided
by two and is the established salary rate of pay for an eligible employee
scheduled for 40 hours of work. There is established for each salary rate a
corresponding hourly equivalent rate equal to one-eightieth of the biweekly
salary rate which is recognized as the straight-time regular rate from which
to calculate overtime.
15.2 The Company may authorize absence from work without reduction of the
salary rate; however, nothing shall require payment for time not worked due to
causes such as:
A. Strikes or work stoppages in connection with labor disputes.
B. Refusal to perform assigned work.
C. Absence from work without just cause.
D. Voluntary absence from work.
E. Justifiable discharge or suspension from work.
15.3 To be eligible for the established weekly salary rate, an employee
shall have accrued two years of continuous service; this will not be utilized
to permit Management to schedule an employee for less than 40 hours in a week
except for weeks containing holidays.
15.4 The starting rate for a newly hired employee will be $2.50 per hour
less than the established rate for the particular job to which he is assigned.
This rate will remain in effect for the first 2080 hours of work.
15.5 No basis shall exist for an employee to allege that a salary rate
inequity exists and no complaint or grievance on behalf of an employee
alleging a salary rate inequity shall be initiated or processed during the
terms of this Agreement.
15.6 Notwithstanding any provisions of this Article, errors in application
of rates of pay shall be corrected.
15.7 For hours worked on the afternoon shift there shall be paid a premium
rate of $.30 per hour. For hours worked on the night shift there shall be
paid a premium of $.45 per hour. Shifts are identified as follows:
Day Shift - Turns starting between 7:00 AM and 9:30 AM inclusive.
Afternoon Shift - Turns starting between 3:00 PM and 5:30 PM inclusive.
Night Shift - Turns starting between 11:00 PM and 1:30 AM inclusive.
15.8 Shift differential shall be included in the calculation of overtime
compensation.
15.9 An employee shall be paid a premium of 50% based on his regular rate
of pay for all hours worked on Sunday which are not paid for on an overtime
basis.
15.10 Existing practices and procedures governing job descriptions and
classifications will remain in effect for the duration of this Agreement
unless modified by mutual consent.
<PAGE>
<PAGE>31
ARTICLE 16
SICK LEAVE
16.1 An eligible employee who is absent from work as the result of personal
disability caused by accident or sickness shall have his salary continued
during such disability in accordance with the following table of limitations:
<TABLE>
<CAPTION>
Length of Maximum Sick Leave
Continuous Service Salary Continuance
<S> <C>
Less than 2 years Not Eligible
2 yrs. but less than 5 Balance of pay period and 4 pay periods
5 yrs. but less than 10 Balance of pay period and 6 pay periods
10 yrs. but less than 15 Balance of pay period and 8 pay periods
15 yrs. but less than 20 Balance of pay period and 10 pay periods
20 yrs. and over Balance of pay period and 13 pay periods
</TABLE>
16.2 To be eligible under the provisions of this Article, an employee shall
have accrued two years of continuous service. Reasonable evidence (including,
in appropriate circumstances, a certificate from a licensed physician) of
disability due to sickness or accident will be required of all employees.
16.3 Salary continuance in accordance with the above table shall constitute
the maximum payments for an employee's absences from work due to one or more
personal disabilities in any 12 month period; provided, however, that
fractional initial pay periods for each disability for which salary is
continued shall not be counted in the maximum salary continuance limitation
set forth above. Should an employee receive his maximum salary continuance in
a 12 month period, any succeeding maximum period shall not commence until
another disability following his return to work.
16.4 Salary continuance payments shall be reduced by the amount of any
Worker's Compensation payment but such payments shall not be reduced or
discontinued as the result of any demotion or reduction in force which occurs
during the applicable period set forth in the table of limitations.
16.5 Salary continuance shall not be paid during any period while an
employee is on vacation.
ARTICLE 17
TERMINATION
This agreement shall become effective June 1, 1996, and remain in force until
Midnight, May 31, 2001 and shall thereafter continue in force from year to
year unless either party desires to modify the terms. The party desiring the
modification must notify the other party in writing not less than sixty (60)
days prior to the expiration date of this Agreement, or not less than sixty
(60) days prior to an anniversary date hereof. Should either party serve such
notice, a joint conference shall convene not later than thirty (30) days prior
to the expiration date in the year in which the notice given. Notice shall be
by registered mail to the other party.
<PAGE>
<PAGE>32
IN WITNESS WHEREOF, and intending to be legally bound hereby, the proper
and duly authorized officers of the Company and the Union have executed
this Agreement effective this date and year June 1, 1996
--------------------------------
UNITED STEELWORKERS OF
CP INDUSTRIES, INC. AMERICAN AFL-CIO-CLC
- - --------------------------------- ---------------------------------
Jack T. Croushore, President George F. Becker, Int'l President
- - --------------------------------- ---------------------------------
C. Herbert Ellis, Vice President Leon Lynch, Vice President
Human Resources Human Affairs
- - --------------------------------- ---------------------------------
Roger L. Seese, Controller Leo W. Gerard, Sec./Treas.
- - --------------------------------- ---------------------------------
Kevin P. Collins, Vice President Richard H. Davis, Vice President
Business Development Administration
---------------------------------
Andrew V. Palm, Director
District 10
---------------------------------
Dennis R. Fleming, Staff Rep.
USWA - LOCAL UNION 1514 (O&T)
---------------------------------
John McWhorter, Unit Chairman
---------------------------------
Dan Witkowski, Unit Secretary<PAGE>
<PAGE>33
APPENDIX A
LETTER OF AGREEMENT ON MISCELLANEOUS MATTERS
June 4, 1992
Mr. Richard Pastore
Staff Representative
United Steelworkers of America
Dear Mr. Pastore:
This will confirm our understanding and agreement that the following matters
were resolved as stated during the 1992 negotiations on behalf of USW Locals
#1514 (hourly) and #3330 (salary):
1. Appendix D of the hourly 6/1/87 Agreement is modified as follows: Pay
performance for Plan 4650-01 (Tool Grinders) is 114% and Plan 4900-03
(Heavy Forge) is 117%.
2. Appendix D of the salary 6/1/87 Agreement is modified to state the
Service Bonus Plan provisions will remain in place for the duration of
the 6/1/92 Agreement.
3. The terms and conditions of the SUB plan that previously existed will
remain in effect.
4. The parties agree to meet to explore the feasibility of developing and
installing a gain-sharing plan.
5. For retirements after Sept. 1, 1992, the minimum pension formula will
be increased by $1.00 for each year of service worked as a CP
Industries, Inc. employee, i.e. on or after August 1, 1986.
6. The parties recognize the "American With Disabilities Act" becoming
effective 7/26/92 and pledge support for and conformance with the
principles and intent of this legislation.
Sincerely,
(Signed)
---------------------------------
C.H. Ellis, Vice President
Human Resources and
Administrative Services
CONFIRMED:
(Signed)
- - ---------------------------------
Richard Pastore
USW Staff Representative
<PAGE>
<PAGE>34
APPENDIX B
MANNING AGREEMENT
The parties recognize that existing narrow job descriptions
necessarily limit the scope of employees' work activity; the need to revise
manning procedures to permit more flexibility in job assignment is evident.
To this end, the parties agree that job combinations will occur and employee
utilization will be broadened. In order to realize this expansion of work
function and overlapping of assignments, the parties will address jobs
performed by CP Industries, Inc. employees. As those employees terminate
(defined as quit, retire, die), functions may be combined with other jobs as
determined by Management. Input from the Union representatives with respect
to the most efficient manning arrangement will be sought prior to a pending
combination. It is understood that the ability to combine work functions is
at the discretion of Management; however, should Management decide that a
replacement in kind is needed, those other employees on layoff who still
retain recall rights will be considered prior to seeking new hires.
It is agreed and understood that for a given week, Management will
develop a schedule, placing recognized incumbents on a job if it is reasonably
anticipated that performance of such work functions will be required. It is
expected that these identified employees will work on scheduled jobs during
the week as well as be available for reassignment as the need exists. This
mobility is not subject to question during the week and only an appropriate
challenge may be lodged alleging a continuing violation or abuse of the intent
of the system after initial discussion by the parties to air the concern.
Management will, in the course of reviewing anticipated work and
related manning, consider the respective seniority status of a department's
employees: however, it is recognized that where junior-in-service employees
hold incumbency on certain primary, critical jobs, those individuals may work
a portion of the time on the scheduled job and then may be reassigned for the
duration while senior employees are on layoff.
The parties agree that for purposes stated herein, there shall exist
three (3) departments: (A) Production Engineering Planning, (B) Accounting,
and (C) Maintenance. The Production Engineering Planning Department will
still retain two (2) separate units. The Company's intention is to reassign
within the department as the needs dictate, avoiding the crossing of
departmental lines. There could be exceptions, however, depending on the
circumstances; e.g. should a given work situation arise during a week where a
need exists to get a particular job done and available departmental employees
are being fully utilized, the options may be several: (1) A Management
decision to postpone the job; (2) Use overtime to complete within the week;
(3) With the approval of the Chairman or Secretary of the Grievance Committee,
use employees from other departments; (4) Some combination of above.
<PAGE>
<PAGE>35
Standard Biweekly Salary Rate
Appendix C
Job Effective Effective Effective Effective Effective
Class 6/1/96 6/1/97 6/1/98 6/1/99 6/1/00
0-1 $1,059.60 $1,099.60 $1,139.60 $1,179.60 $1,227.60
2 $1,084.03 $1,124.03 $1,164.03 $1,204.03 $1,252.03
3 $1,108.47 $1,148.47 $1,188.47 $1,228.47 $1,276.47
4 $1,132.90 $1,172.90 $1,212.90 $1,252.90 $1,300.90
5 $1,157.34 $1,197.34 $1,237.34 $1,277.34 $1,325.34
6 $1,181.77 $1,221.77 $1,261.77 $1,301.77 $1,349.77
7 $1,206.21 $1,246.21 $1,286.21 $1,326.21 $1,374.21
8 $1,230.64 $1,270.64 $1,310.64 $1,350.64 $1,398.64
9 $1,255.08 $1,295.08 $1,335.08 $1,375.08 $1,423.08
10 $1,279.51 $1,319.51 $1,359.51 $1,399.51 $1,447.51
11 $1,303.95 $1,343.95 $1,383.95 $1,423.95 $1,471.95
12 $1,328.38 $1,368.38 $1,408.38 $1,448.38 $1,496.38
13 $1,352.82 $1,392.82 $1,432.82 $1,472.82 $1,520.82
14 $1,377.25 $1,417.25 $1,457.25 $1,497.25 $1,545.25
15 $1,401.69 $1,441.69 $1,481.69 $1,521.69 $1,569.69
16 $1,426.12 $1,466.12 $1,506.12 $1,546.12 $1,594.12
<PAGE>
<PAGE>36
APPENDIX D
June 17, 1987
William M. Halas
President - Local #3330
United Steelworkers of America
2214 Walnut Street
McKeesport, PA 15132
Dear Mr. Halas:
This will confirm our understanding and agreement that the terms and
conditions of the existing provisions of the Service Bonus Plan will remain in
place for the duration of our 6/1/87 Agreement.
(Signed)
---------------------------------
C. H. Ellis, Director
Human Resources &
Administration Services
CP Industries, Inc.
CONFIRMED:
(Signed)
- - ---------------------------------
William M. Halas
President - Local #3330 USW
7/16/87
- - ---------------------------------
Date
<PAGE>
<PAGE>37
APPENDIX E
Mr. William Halas June 24, 1987
President
Local #3330
United Steelworkers of America
Dear Mr. Halas:
This will confirm our understanding and agreement that the following
modifications are made to existing benefit programs:
1. Effective February 1, 1988, for retirements on or after July 31, 1986,
increase minimum pension formula by $1.00. The percent pension
calculation method is eliminated.
2. Effective for retirements on or after January 31, 1987, increase
pension protection afforded short service employees by lowering
eligibility for deferred vested pension from 10 years to 5 years of
service.
3. Effective February 1, 1988, increase the minimum monthly surviving
spouse's benefit by $10.00 for surviving spouses of active employees
who die on or after July 31, 1986 and for the surviving spouses of
employees who retire on or after July 31, 1986 and who die thereafter.
4. Effective July 1, 1987, adopt pre-certification of inpatient
admissions and mandatory second surgical provisions.
5. Increase major medical deductible to $150 for individuals and $300 for
families.
6. Extend subrogation provisions applicable to dental benefits to all
health care benefits.
Sincerely,
(Signed)
---------------------------------
C. H. Ellis, Director
Human Resources and
Administrative Services
CP Industries, Inc.
CONFIRMED
(Signed)
- - ---------------------------------
William Halas, President
USW Local #3330
<PAGE>
<PAGE>38
APPENDIX F
LETTER OF AGREEMENT - 1996
May 30, 1996
Mr. Dennis Fleming
Staff Representative
United Steel Workers of America
Dear Mr. Fleming:
In the interest of renewing our agreement effective June 1, 1996, the
following contract modifications are proposed:
1.) The Steel Workers' Select Blue POS 100 Plan with mail order
drug provisions will be implemented effective 8/1/96 for all CPI bargaining
unit employees. Existing dental and vision coverage will be retained.
2.) Each active employee, other than probationary employees, as of
6/1/96, will receive a gross amount of $500.00 on or before 7/1/96. Another
payment of $500.00 will be made in a similar manner in 1998.
3.) On July 1, 1997 and July 1, 1999, each employee, other than
probationary employees who is required to wear safety shoes will be provided
an allowance of $40.00 to purchase same.
4.) For retirements after September 1, 1996, the minimum pension
formula will be increased an additional $1.00 for each year of service as a CP
Industries, Inc. employee; i.e. on or after August 1, 1986.
For retirements after September 1, 2000, the minimum pension
formula will be increased an additional $1.00 for each year of service as a CP
Industries, Inc. employee; i.e. on or after August 1, 1986.
5.) For future retirements, the company will not use the USX
percent-calculated figure in determining the offset to be applied... the USX
minimum formula-calculated amount will be used.
6.) The amount of weekly Sickness & Accident benefits will be
$300.00 for payment after 6/1/1996.
7.) An increase in the hourly additive to the standard hourly wage
scale rate as follows:
6/1/96 --- $ .50
6/1/97 --- $ .50
6/1/98 --- $ .50
6/1/99 --- $ .50
6/1/00 --- $ .60
8.) This agreement is effective June 1, 1996 through May 31, 2001.
The above is contingent upon and in conjunction with an understanding
that any and all issues presented by the Union in the form of contractual
proposals, which have not been agreed to up to this point, are considered
withdrawn.
CONFIRMED Sincerely,
(Signed) (Signed)
- - --------------------------------- ---------------------------------
Dennis R. Fleming C. H. Ellis
VP Human Resources
& Administrative Services
<PAGE>
<PAGE>39
UNITED STEELWORKERS CP INDUSTRIES, INC.
OF AMERICA CHRISTY PARK PLANT
- - --------------------------------- ---------------------------------
George Becker Jack T. Croushore
President President
- - --------------------------------- ---------------------------------
Richard H. Davis C.H. Ellis
Vice-President Vice-President
Administration Human Resources
- - --------------------------------- ---------------------------------
Leon Lynch K.P. Collins
Vice-President Vice-President
Human Affairs Business Development
- - --------------------------------- ---------------------------------
Leo W. Gerard Roger L. Seese
Secretary Controller
- - ---------------------------------
Andrew V. Palm
Director
District #10
- - ---------------------------------
Dennis R. Fleming
Staff Representative
District #10
- - ---------------------------------
John McWhorter
Unit Chairman
- - ---------------------------------
Dan Witkowski
Unit Secretary
<PAGE>
<PAGE>40
TABLE OF CONTENTS
Article Page*
1 Purpose 1
2 Management 2
3 Existing Working Conditions 3
4 Contracting Out 4
5 General Principles 5
6 Union Shop 6
7 Grievance Procedure 7
8 Safety and Health 9
9 Hours of Work 11
10 Overtime and Holidays 13
11 Vacations 15
12 Seniority 17
13 Military Service 21
14 Severance Allowance 21
15 Rates of Pay 23
16 Termination 24
Appendices
A Letter of Agreement on Misc. Matters 26
B Manning Agreement 27
C Standard Hourly Wage Scale 29
C-1 Standard Hourly Wage Scale 30
D Memorandum - Indirect Incentives 31
E Memorandum - Benefits 32
F Letter of Agreement - 1996 33
* Page references are to the original, signed agreement and not the
"EDGARized" version of the agreement as filed herein.
<PAGE>
<PAGE>41
AGREEMENT
This Agreement is between CP Industries, Inc. (Company) and the United
Steelworkers of America on behalf of Local #1514 (Union). The Company
recognizes the Union as the exclusive collective bargaining representative of
all hourly production and maintenance employees for whom the Union is
certified by the National Labor Relations Board as the exclusive collective
bargaining representative. This agreement applies only to operations at the
Christy Park Plant in McKeesport, PA. Any future business ventures which may
be pursued and/or obtained by CP Industries, Inc. will be considered separate
entities and not subject to the provisions of this Agreement.
ARTICLE 1
PURPOSE
The purpose of this agreement is to establish rates of pay, hours of work and
other conditions of employment promoting a cooperative relationship among all
employees, ensuring uninterrupted operations and achieving the highest level
of employee performance consistent with safety, good health, and sustained
effort.
ARTICLE 2
MANAGEMENT
2.1 The Company retains the exclusive right to manage the business and to
direct the work force. These rights include the right to hire, suspend or
discharge for proper cause, or transfer, and the right to relieve employees
from duty because of lack of work or for other legitimate reasons.
2.2 A supervisor will not perform work normally done by a bargaining unit
employee except in the following types of situations: experimental and/or
demonstrational work, work under emergency conditions where interference with
operations, injury or damage to material or equipment could occur, and work
under existing circumstances would be unreasonable to assign to bargaining
unit employees or is negligible in amount. Work incidental to supervisory
duties or a job normally performed by a supervisor, even though similar to
duties in bargaining unit jobs, shall not be affected by this provision.
2.3 If a supervisor performs work in violation of the above and the
employee who would have done the work and who has realized a loss of earnings
can be identified, the Company shall pay that employee the applicable standard
hourly wage rate for the time involved or for four hours, whichever is
greater.
2.4 An employee who is assigned as a temporary foreman shall not cease to
be an employee, although the terms and conditions of employment applicable to
the position shall be solely determined by the Company. An employee assigned
as a temporary foreman on a weekly basis will not work in the bargaining unit
during that week; provided, however, if all employees are at work in a given
department wherein a temporary foreman is so assigned, there shall be no
prohibition in his performance of bargaining unit functions as required. An
employee will not be assigned as a temporary foreman merely as a means of
retaining him from layoff at a time when the application of his seniority
would not otherwise result in his retention.
2.5 Crew leader assignments will be made at the discretion of management;<PAGE>
<PAGE>42
however, such assignments will not be made for a period exceeding four
consecutive months.
ARTICLE 3
EXISTING WORKING CONDITIONS
A. Identified specific practices or customs in effect as of the date of
this agreement will remain in effect except as they are changed or eliminated
by mutual agreement or, if the basis for the existence of such practice or
custom is changed or eliminated, the Company will have the right to void same.
When such a change or elimination is made by the Company, any affected
employee shall have recourse to the grievance procedure to have the Company
justify its action. A three month period of time will be provided following
the effective date of this agreement for the parties to agree to which, if
any, practices exist. Any claimed practice, custom, or condition not
identified and agreed to during this time will not be recognized.
ARTICLE 4
CONTRACTING OUT
4.1 The Company intends to use its employees when reasonable and
practicable for work on its property. The following shall govern the various
types of contracting out situations:
A. Where the practice has been to perform production, service, and day-
to-day maintenance and repair work within the plant by bargaining unit
employees, such will continue unless otherwise agreed to.
B. Where the practice has been to contract out such work, it may continue
unless otherwise agreed to.
4.2 Maintenance and repair work performed within the plant, other than
that described above, and installation, replacement and reconstruction of
equipment and productive facilities, other than that described below, may not
be contracted out for performance within the plant unless contracting out can
be demonstrated by the Company to have been the more reasonable course of
action.
4.3 New construction including major installation, major replacement
and/or reconstruction of equipment and productive facilities may be contracted
out.
4.4 A joint committee will be established to discuss problems which may
arise concerning the application of this Article. The Union representative(s)
will be notified when the Company decides to contract out work for performance
in the plant; such notice will be in advance of contracting out except where
emergency requirements preclude same.
4.5 Should the Union representatives on the committee believe discussion
is necessary, they shall request a meeting within 5 days after notice is given
and a meeting shall be held within 3 days thereafter. If the matter is not
resolved, a grievance challenging such action may be filed, if initiated
within 30 days from the date of the Company's notice. If the Company fails to
notify the Union on matters covered by paragraphs 4.4 and 4.5 and the reason
was not due to an emergency situation, and such failure deprived the Union of
a reasonable opportunity to suggest practicable alternatives, the Board of <PAGE>
<PAGE>43
Arbitration shall have the authority to fashion a remedy appropriately.
4.6 The Company will notify the Union of significant items of maintenance
or repair work to be performed outside the plant but no requirement of
notification shall exist concerning the purchase of goods, materials and
equipment. The parties agree that if work which had been historically and
exclusively done by bargaining unit employees is sent outside the plant to be
performed and that activity prompts a pending layoff of employees who would
have done the work, such layoff will not occur while the work continues to be
performed outside the plant.
4.7 Janitorial services will be provided by an outside contractor.
ARTICLE 5
GENERAL PRINCIPLES
5.1 The provisions of this agreement will be applied to all employees
without regard to race, color, religious creed, national origin, sex or age.
5.2 There will be no Union activity on Company time. There will be no
strikes, work stoppages, slow-downs, or other acts which would interrupt or
impede operations. No officer or representative of the Union shall authorize,
instigate, aid, or condone any such activities.
5.3 The Company agrees there will be no lockouts.
5.4 The right of the Company to discipline an employee for a violation of
this agreement shall be limited to the failure of such employee to discharge
his responsibilities as an employee and may not in any way be based upon the
failure of such employee to discharge his responsibilities as a representative
or officer of the Union. The Union has the exclusive right to discipline its
officers and representatives. The Company has the exclusive right to
discipline its officers, representatives, and employees.
ARTICLE 6
UNION SHOP
6.1 Each employee in the bargaining unit on the date of this agreement and
each person who becomes an employee shall, as a condition of continued
employment, be required to be a member of the Union on the 30th day following
the date of this agreement or the beginning of his employment, whichever is
later.
6.2 The Company agrees to deduct, upon written authorization signed by the
employee, initiation fees and/or monthly dues from employees' earnings. The
amount of monthly dues shall be twice the employee's current hourly vacation
rate.
6.3 The Union shall indemnify and save the Company harmless against any
and all claims, demands, suits or other forms of liability that shall arise
out of or by reason of action taken or not taken by the Company for the
purpose of complying with any of the provisions of this article.
<PAGE>
<PAGE>44
ARTICLE 7
GRIEVANCE PROCEDURE
1. Differences between the parties as to interpretation or application of,
or compliance with, the provisions of this agreement should be addressed in an
expeditious and effective manner. The following procedure for processing
grievances will be applied:
A. An Employee and/or his grievance committeeman will discuss complaints
or grievances with his immediate supervisor within ten (10) calendar days
after the occurrence or non-occurrence of the event prompting the grievance,
or the date on which such event should reasonably have become known.
B. If the issue remains unresolved, a grievance must be filed in writing,
signed by the employee and his grievance committeeman, and submitted to his
supervisor no later than ten (10) calendar days after a response from the
supervisor. The written grievance will set forth the specific alleged
infraction, facts relating thereto, and the contractual provisions claimed to
have been violated. A grievance not conforming to this format will not be
appropriate for processing.
C. A meeting will be held with a Company representative from the area
involved at mutually agreeable times. If an answer is not provided within ten
(10) calendar days thereafter, the grievance will be granted.
D. Should the grievance remain unresolved, it may be appealed within ten
(10) calendar days for a hearing before the President and/or his
representatives, the Grievance Committee and a Representative from the
International Union, if desired. Meetings will be held at mutually agreeable
times after the appeal is received. The resolution of grievances up to and
including this level will be without prejudice to the position of either
party. For any unresolved grievance, a summary of pertinent points discussed
will be prepared by the Company and jointly signed.
E. In the event the grievance is not settled, it may be appealed to an
arbitrator mutually selected by the parties, provided such is so appealed
within thirty (30) calendar days after (D) above.
F. Hearings before an arbitrator will be held within thirty (30) calendar
days after (E) above.
G. An arbitrator will have jurisdiction and authority only to interpret,
apply, or determine compliance with this agreement and may not add to, detract
from, or alter this agreement.
H. The costs of arbitration will be equally shared by the parties.
I. If a grievance is not appealed in accordance with the above, it shall
be considered settled on the basis of the last decision made.
7.2 A Grievance Committee will be designated by the Union and will number
no more than four employees, one of whom will be the Chairman.
7.3 In all instances where the Company believes an employee's conduct
justifies discharge, he will first be suspended for not more than five (5)
calendars days and notified in writing that he will be discharged at the end
thereof. During such five day period, if the employee believes his proposed
discharge is unjust, he may request a hearing and discussion of the offense <PAGE>
<PAGE>45
before the Vice-President--Operations (or Director, if appropriate). Within
five (5) calendar days thereafter, the suspension will be affirmed, modified,
extended, revoked or converted to discharge.
Should the determination result in discharge, the employee may file a
grievance within five (5) calendar days after notice. A hearing before the
President and/or his representatives will be held and decision rendered within
ten (10) calendar days. This decision may be appealed to arbitration and
heard in the manner set forth above. Additionally, the Arbitrator will not
have jurisdiction to modify the degree of discipline imposed should it be
determined that the employee has been suspended or discharged for proper
cause.
ARTICLE 8
SAFETY AND HEALTH
8.1 The safety and health of all employees is of great concern to the
Company and Union of CP Industries, Inc. and all employees will accept
"safety" as a part of their individual responsibility.
8.2 The Company will make all necessary repairs and adjustments to assure
the safety of all its employees and shall comply with all applicable State and
Federal regulations regarding job safety and health. The Union agrees to
cooperate fully in providing a safe work environment.
8.3 Protective devices and other equipment deemed necessary by Management
to protect employees from accidents and health hazards shall be provided by
the Company. On July 1, 1997 and July 1, 1999, each employee, other than
probationary employees, who is required to wear safety shoes or metatarsals
will be provided an allowance of $40.00 to purchase safety shoes for wear at
the plant.
8.4 The Company welcomes suggestions from all employees or from the Union
which offer practical and feasible ways of improving plant safety. An
employee may submit safety suggestions through his immediate supervisor.
8.5 The Company reserves the right to adopt reasonable plant rules and may
impose appropriate discipline for the violation of such rules. Employees of
CP Industries must recognize that compliance with safety rules and regulations
is a condition of employment. To be effective, all employees must be
constantly on the lookout for any condition or action which might be unsafe or
careless. Both the Union and the Company agree to promote all rules necessary
to insure safety on the job.
8.6 Both the Company and the Union agree that failure to report accidents,
even if minor in nature, can result in a loss of a life or limb to other
workers and also disrupt the efficient operation of the plant.
8.7 Consequently, employees are required to immediately report to their
supervisor any accident or injury, major or minor, which may occur to them.
If then directed by his supervisor, the employee will report immediately for
medical treatment.
8.8 A Joint Union - Management Safety and Health Committee will be
established.
<PAGE>
<PAGE>46
ARTICLE 9
HOURS OF WORK
9.1 This Article defines the normal hours of work and shall not be
construed as a guarantee of hours per day or per week, or as a guarantee of
any amount of pay, or as a limitation on hours of work in a day or week.
9.2 The normal work day shall consist of eight (8) hours in a twenty-four
(24) hour period with five (5) consecutive workdays constituting a normal work
week. While forty (40) hours shall be considered a normal pattern, the
Company may reduce the work week to thirty-two (32) hours at its option.
9.3 The eight (8) hours work day shall be consecutive with the following
conditions applicable: (1) A ten (10) minute coffee break at 9:00 AM;
(2) a twenty (20) minute lunch break at Noon, and (3) employees may leave
their respective work areas for wash-up no earlier than fifteen (15) minutes
to the hour at the end of the scheduled turn and may exit the plant no earlier
than seven (7) minutes to the hour. The parties recognize that in the past
there has been abuse of these privileges; in this light, the Union
representatives and all employees pledge adherence to these regulations and
will confine non-work time to the limitations so stated. If it is determined
that abuse persists, the privilege of the fifteen (15) minute wash-up time
will be revoked and employees will work to the end of the hour of the
scheduled turn.
9.4 An employee who reports for work as scheduled and is sent home for
lack of work shall receive four (4) hours pay at his standard hourly wage rate
provided he was not otherwise notified not to report. The Company may assign
the employee to other work for which he is qualified in lieu of being
released. If the employee refuses the assignment, or lack of work is due to
an emergency such as fire, flood, explosion, storm, utility failure,
mechanical breakdown, work stoppage, labor dispute , act of God, or for any
reason or condition beyond control of the Company, no compensation is due.
9.5 An employee who is called for jury service or subpoenaed as a witness
shall be excused from work for the days on which he serves. Service includes
required reporting whether or not he is used. In such case, the employee will
be paid the difference between the amount paid by the court and his standard
hourly wage rate for eight (8) hours for each day. The employee must present
proof of service and of the amount of pay received.
9.6 When death occurs to an employee's legal spouse, mother, father,
mother-in-law, father-in-law, son, daughter, brother, sister, grandparents or
grandchildren (including stepfather, stepmother, stepchildren, stepbrother or
stepsister when they have lived with the employee in an immediate family
relationship), an employee, upon request, will be excused and paid for up to a
maximum of three (3) scheduled shifts (or for such fewer shifts as the
employee may be absent) which fall within a three (3) consecutive calendar day
period; provided, however, that one such calendar day shall be the day of the
funeral and it is established that the employee attended the funeral. Payment
shall be eight (8) times his average straight-time hourly earnings (as
computed for jury pay). An employee will not receive funeral pay when it
duplicates pay received for time not worked for any other reason. Time thus
paid will not be counted as hours worked for purposes of determining overtime
or premium pay liability.
<PAGE>
<PAGE>47
ARTICLE 10
OVERTIME AND HOLIDAYS
10.1 Overtime at the rate of 1-1/2 times the regular rate of pay shall be
paid for:
A. Hours worked in excess of eight (8) hours in a workday or forty (40)
hours in a week.
B. Hours worked on a sixth or seventh workday when work was performed on
five (5) other workdays in a week.
C. Hours worked on a sixth or seventh workday of a seven (7) consecutive-
day period during which the first five (5) days were worked, whether or not
all of such days fall within the same payroll week except as mutually agreed.
Overtime must be claimed by notification of the employee's foreman within a
week after the sixth or seventh day is worked.
10.2 Payment of overtime rates shall not be duplicated for the same hours
worked.
10.3 The designated holidays are: January 1, Good Friday, Memorial Day,
July 4th, Labor Day, Thanksgiving Day, the day after Thanksgiving Day, the day
before Christmas Day and Christmas Day. If the calendar holiday is on Sunday,
the holiday shall be the following Monday.
10.4 For hours worked on any designated holiday, an overtime rate of
2-1/2 times an employee's regular rate of pay will be paid.
10.5 An eligible employee who does not work on a designated Holiday will be
paid eight (8) times his current hourly vacation rate. If, however, he is
scheduled to work and fails to report or perform work, he will be ineligible
for pay unless his absence was due to sickness or because of death in the
immediate family (parents including in-laws, children, brother, sister, spouse
and grandparents) or because of similar good cause.
10.6 An eligible employee is one who: (a) Has completed thirty (30) turns
of work since his last hire; (b) Performs work or is on vacation in the
payroll period in which the Holiday occurs; or if he is laid-off for such
payroll period, performs work or is on vacation in both the payroll period
preceding and the payroll period following the payroll period in which the
Holiday occurs; and (c) Works as scheduled or assigned both on his last
scheduled workday prior to and on his first scheduled workday following the
Holiday unless he has failed to so work because of sickness or because of
death in the immediate family or because of similar good cause.
10.7 When a Holiday occurs during an eligible employee's scheduled
vacation, he shall be paid for same in addition to his vacation pay. Such
payment shall also apply to (1) an employee whose vacation has been scheduled
prior to his layoff and who thereafter is laid off and takes his vacation as
scheduled, or (2) an employee who is not at work at the time his vacation is
scheduled, but who thereafter returns to work and is then absent from work
during a Holiday week because of his scheduled vacation. However, an employee
who is not at work at the time of scheduling his vacation and is not working
at the time his vacation commences, is not eligible for Holiday pay for such
Holiday occurring during his vacation.
<PAGE>
<PAGE>48
ARTICLE 11
VACATIONS
11.1 Eligible employees shall receive vacation in accordance with the
following:
<TABLE><CAPTION>
Years of Continuous Service Weeks of Vacation
<C> <C>
1 but less than 3 1
3 but less than 10 2
10 but less than 17 3
17 but less than 25 4
25 or more 5
</TABLE>
Vacations will be taken on a calendar week basis.
11.2 Continuous service is that time calculated pursuant to Article 12 -
Seniority, except that there shall be no accumulation of service in excess of
the first two (2) years of any continuous period of absence on account of
layoff or physical disability (compensable disability excepted, as provided in
Article 12) in the calculation of service for vacation eligibility.
11.3 To be eligible, an employee must not have been absent from work for
six (6) consecutive months or more in the preceding calendar year and must
work some time in current calendar year. However, any period of absence while
on vacation or due to a compensable disability in the year in which he
incurred such disability or while in military service in the year of his
reinstatement to employment, shall be deducted in determining the length of a
period of absence from work.
11.4 An employee forfeits any vacation benefits if he quits, retires, dies
or is discharged prior to January 1 of the vacation year.
11.5 Vacations will, so far as practicable, be granted at times most
desired by employees (longer service employees being given preference as to
choice); but the final right to allot vacation periods and to change such
allotments is exclusively reserved to the Company in order to insure the
orderly operation of the plant.
11.6 Vacations may be scheduled throughout the calendar year; however, the
Company may designate certain weeks as vacation shutdown periods.
11.7 Each employee granted a vacation under this Article will be paid at
his average rate of earnings per hour for the first two of the last four
closed and calculated pay periods worked by the employee preceding the first
week of the actual vacation period. Hours of vacation pay for each vacation
week shall be the average hours per week worked by the employee in the first
two of the last four pay periods worked by the employee preceding the first
week of the actual vacation period, but not less than forty (40) hours per
week nor more than forty-eight (48) hours per week.
11.8 The average rate of earnings per hour shall be computed by:
A. Totaling pay received for all hours worked (total earnings, excluding
premium for overtime, holiday, Sunday and shift differential) and pay for
unworked holidays, and<PAGE>
<PAGE>49
B. Dividing such earnings by the total of hours worked and unworked
holiday hours which were paid for.
ARTICLE 12
SENIORITY
12.1 The parties recognize that promotional opportunity and job security in
event of promotions, decrease of forces, and recalls after layoffs should
increase in proportion to length of continuous service.
12.2 It is understood that the Manning Agreement will provide the
guidelines for administration of work assignments and mobility of the work
force to the extent stated therein. The Manning Agreement is Appendix B. The
Production Engineering Planning Department has two separate units.
12.3 Plant continuous service shall be used for all purposes in which a
measure of continuous service is utilized, except vacation preference purposes
where continuous combined corporation service will apply. In the event two or
more employees have identical plant continuous service, the tie will be broken
on the basis of continuous combined corporation service. If they are the
same, the tie will be resolved with the employee having the earliest birth
date being recognized as the senior employee.
12.4 It is understood and agreed that in all cases of:
A. Promotion the following factors as listed below shall be considered;
however, only where factors "1" and "2" are relatively equal shall continuous
service be the determining factor:
1. Ability to perform the work,
2. Physical fitness,
3. Continuous service.
B. Decrease in forces or recalls after layoffs the following factors as
listed below shall be considered; however, only where both factors "1" and "2"
are relatively equal shall continuous service be the determining factor:
1. Ability to perform the work,
2. Physical fitness,
3. Continuous service.
12.5 Continuous service shall be calculated from date of first employment
or reemployment following a break in continuous service. Continuous service
shall be broken by:
A. Quit
B. Discharge, provided that if the employee is rehired within six (6)
months the break in continuous service shall be removed.
C. Termination in accordance with Article 14 - Severance Allowance.
D. Absence in excess of two years, except as provided in 12.7 and 12.8
below.
12.7 If an employee is absent because of layoff or physical disability in
excess of two (2) years, he shall continue to accumulate continuous service
during such absence for an additional period equal to (i) three years, or (ii)
the excess, if any, of his length of continuous service at commencement of
such absence over two years, whichever is less. Any accumulation in excess of<PAGE>
<PAGE>50
two years during such absence shall be counted, however, only for purposes of
this Article and shall not be counted for any other purpose under this
agreement. In order to avoid a break in service within the above period after
an absence in excess of two years, an employee absent because of layoff or
physical disability must report for work promptly upon termination of either
cause, provided, in the case of layoff, the Company has mailed a recall notice
to the last address furnished to the Company by the employee.
12.8 Absence due to a compensable disability incurred during course of
employment shall not break continuous service, provided such individual is
returned to work within thirty (30) days after final payment of statutory
compensation for such disability or after the end of the period used in
calculating a lump-sum payment.
12.9 New employees and those hired after a break in continuity of service
will be regarded as probationary employees for the first five hundred and
twenty (520) hours of actual work and will receive no continuous service
credit during such period. Probationary employees may be laid off or
discharged as exclusively determined by Management. Probationary employees
continued in the service of the Company subsequent to the first five hundred
and twenty (520) hours of actual work shall receive full continuous service
credit from date of original hiring.
12.10 When a decrease in force continues to the point at which a grievance
committeeman would otherwise be laid off, he shall be retained in active
employment (for such hours per week as may be scheduled for an employee on the
job to which he is assigned) for the purpose of continuity in the
administration of this Agreement in the interest of employees and the Company
so long as a work force is at work in the plant area which he represents on
the grievance committee. In any event, no grievance committeeman shall be
retained in employment under this paragraph unless work which he can perform
is available in the plant area which he represents on the grievance committee.
12.11 The principles set forth in the preceding paragraph shall apply on a
plant-wide basis to employees who hold the following office: President or
Vice-President. This applies only if not in conflict with the National Labor
Relations Board's ruling. When there are not sufficient jobs available to
provide employment in accordance with both this paragraph and the preceding
paragraph, priority shall be given to employees covered by the preceding
paragraph.
12.12 The Company shall make available for review by the local union
concerned lists showing the relative continuous service of each employee in
each seniority unit. Such lists shall be revised by the Company from time to
time, as necessary, to keep them relatively up-to-date. The seniority rights
of individual employees shall in no way be prejudiced by errors, inaccuracies,
or omissions in such lists.
12.13 The procedure outlined below will govern assignments to permanent job
vacancies if and when Management determines that such a vacancy exists and is
to be filled:
Within a given line of progression, a vacancy within such line
would be filled by employees occupying jobs immediately below that
job, by job class, on the basis of plant service. Then, to fill
the ensuing vacancy in that job, employees in the next lower level
job would be offered promotion. This procedure would continue
until there remained a vacancy at the entry level job. At this<PAGE>
<PAGE>51
point, for departments where more than one line of progression exists,
employees in other lines may submit applications for the posted entry
level job. In the end, a department entry level job would be filled
on a plant-wide basis. In department where all jobs are part of one
line of progression, the entry level job will be posted and filled
on a plant-wide basis. An entry level job will be posted for a
period of seven (7) calendar days. Trade and craft vacancies will
be posted for consideration on a plant-wide basis. Vacancies not
filled within 45 days will be reposted. A successful bidder may
decide to return to his former incumbent position within 45 days
and such return will be without loss of his seniority standing.
In such case, other applicants will be considered.
ARTICLE 13
MILITARY SERVICE
13.1 Employees who enter military service shall receive all rights and
privileges accorded them by the laws of the United States.
13.2 Employees called for encampment of the National Guard or Reserve shall
receive the difference in their service pay and average rate of earnings (as
calculated for vacation pay) for hours they would have worked for up to a
maximum of two (2) weeks per year.
ARTICLE 14
SEVERANCE ALLOWANCE
14.1 If the Company, in its sole discretion, decided to permanently close
the plant or a department thereof, an employee with three (3) or more years of
continuous Company service whose employment is terminated because he was not
entitled to nor offered other employment shall be eligible for severance
allowance in accordance with the following scale:
<TABLE>
<CAPTION>
Continuous Company Service Weeks of Severance Allowance
<C> <C>
3 years but less than 5 years 4
5 years but less than 7 years 6
7 years but less than 10 years 7
10 years or more 8
</TABLE>
14.2 A week's severance allowance shall be the employee's vacation rate as
calculated pursuant to Article 11. Payment shall be made in a lump sum at the
time of termination and acceptance of same shall terminate employment and
continuous service for all purposes.
14.3 An employee who is offered employment in another department of the
plant shall not be entitled to severance allowance. If, however, he transfers
and such transfer results directly in the permanent displacement of some other
employee, the latter shall be eligible for severance allowance provided he
otherwise qualifies.
14.4 Severance allowance shall not be duplicated for the same severance and
any payment received from other sources shall be deducted from the amount to
which the employee may be entitled under this article.<PAGE>
<PAGE>52
14.5 An employee whose employment would otherwise have been terminated may
elect to be placed on layoff for thirty (30) days during which time he shall
decide whether to remain on layoff or take severance allowance. If he elects
to continue on layoff, severance allowance is permanently waived. Moreover,
any SUB payments received during this time shall be deducted from any
severance allowance to be paid.
ARTICLE 15
RATES OF PAY
15.1 The standard hourly wage scale of rates for the respective job classes
shall be those set forth in Appendix C and C-1 and shall continue in effect
without change until the expiration date of this Agreement.
15.2 The starting rate for a newly hired employee will be $2.50 per hour
less than the established rate for the particular job to which he is assigned.
This rate will remain in effect for the first 2080 hours of work.
15.3 No basis shall exist for an employee to allege that a wage-rate
inequity exists and no complaint or grievance on behalf of an employee
alleging a wage-rate inequity shall be initiated or processed during the terms
of this Agreement.
15.4 Notwithstanding any provisions of this Article, errors in application
of rates of pay shall be corrected.
15.5 The Company will not establish performance standards for nonincentive
jobs, except as such jobs are covered by incentives.
15.6 For hours worked on the afternoon shift there shall be paid a premium
rate of $.30 per hour. For hours worked on the night shift there shall be
paid a premium rate of $.45 per hour. Shifts are identified as follows:
Day Shift - Turns starting between 6:00 AM and 8:00 AM inclusive.
Afternoon Shift - Turns starting between 2:00 PM and 4:00 PM inclusive.
Night Shift - Turns starting between 10:00 PM and 12 midnight inclusive.
15.7 Shift differential shall be included in the calculation of overtime
compensation but shall not be included in the base hourly rate for calculating
incentive earnings.
15.8 An employee shall be paid a premium of 50% based on his regular rate
of pay for all hours worked on Sunday which are not paid for on an overtime
basis.
15.9 Existing practices and procedures governing the administration of
incentive applications and job descriptions and classifications will remain in
effect for the duration of this Agreement unless modified by mutual consent.
However, as set forth in Appendix D, employees covered by the identified
indirect incentive applications will be paid the reference average rate.
ARTICLE 16
TERMINATION
This agreement shall become effective June 1, 1996, and remain in force until
Midnight, May 31, 2001 and shall thereafter continue in force from year to<PAGE>
<PAGE>53
year unless either party desires to modify the terms. The party desiring the
modification must notify the other party in writing not less than sixty (60)
days prior to the expiration date of this Agreement, or not less than sixty
(60) days prior to an anniversary date hereof. Should either party serve such
notice, a joint conference shall convene not later than thirty (30) days prior
to the expiration date in the year in which the notice given. Notice shall be
by registered mail to the other party.
<PAGE>
<PAGE>54
IN WITNESS WHEREOF, and intending to be legally bound hereby, the proper
and duly authorized officers of the Company and the Union have executed
this Agreement effective this date and year June 1, 1996
--------------------------------
UNITED STEELWORKERS OF
CP INDUSTRIES, INC. AMERICAN AFL-CIO-CLC
- - --------------------------------- ---------------------------------
Jack T. Croushore, President George F. Becker, Int'l President
- - --------------------------------- ---------------------------------
C. Herbert Ellis, Vice President Leon Lynch, Vice President
Human Resources Human Affairs
- - --------------------------------- ---------------------------------
Roger L. Seese, Controller Leo W. Gerard, Sec./Treas.
- - --------------------------------- ---------------------------------
Kevin P. Collins, Vice President Richard H. Davis, Vice President
Business Development Administration
---------------------------------
Andrew V. Palm, Director
District 10
---------------------------------
Dennis R. Fleming, Staff Rep.
USWA - LOCAL UNION 1514 (O&T)
---------------------------------
Walter N. Grimes, President
---------------------------------
Gerald R. Robinson, Vice President
---------------------------------
Edward T. Aaron, Jr., Rec. Secretary
---------------------------------
James McLaughlin, Grievance Comm.
---------------------------------
Samuel Zenobi, Grievance Comm.
<PAGE>
<PAGE>55
APPENDIX A
LETTER OF AGREEMENT ON MISCELLANEOUS MATTERS
June 4, 1992
Mr. Richard Pastore
Staff Representative
United Steelworkers of America
Dear Mr. Pastore:
This will confirm our understanding and agreement that the following matters
were resolved as stated during the 1992 negotiations on behalf of USW Locals
#1514 (hourly) and #3330 (salary):
1. Appendix D of the hourly 6/1/87 Agreement is modified as follows: Pay
performance for Plan 4650-01 (Tool Grinders) is 114% and Plan 4900-03
(Heavy Forge) is 117%.
2. Appendix D of the salary 6/1/87 Agreement is modified to state the
Service Bonus Plan provisions will remain in place for the duration of
the 6/1/92 Agreement.
3. The terms and conditions of the SUB plan that previously existed will
remain in effect.
4. The parties agree to meet to explore the feasibility of developing and
installing a gain-sharing plan.
5. For retirements after Sept. 1, 1992, the minimum pension formula will
be increased by $1.00 for each year of service worked as a CP
Industries, Inc. employee, i.e. on or after August 1, 1986.
6. The parties recognize the "American With Disabilities Act" becoming
effective 7/26/92 and pledge support for and conformance with the
principles and intent of this legislation.
Sincerely,
(Signed)
---------------------------------
C.H. Ellis, Vice President
Human Resources and
Administrative Services
CONFIRMED:
(Signed)
- - ---------------------------------
Richard Pastore
USW Staff Representative
<PAGE>
<PAGE>56
APPENDIX B
MANNING AGREEMENT
The parties recognize that existing narrow job descriptions
necessarily limit the scope of employees' work activity; the need to revise
manning procedures to permit more flexibility in job assignment is evident.
To this end, the parties agree that job combinations will occur and employee
utilization will be broadened. In order to realize this expansion of work
function and overlapping of assignments, the parties will address jobs
performed by CP Industries, Inc. employees. As those employees terminate
(defined as quit, retire, die), functions may be combined with other jobs as
determined by Management. Input from the Union representatives with respect
to the most efficient manning arrangement will be sought prior to a pending
combination. It is understood that the ability to combine work functions is
at the discretion of Management; however, should Management decide that a
replacement in kind is needed, those other employees on layoff who still
retain recall rights will be considered prior to seeking new hires.
It is agreed and understood that for a given week, Management will
develop a schedule, placing recognized incumbents on a job if it is reasonably
anticipated that performance of such work functions will be required. It is
expected that these identified employees will work on scheduled jobs during
the week as well as be available for reassignment as the need exists. This
mobility is not subject to question during the week and only an appropriate
challenge may be lodged alleging a continuing violation or abuse of the intent
of the system after initial discussion by the parties to air the concern.
Management will, in the course of reviewing anticipated work and
related manning, consider the respective seniority status of a department's
employees: however, it is recognized that where junior-in-service employees
hold incumbency on certain primary, critical jobs, those individuals may work
a portion of the time on the scheduled job and then may be reassigned for the
duration while senior employees are on layoff.
The parties agree that for purposes stated herein, there shall exist
four (4) departments: (A) Cylinder Manufacturing, (B) Maintenance, (C) Stores,
and (D) Quality Control. The latter department will still retain two (2)
separate units (Metallurgical Lab and Inspection) for force reduction purposes
only. The Company's intention is to reassign within the department as the
needs dictate, avoiding the crossing of departmental lines. There could be
exceptions, however, depending on the circumstances; e.g. should a given work
situation arise during a week where a need exists to get a particular job done
and available departmental employees are being fully utilized, the options may
be several: (1) A Management decision to postpone the job; (2) Use overtime
to complete within the week; (3) With the approval of the Chairman or
Secretary of the Grievance Committee, use employees from other departments;
(4) Some combination of above.
<PAGE>
<PAGE>57
Standard Hourly Wage Scale
Appendix C (Non-Incentive jobs)
Job Effective Effective Effective Effective Effective
Class 6/1/96 6/1/97 6/1/98 6/1/99 6/1/00
1-2 $13.245 $13.745 $14.245 $14.745 $15.345
3 $13.392 $13.892 $14.392 $14.892 $15.492
4 $13.539 $14.039 $14.539 $15.039 $15.639
5 $13.686 $14.186 $14.686 $15.186 $15.786
6 $13.833 $14.333 $14.833 $15.333 $15.933
7 $13.980 $14.480 $14.980 $15.480 $16.080
8 $14.127 $14.627 $15.127 $15.627 $16.227
9 $14.274 $14.774 $15.274 $15.774 $16.374
10 $14.421 $14.921 $15.421 $15.921 $16.521
11 $14.568 $15.068 $15.568 $16.068 $16.668
12 $14.715 $15.215 $15.715 $16.215 $16.815
13 $14.862 $15.362 $15.862 $16.362 $16.962
14 $15.009 $15.509 $16.009 $16.509 $17.109
15 $15.156 $15.656 $16.156 $16.656 $17.256
16 $15.303 $15.803 $16.303 $16.803 $17.403
17 $15.450 $15.950 $16.450 $16.950 $17.550
18 $15.597 $16.097 $16.597 $17.097 $17.697
19 $15.744 $16.244 $16.744 $17.244 $17.844
20 $15.891 $16.391 $16.891 $17.391 $17.991
21 $16.038 $16.538 $17.038 $17.538 $18.138
22 $16.185 $16.685 $17.185 $17.685 $18.285
23 $16.332 $16.832 $17.332 $17.832 $18.432
24 $16.479 $16.979 $17.479 $17.979 $18.579
25 $16.626 $17.126 $17.626 $18.126 $18.726
<PAGE>
<PAGE>58
Standard Hourly Wage Scale
Appendix C-1 (Incentive Jobs)
Job Calculation Effective Effective Effective Effective Effective
Class Rate 6/1/96 6/1/97 6/1/98 6/1/99 6/1/00
1-2 $4.600 8.645 9.145 9.645 10.145 10.745
3 $4.719 8.673 9.173 9.673 10.173 10.773
4 $4.838 8.701 9.201 9.701 10.201 10.801
5 $4.957 8.729 9.229 9.729 10.229 10.829
6 $5.076 8.757 9.257 9.757 10.257 10.857
7 $5.195 8.785 9.285 9.785 10.285 10.885
8 $5.314 8.813 9.313 9.813 10.313 10.913
9 $5.433 8.841 9.341 9.841 10.341 10.941
10 $5.552 8.869 9.369 9.869 10.369 10.969
11 $5.671 8.897 9.397 9.897 10.397 10.997
12 $5.790 8.925 9.425 9.925 10.425 11.025
13 $5.909 8.953 9.453 9.953 10.453 11.053
14 $6.028 8.981 9.481 9.981 10.481 11.081
15 $6.147 9.009 9.509 10.009 10.509 11.109
16 $6.266 9.037 9.537 10.037 10.537 11.137
17 $6.385 9.065 9.565 10.065 10.565 11.165
18 $6.504 9.093 9.593 10.093 10.593 11.193
19 $6.623 9.121 9.621 10.121 10.621 11.221
20 $6.742 9.149 9.649 10.149 10.649 11.249
21 $6.861 9.177 9.677 10.177 10.677 11.277
22 $6.980 9.205 9.705 10.205 10.705 11.305
23 $7.099 9.233 9.733 10.233 10.733 11.333
24 $7.218 9.261 9.761 10.261 10.761 11.361
25 $7.337 9.289 9.789 10.289 10.789 11.389
<PAGE>
<PAGE>59
APPENDIX D
May 27, 1987
Mr. Howard J. Allen
President
Local #1514
United Steelworkers of America
Dear Mr. Allen:
This will confirm our understanding that effective 6/1/87, employees covered
by the following indirect incentive applications will be paid the average
index of pay performance so indicated. This rate, which is the average of
twenty six (26) pay periods from 4/6/86 through 4/4/87, will remain in effect
until changed by mutual agreement.
Plan 2952 (Assigned Maintenance) 114%
Plan 2953 (Central Shops) 114%
Plan 4650-01 (Tool Grinders) 107%
Plan 4900-01 (Cylinder Finishing) 117%
Plan 4900-02 (Roll Forge Finish) 114%
Plan 4900-03 (Heavy Forge) 109%
Sincerely,
(Signed)
---------------------------------
C. H. Ellis, Director
Human Resources &
Administration Services
CP Industries, Inc.
CONFIRMED:
(Signed)
- - ---------------------------------
H. J. Allen, President
USW Local #1514
<PAGE>
<PAGE>60
APPENDIX E
Mr. Howard J. Allen May 28, 1987
President
Local #3330
United Steelworkers of America
Dear Mr. Allen:
This will confirm our understanding and agreement that the following
modifications are made to existing benefit programs:
1. Effective February 1, 1988, for retirements on or after July 31, 1986,
increase minimum pension formula by $1.00. The percent pension
calculation method is eliminated.
2. Effective for retirements on or after January 31, 1987, increase
pension protection afforded short service employees by lowering
eligibility for deferred vested pension from 10 years to 5 years of
service.
3. Effective February 1, 1988, increase the minimum monthly surviving
spouse's benefit by $10.00 for surviving spouses of active employees
who die on or after July 31, 1986 and for the surviving spouses of
employees who retire on or after July 31, 1986 and who die thereafter.
4. Effective July 1, 1987, adopt pre-certification of inpatient
admissions and mandatory second surgical provisions.
5. Increase major medical deductible to $150 for individuals and $300 for
families.
6. Extend subrogation provisions applicable to dental benefits to all
health care benefits.
Sincerely,
(Signed)
---------------------------------
C. H. Ellis, Director
Human Resources and
Administrative Services
CP Industries, Inc.
CONFIRMED
(Signed)
- - ---------------------------------
H. J. Allen, President
USW Local #1514
<PAGE>
<PAGE>61
APPENDIX F
LETTER OF AGREEMENT - 1996
May 30, 1996
Mr. Dennis Fleming
Staff Representative
United Steel Workers of America
Dear Mr. Fleming:
In the interest of renewing our agreement effective June 1, 1996, the
following contract modifications are proposed:
1.) The Steel Workers' Select Blue POS 100 Plan with mail order
drug provisions will be implemented effective 8/1/96 for all CPI bargaining
unit employees. Existing dental and vision coverage will be retained.
2.) Each active employee, other than probationary employees, as of
6/1/96, will receive a gross amount of $500.00 on or before 7/1/96. Another
payment of $500.00 will be made in a similar manner in 1998.
3.) On July 1, 1997 and July 1, 1999, each employee, other than
probationary employees who is required to wear safety shoes will be provided
an allowance of $40.00 to purchase same.
4.) For retirements after September 1, 1996, the minimum pension
formula will be increased an additional $1.00 for each year of service as a CP
Industries, Inc. employee; i.e. on or after August 1, 1986.
For retirements after September 1, 2000, the minimum pension
formula will be increased an additional $1.00 for each year of service as a CP
Industries, Inc. employee; i.e. on or after August 1, 1986.
5.) For future retirements, the company will not use the USX
percent-calculated figure in determining the offset to be applied... the USX
minimum formula-calculated amount will be used.
6.) The amount of weekly Sickness & Accident benefits will be
$300.00 for payment after 6/1/1996.
7.) An increase in the hourly additive to the standard hourly wage
scale rate as follows:
6/1/96 --- $ .50
6/1/97 --- $ .50
6/1/98 --- $ .50
6/1/99 --- $ .50
6/1/00 --- $ .60
8.) This agreement is effective June 1, 1996 through May 31, 2001.
The above is contingent upon and in conjunction with an understanding
that any and all issues presented by the Union in the form of contractual
proposals, which have not been agreed to up to this point, are considered
withdrawn.
CONFIRMED Sincerely,
(Signed) (Signed)
- - --------------------------------- ---------------------------------
Dennis R. Fleming C. H. Ellis
VP Human Resources
& Administrative Services
<PAGE>
<PAGE>62
UNITED STEELWORKERS CP INDUSTRIES, INC.
OF AMERICA CHRISTY PARK PLANT
- - --------------------------------- ---------------------------------
George Becker, President Jack T. Croushore, President
- - --------------------------------- ---------------------------------
Richard H. Davis, Vice-President C.H. Ellis, Vice-President
Administration Human Resources
- - --------------------------------- ---------------------------------
Leon Lynch, Vice-President K.P. Collins, Vice-President
Human Affairs Business Development
- - --------------------------------- ---------------------------------
Leo W. Gerard, Secretary Roger L. Seese, Controller
- - ---------------------------------
Andrew V. Palm, Director
District #10
- - ---------------------------------
Dennis R. Fleming
Staff Representative
District #10
- - ---------------------------------
Walter N. Grimes
President
- - ---------------------------------
Gerald R. Robinson
Vice-President
- - ---------------------------------
James J. McLaughlin
Grievance Comm.
- - ---------------------------------
Edward T. Aaron, Sr.
Recording Secretary
- - ---------------------------------
Samuel J. Zenobi
Grievance Comm.
<PAGE>
<PAGE>63
AGREEMENT
Between
THE ALLIANCE MACHINE COMPANY
of Alliance, Ohio
and
LOCAL UNION NO. 2361
UNITED STEEL WORKERS
OF AMERICA
AFL - CIO. CLC
1996
<PAGE>
<PAGE>64
INDEX
SECTION PARAGRAPH
- - ------- ---------
AGREEMENT 1
ARTICLE 1 - UNION RECOGNITION
-----------------------------
1 UNION SHOP 2
2a PROBATION PERIOD 3
2b DISCHARGE 4
2c DISCRIMINATION 5
3 DUES 6
4 BULLETIN BOARDS 7
ARTICLE 2 - MANAGEMENT RECOGNITION
----------------------------------
1 MANAGEMENT DIRECTION 8
2 DISCIPLINARY ACTION 9
NUMBER OF COPIES 10
LENGTH OF TIME 11
3 DISCHARGE 12
FINAL DECISION 13
4a REPORT OFF 14
4b TIME ALLOWANCE 15
4c WORK FOR EMPLOYEE 16
5 MEDICAL REQUIREMENTS 17
6 UNION COOPERATION 18
7 RULES AND REGULATIONS 19
8 GENERAL TEMPORARY TRANSFER 20-23
ARTICLE 3 - SENIORITY
---------------------
1 PLANT SENIORITY 24
2 TEMPORARY EMPLOYEE 25
3 SENIORITY RECORDS 26
4 UNION OFFICER SENIORITY 27
5 UNION OFFICER LEAVE OF ABSENCE 28
6 SENIORITY TERMINATION 29
6a RESIGNATION 30
6b DISCHARGE 31
6c LAYOFF PERIOD 32
6d DISABILITY OR WORKERS' COMPENSATION 33
7 FORMER EMPLOYEE 34
8 TRANSFER NON-UNION 35
ASSIGNING TEMPORARY FOREMAN 36-44
ASSIGNING FOREMAN IN TRAINING 45-51
9 DUAL START EMPLOYEES 52
MEDICAL TIME SLIP FOR DUAL SENIORITY 53
10 LEAVE OF ABSENCE 54
FAMILY MEDICAL LEAVE ACT-LEAVE OF ABSENCES 54
11 MILITARY SERVICE DISABILITY 55
12 POST SENIORITY LIST 56
ARTICLE 4 - GRIEVANCE PROCEDURE
-------------------------------
1 GRIEVANCE DEFINED 57
FIRST STEP 58<PAGE>
<PAGE>65
SECOND STEP 59
THIRD STEP 60
FOURTH STEP 61
FIFTH STEP 62
2 GRIEVANCE COMMITTEE 63
2a TIME OFF TO ATTEND MEETINGS 64
2b TIME OFF TO DISCUSS GRIEVANCES 65
WHEN TO HOLD MEETINGS 66
3 TIME OFF FOR UNION MEETINGS 67
4 REPRESENTATION OF REPRIMANDS 68
5 TIME LIMITS 69
ARTICLE 5 - HOURS OF WORK
-------------------------
1 NORMAL HOURS 70
2 WORK WEEK 71
3 CHANGES 72
4 CALENDAR DAY 73
5 MINIMUM HOURS 74
6 CALL BACK HOURS 74
7 SHIFT PREFERENCE 76
DEPARTMENT OVERTIME AGREEMENT 77
8 OVERTIME DIVISION 78
9 ACCESS TO OVERTIME RECORDS 79
10 COFFEE BREAK 80
11 PAID 15 - MINUTE LUNCH BREAK 81-82
ARTICLE 6 - RATE OF PAY
-----------------------
1 WAGE RATES 83
2 SHIFT PREMIUM 84
3 REGULAR VACATION 85
4 PREMIUM PAY 86
4a OVERTIME IN EXCESS OF EIGHT HOURS 87
4b OVERTIME IN EXCESS OF FORTY HOURS 88
4c SATURDAY OVERTIME 89
5 PREMIUM PAY DOUBLE TIME 90
5a DOUBLE TIME 91
5b DOUBLE TIME IN ADDITION TO HOLIDAY PAY 92
6 DAILY AND WEEKLY 92
7a DESIGNATED PAID HOLIDAYS 93
7b CHRISTMAS WEEK SHUTDOWN 94
7c HOLIDAY PAY 95
7d EVIDENCE OF ABSENCE OR TARDINESS 96
7e HOLIDAY PAY FOR LAID-OFF EMPLOYEES 97
8 NATIONAL GUARD OR RESERVE TRAINING PROGRAM 98
9 RIOT PAY 99
10 JURY DUTY 100
SUBPOENAED/CIVIL MATTER 100
11 INJURY PAY 101
11 DOCTOR CALL FOR INJURY 101-102
PAY FOR APPEARANCE AT WORKER'S
COMPENSATION HEARING 103
12 ALLOWANCE FOR FUNERAL LEAVE 104
GRANDCHILD, STEP, AND IN-LAW FUNERAL LEAVE 105
13 WELDER ON PRE-HEATED 106
14 BLOOD DONATION 107
<PAGE>
<PAGE>66
ARTICLE 7 - VACATION
--------------------
1 ELIGIBILITY AND LENGTH OF VACATION 108
1 REGULAR VACATION 109
1 PERFECT ATTENDANCE 110
ADDITIONAL EARNED VACATION DAY 111
1 VACATION ELIGIBILITY 112-118
3 VACATION WAIVER 119
4 ILLNESS WAIVER 120
5 VACATION YEAR 121
6 VACATION PERIOD 122
7 PLANT SHUTDOWN 123
ARTICLE 8 - SAFETY & HEALTH
---------------------------
1 SAFETY PROVISIONS 124
COOPERATION 125
2 PROTECTIVE DEVICES 126
3 SAFETY COMMITTEE 127
4 COMMITTEE DUTIES 128-135
7 REGULAR SCHEDULED MONTHLY MEETINGS 136
ARTICLE 9 - APPRENTICE
----------------------
1 APPRENTICE PROGRAM 137
"CO-OP" EDUCATIONAL PROGRAM 138
1 MONITOR GRADING OF TESTS 139
2 APPRENTICE FAILURE 140
ARTICLE 10 - JOB BIDDING
------------------------
1a POSTING 141
1b AWARDING PREFERENCE 142
1c DECLINE OF JOB AWARD 143
JOB AWARDING 144
2 QUALIFYING 145
3a TEMPORARY TRANSFER BIDDING 146
3b OUT OF AREA BUMPING RIGHTS 147
3c LAYOFF 148
3i PERMANENT JOB 149
3ii TEMPORARY JOB 150
REPOSTING JOB 151
3d ELIMINATION OF JOB CLASSIFICATION 152
4 NO ELIGIBLE JOB BIDDERS 153
5 ELIGIBILITY FOR JOB BIDDING 154
5a PROBATIONARY EMPLOYEES 155
5b APPRENTICE OR TRAINING EMPLOYEES 156
5c PREVIOUSLY AWARDED JOB BID 157-162
5d TIME ALLOWANCE TO ACCEPT BID 163
6 EMPLOYEE ON VACATION 164
7 JOB POSTING DURING PLANT SHUTDOWN 165
ARTICLE 11 - LAYOFF
-------------------
1 LAYOFF PROVISION 166
2 ORDER OF REDUCTION 167-171
3 BUMPING RIGHTS 172-178
<PAGE>
<PAGE>67
3e CHRISTMAS SHUTDOWN-NO BUMPING RIGHTS
INTO MAINT. 179
4 RECALL 180-183
4iv NOTICE OF JOB 184-186
4c ERRORS IN RECALL 187
4d EFFICIENCY OF OPERATION AND SAFETY 188
5 EXTENSION OF RECALL 189-193
6 NOTIFICATION OF RECALL 194
7 PROPER EXERCISE OF SENIORITY 195
8 OVERTIME EQUALIZATION 196
ARTICLE 12 - EMPLOYEE BENEFITS
------------------------------
1 INSURANCE 197
1 WEEKLY DISABILITY 198
1 LIFE INSURANCE 199
2 401K PLAN 200-210
ARTICLE 13 - GENERAL PROVISIONS
-------------------------------
1 SEVERANCE ALLOWANCE 211
1a CONDITIONS OF ALLOWANCE 212
1b ELIGIBILITY 213
1c SCALE OF ALLOWANCE 214
1d CALCULATION OF ALLOWANCE 215
1e PAYMENT OF ALLOWANCE 216
2 STRIKES AND LOCKOUTS 217
3 COMPANY AGREEMENT 218
4 DURATION 219
5 NOTICE 220-221
EXHIBIT A
---------
JOB CLASS RATES BY JOB LEVEL 222
RATE PROGRESSIONS 223-230
RATE PROGRESSIONS - GRANDFATHERED 231-232
LETTERS OF UNDERSTANDING
------------------------
BEREAVEMENT PAY 233
BUMPING/LAYOFF PROCEDURE 234
RED CROSS TRAINING FOR BLOODBORN PATHOGENS 235
REMOVAL OF TWO (2) OCCURRENCES 236
SIDE SHIELD REQUIREMENT ON SAFETY GLASSES 237
TESTING FOR SKILLED POSITIONS 238
TRAINING 239
SECOND SHIFT EMPLOYEES ATTENDING UNION MEETINGS 240
A & B ASSEMBLERS 241
WELDER JOB BIDS FOR DEPT. CHANGES 242
COMMERCIAL DRIVERS LICENSE (CDL) 243
EXCUSED ABSENCE DUE TO ADVERSE WEATHER COND. 244
SUNDAY DOUBLE TIME PAY 245
<PAGE>
<PAGE>68
AGREEMENT
1 This Agreement is made at Alliance, Ohio on the 17th day of June
1996 by and between THE ALLIANCE MACHINE COMPANY of Alliance, Ohio and/or its
successors, hereinafter referred to as the Company and the UNITED STEELWORKERS
OF AMERICA, AFL - CIO on behalf of themselves and the members of LOCAL UNION
NO. 2361, hereafter referred to as the Union.
WITNESSETH:
That said Company and the said Union agree as follows:
ARTICLE 1, UNION RECOGNITION
2 Section 1. The Company recognizes the Union as the sole
collective bargaining agency for all production and maintenance employees,
with the exceptions of foremen, assistant foreman, salaried office or clerical
employees, plant guards, and engineering employees. Employees outside the
bargaining unit shall not perform work performed by the production or
maintenance employees, where it would have the effect of depriving such
employees of work.
Section 2.
3 (a) All present production and maintenance employees who are
members of the Union and all who become members, shall as a condition of
employment, maintain their membership in good standing with the Union for the
duration hereof. All such employees, if any, who are not members of the Union,
shall as a condition of employment, become members of the union not later
than 60 calendar days following the date of their employment or the date of
this contract, whichever be the later, and shall thereafter maintain their
membership in good standing in the Union for the duration hereof. During the
first 90 days they will not have any seniority rights and are not entitled to
any fringe benefits., i.e., holidays and vacations. They will receive
insurance benefits after 30 days of continuous employment.
4 (b) The Company will not be required to discharge an employee in
any instance where such discharge would result in a violation of the National
Labor Relations Act or any federal or state law.
5 (c) Discrimination because of race, color, age, sex, or national
origin is prohibited under Title VII of the Civil Rights Act of 1964.
6 Section 3. The Company for their Union member employees,
(pursuant to individually signed authorizations) shall deduct the initiation
fee in the case of new employees, and the monthly dues and assessments as
designated by the International Treasurer, from the first pay each month for
each member, and promptly remit the same to the International Secretary -
Treasurer of the Union. Dues for the current month will be deducted in the
case of a quit or discharge.
7 Section 4. The Company agrees to furnish Bulletin Boards in each
Work Area time clock location, to be used for the posting of official Union
Notices. They shall be limited to official Union announcements provided that
no material of a political, religious, or derogatory nature shall be placed on
these Bulletin Boards. All notices must be signed by an Union Official.
ARTICLE 2 - MANAGEMENT RECOGNITION
8 Section 1. The Management of the Company and the direction of
the working forces, including but not limited to the rights to hire, suspend,
transfer, or discharge for just and proper cause, and the right to relieve
employees of duties because of lack of work, or for other legitimate reasons, <PAGE>
<PAGE>69
subject to the seniority provisions hereinafter contained, is vested
exclusively in the Company. The Company will establish and post rules and
regulations relating to the conduct and discipline of the employees. Provided,
however, that the exercise of such rights shall not be used by the Company for
the purpose of discrimination against any member of the Union.
9 Section 2. Disciplinary action by the Company shall be governed
by the following procedure:
10 The Company shall prepare notices of disciplinary action in
triplicate, one copy to be served upon the employee, one copy to be served on
the President of the Union, and one copy shall be retained by the employing
Company. From the Date the Company knows of a problem it will have fourteen
(14) calendar days to issue a notice of disciplinary action or notice of
discipline pending.
11 The Company shall not include in its disciplinary action any slip
which is over 12 working months old.
12 Section. 3. Discharge: In the exercise of its rights as set
forth in Article 2, Section 1, the Company shall not pre - emptorily discharge
an employee. In all instances in which the Company may conclude that an
employee's conduct may justify suspension or discharge, he shall first be
suspended for a period not to exceed five (5) days. During the period of
initial suspension, the employee may, if he believes he has been unjustly
dealt with, request a hearing and a statement of the offense before the
Department Head with a Grievance Committeeman present or the General
Superintendent or the Manager of the plant with or without a member or members
of the Grievance Committee present, as he may choose. At such hearing, the
facts concerning the case shall be made available to both parties. After such
hearing, the Company may conclude whether the suspension shall be confirmed
into discharge or dependent upon the facts of the case that suspension may be
extended or revoked. If the suspension is revoked the employee shall be
returned to work with full rights and receive full compensation at his regular
rate of pay for the time lost, but in the event a disposition shall result in
either affirmation and extension of the suspension or discharge of the
employee, the employee may allege a grievance with regard thereto. The
grievance must be filed with his foreman, or in the foreman's absence, the
foreman's substitute, within ten (10) days after such disposition and the
grievance shall thereafter be handled commencing at Step 4 of the grievance
procedure.
13 Should it be determined by an arbitrator in accordance with the
Grievance Procedure, that the employee has been discharged unjustly, the
company shall reinstate the employee and pay full compensation at the
employee's regular rate of pay for the time lost, less any wages received from
other employment during that period and less any Unemployment Compensation for
the period determined by the arbitrator.
Section 4.
14 (a) An employee who is unable to report for work shall notify
the Company of the cause preventing him from working and shall advise said
Company how long he expects to be absent from work, in order that he may
temporarily be replaced in the work schedule, if the company finds it
necessary.
15 (b) The employee must report off, or tardy, before the
employee's shift starts, if possible, but must report off or tardy no later <PAGE>
<PAGE>70
than two (2) hours after shift starting time. Employee shall call 823-5279 to
comply with this regulation. The Company will take into consideration health
related emergencies that cause the employee to be hospitalized, circumstances
arising through no fault of the employee that are beyond the control of the
employee, and "Acts of God" preventing employees from complying with the two
hour limitation. Employees who are tardy must report to their foreman after
clocking in, but before beginning to work.
16 (c) The Company shall provide work for an employee who has
complied with the above reporting requirements or for an employee whose
tardiness is less than two (2) hours after shift starting time but not
required to provide work if the above reporting requirements are not complied
with or if the tardiness exceeds two (2) hours after shift starting time.
17 Section 5. An employee who is absent from his work for over
seven (7) calendar days, is required to present the Company a medical
certificate of a qualified physician, evidencing said employee's physical
fitness to return to work. Provided however, that should said employee during
any part of said absence be gainfully employed, then in such event, a medical
certificate referred to above shall not preserve his seniority. The Company
reserves the right to have an employee who seeks to resume his work referred
to the Company's medical representative, at the Company's expense, to
determine the question of physical fitness.
18 Section 6. The Union and the members thereof agree at all times
to cooperate to the fullest extent with the Company and the members agree to
perform their work to the end that the utmost efficiency in the manufacture of
the Company's products shall be obtained and promote the general interest of
the Company and its employees.
19 Section 7. The Union and members thereof agree to abide by all
the rules and regulations of the Company not in conflict with this Agreement.
Such rules and regulations are to be reasonable and applied reasonably, and
the Union reserves the right to challenge the reasonableness of the rules
and/or their application by way of the Grievance Procedure provided for in
this Agreement.
20 Section 8. Temporary Transfers:
The Company shall have the right to transfer individuals at their discretion
based on needs, for periods of sixty (60) days or less, as long as the
individual's pay is not reduced or his safety or the safety of others is in
question. If an individual is transferred into a higher paying classification,
he will be paid the minimum rate for that classification (without taking any
reduction) or if he had previously held that job he will be paid his previous
rate.
21 However, if the temporary transfer is less than two (2) days,
seniority will not necessarily be a consideration in who is transferred.
22 However, if the temporary transfer is over two (2) days, then the
Company will attempt to transfer the least senior employee in the department
that the individual is being transferred from. If the transfer is to a higher
paying job, consideration will be given to seniority as to who is to be
transferred. Consideration will also be given to production and in any event
the person being transferred must be capable of performing the work.
23 If an employee is working out of his job classification in a
lower classification and there is a need to temporary transfer someone into <PAGE>
<PAGE>71
his classification that person will be temporary transferred first.
ARTICLE 3 - SENIORITY
24 Section 1. It is agreed that an employee shall have plant wide
seniority computed from his last date of hire by the Company. Such seniority,
subject to the employee's ability to perform the work, shall govern in cases
of job bidding, layoff and recall, subject to the separate provisions of this
Agreement governing job bidding, layoff and recall. In the event an employee
is transferred from one job classification to another, he shall retain and
continue to be credited with his total plant - wide seniority from his last
date of hire by the Company.
25 Section 2. Any employee having less than ninety (90) calendar
days of continuous service with the Company shall be deemed to be a
probationary employee, and is entitled to no seniority rights. During the
period that an employee is probationary he shall be regarded as a temporary
employee and no grievances regarding his discharge from employment shall be
presented or processed. Probationary employees are subject to Article 5,
Section 7 (Shift Preference) after a maximum of (30) calendar days. If such
probationary employee is continued in employment after the expiration of the
90 day probationary period, his service shall date from the beginning of such
period. There shall be no obligation on the part of the Company to re - employ
a probationary employee who is discharged. laid off, or who resigned during
such a period.
26 Section 3. The Company will at all times maintain records as to
seniority of its employees, which records will be available for inspection by
the individual employee at reasonable and proper times.
27 Section 4. The Union President and the six (6) most senior
grievance men, two from each department, shall have seniority over other
employees in the event of layoffs or reduction in the working force within
their respective Areas as long as production is not affected. The Union
President will have plant wide seniority as long as he can perform the work
required or that's available.
28 Section 5. Any local Union officer shall be given upon his
request, a leave of absence not to exceed a period of three (3) years for the
purpose of working for the International Union, and during such period, his
seniority rights hereunder shall be maintained. Only one (1) employee at any
given time will be permitted to have such a leave of absence.
29 Section 6. Seniority shall terminate due to any of the following
reasons:
30 (a) resignation;
31 (b) discharge for reason;
32 (c) layoff for a period equal to his seniority at the time of
layoff, up to thirty - six (36) months maximum. If recalled during this
period, his seniority shall be deemed to have accumulated during such layoff.
33 (d) Physical disability or Worker's Compensation for periods of
36 months or longer will cause his seniority to be frozen at that point until
he returns to active employment. Any employee who is on Worker's Compensation
or Disability as of June 13, 1993 will have thirty - six (36) months before
his seniority is frozen.<PAGE>
<PAGE>72
34 Section 7. When former employees who have lost their seniority
thereunder are re - employed, their service shall be computed as though they
were new employees. However, if the company re-employs a former employee who
has lost their seniority under Article 3, Section 6. (c) who has fulfilled
their probationary period in Article 3, Section 2, then this employee will not
be considered a probationary or a temporary employee. The new seniority date
of a re-employed person previously losing their seniority under Article 3,
Section 6 will be set at 90 days prior to the re-hire date.
35 Section 8. In the event an employee is transferred to foreman or
assistant foreman which is directly under shop management, he shall, in the
event the Company transfers him back into the seniority unit, be subject to
the following: (i) He will retain and be transferred back with only the
seniority he had at the time he left the bargaining unit; (ii) He must be
transferred back within five (5) years of his original promotion; (iii) He
may be returned to the bargaining unit two (2) times within the five (5) year
period; (iv) He may not be transferred back to any job classification higher
than the one he held at the time he left the bargaining unit; (v) If any more
senior employee in that job classification is on layoff status, the employee
transferred back will also assume layoff status; (vi) Upon transfer back to
the bargaining unit he will be required to immediately pay the monthly Union
dues and assessments.
36 An employee who is assigned to a temporary foreman position shall
not cease to be a member of Local 2361 USWA, although assignment to such
position and the terms and conditions of employment applicable to the position
shall continue to be as determined by the company.
Such assignments shall be limited to:
37 a.The short term absence of a foreman for reasons of sickness,
jury duty, or vacation.
38 b.A foreman position resulting from increases in operating
requirements above normal levels.
39 c.An employee assigned as a temporary foreman on a weekly basis
will not work in the bargaining unit that week - vacation.
40 d.An employee assigned as a temporary foreman on a daily basis
will not work in the bargaining unit that day - jury duty and sickness.
41 e.During lay-off a temporary foreman will fall in line with his
seniority and will not have seniority over other employees in the bargaining
unit.
42 f.An employee assigned as a temporary foreman will not issue
discipline to other employees. He will not be called by either party in
grievance procedures or arbitration hearings to testify as a witness regarding
any events involving discipline which occurred while the employee was assigned
as a temporary foreman.
43 g.Temporary foreman's positions may be filled on a daily, weekly,
or monthly basis, by those employees who sign an annual sign-up form
indicating their desire, on a rotating basis, by seniority. The time limit for
such temporary foreman job will not be more than one (1) month maximum per
employee, starting with the first day of assignment and continuing for one (1)
month thereafter, unless the employee does not want the position anymore, or
the company is no longer in need of the employee in the position of temporary<PAGE>
<PAGE>73
foreman, in which case he will be transferred back to his bargaining unit job.
44 h.An employee assigned as temporary foreman will receive $.50/hr.
over the standard rate of the highest job classification that he supervises.
45 An employee who is assigned to a foreman in training position
shall not cease to be a member of Local 2361 USWA, although assignment to such
position and the terms and conditions of employment applicable to the position
shall continue to be as determined by the company.
Such assignments shall be listed to:
46 a.A foreman position resulting from increases in operating
requirements above normal levels.
47 b.An employee assigned as a foreman in training on a weekly basis
will not work in the bargaining unit that week - vacation.
48 c.During lay-off a foreman in training will fall in line with his
seniority and will not have seniority over other employees in the bargaining
unit.
49 d.An employee assigned as a foreman in training will not issue
dicipline to other employees. He will not be called by either party in
grievance procedures or arbitration hearings to testify as a witness
regarding any events involving dicipline which occurred while the employee
assigned as a foreman in training.
50 e.The time limit for such foreman in training job will not be
more than six months, starting with the first day of assignment and continuing
for six months, thereafter, unless the employee does not want the position
anymore; or the company is no longer in need of the employee in the position
of foreman in training, in which case he will be transferred back to his
bargaining unit job.
51 f.An employee assigned as foreman in training will receive
$.50/hr. over the standard rate of the highest job classification that he
supervises.
52 Section 9. When two or more employees start on the same day,
they shall be listed on the seniority lists in accordance to starting hour
with the Company. When two or more employees start on the same hour, the
Company will list the employee with the " Medical Report Acceptance Slip "
with the earlier date and time stamp as the more senior employee.
53 Where no medical time slip is available to determine seniority,
the Company shall revert to the time card to determine which employee rang in
first and he shall be listed as the more senior employee.
54 Section 10. Whenever the requirements of the plant will permit
an employee, upon written request and for reasons satisfactory to the Company,
may be granted a leave of absence for a limited time, not to exceed one
hundred eighty (180) days.
Such leave may be extended by mutual agreement between the Company and the
Union. The Company will notify the Union of leave of absence when granted.
Upon employee request for absences, that falls within the guidelines of the
Family and Medical Leave Act, employees may be granted leave of absences. All
Family and Medical Leave of Absences must meet the Alliance Machine Company's
Family and Medical Leave of Absence Policy.<PAGE>
<PAGE>74
55 Section 11. Any employee entitled to reinstatement under this
Section who returns with service connected disability incurred during the
course of his service shall be assigned to any vacancy which shall be suitable
to such impaired condition during the continuance of such disability;
provided, however, that such impairment is of such nature as to render the
veteran's returning to his own job or department onerous or impossible; and
provided further, that the veteran meets the minimum physical requirements.
56 Section 12. The Company will post a complete plant - wide
seniority list on all bulletin boards in each of the three Areas (Machine
Area, the Assembly Area, and the Structural Area) twice a year in January and
July.
ARTICLE 4 - GRIEVANCE PROCEDURE
57 Section 1. Should differences arise between the parties hereto
as to the meaning and application of this Agreement, there shall be no
suspension of work, either by direction or authorization of the Company or by
direction or authorization of the Union on account of such differences, but an
earnest effort shall be made by all parties to settle such differences
immediately in the following manner:
58 Step One: Between the employee who has been aggrieved, with or
without his Committeeman/Steward, and the employee's foreman or Company
representative.
59 Step Two: If the complaint has not been satisfactorily settled
at Step One, the complaint shall then be reduced to writing and signed by the
grievant, the grievance may then be presented to the foreman not later than
ten (10) working days after the occurrence of the event upon which the
complaint is based, or after the time the employee should have had reasonable
knowledge of such occurrence. The date on which the grievance is given to the
foreman shall be the filing date. The foreman shall be required to answer in
writing within ten (10) working days.
60 Step Three: If the answer obtained from the foreman is not
satisfactory to the grievant, the grievance may then be presented to the
foreman within ten (10) working days of the foreman's answer at Step Two.
Within ten (10) working days of the presentation of the rejected grievance to
the foreman, the Company shall set up a hearing with the grievant, his
Committeeman and/or Steward, the president of the Union or chairman of the
Grievance Committee. The Grievance Committeeman shall be determined by the
Union President or the Grievance Chairman. The Company's answer shall be
given within ten (10) working days of said meeting.
61 Step Four: If the decision of the Company under Step Three is
not satisfactory to the grievant, his Steward (if he chooses) and the
Grievance Committee shall within ten (10) working days request a hearing with
the International Representative and Representatives of the Company. The
Company and the International Representative shall set a hearing date within
twenty (20) working days of the presentation of the rejected grievance to the
foreman at this Step. The company representatives shall give their decision
within ten (10) working days after such hearing.
62 Step Five: In the event the dispute shall not have been
satisfactorily settled under the above Steps of the Grievance procedure, then,
upon written notice of either party served upon the other, after receipt of
the decision of the Company Representatives after the Step Four hearing, the
matter shall be appealed to an impartial arbitrator. Such written notice must<PAGE>
<PAGE>75
be served within thirty - two (32) calendar days after the receipt of the
decision of the Company Representative after the Step Four hearing in all
cases. The impartial arbitrator is to be selected by mutual agreement. In the
event the Company and the Union cannot mutually agree on the selection of an
arbitrator, a list of seven (7) arbitrators shall be requested from the
Federal Mediation and Conciliation Service; Request for list will not exceed
two (2). The expense of the arbitrator shall be borne equally by the Company
and Union. The arbitrator's decision must be based upon the express terms of
this Agreement, and he may not add to, subtract from, or modify such express
terms by implication or otherwise. The decision of the arbitrator reached
within the above authority shall be final and binding upon all parties.
63 Section 2. The Grievance Committee of the employing Company
shall consist of not less than three (3) nor more than six (6) employees of
said Company designated by the Union and divided as follows: Up to two (2)
from Structural Area, up to two (2) from Machine Area and up to two (2) from
Erection Area. Where Grievance Committeemen are not scheduled on a shift, the
Union will arrange with the Company to hold an election in the shop for a
steward who will serve only on that shift not having scheduled Grievance
Committeemen, Said Steward to be elected by the shift in the area which he is
to serve. In the event a steward leaves the shift or area he had been serving,
he immediately ceases to be a steward. There shall be no more than one (1)
steward per shift in the Structural Area, Machine Area, and Erection Area.
These men shall be afforded such time off without pay as may be required for
the following purposes:
64 (a) To attend meetings pertaining to discharge or other matters
which cannot be reasonably delayed.
65 (b) To present and discuss with persons hereinabove designated,
grievances or complaints in the manner set forth above.
66 Whenever possible, such meeting shall be held outside working
hours. It is furthered agreed that members of said Grievance Committee shall
be in compliance with Article 3, Section 4 and Article 7, Section 9a of the
Constitution of the International Union, United Steelworkers of America, AFL -
CIO dated September 21, 1978.
67 Section 3. Committeemen and Steward working the afternoon shift
shall be permitted time off, without pay, to attend Union meetings.
68 Section 4. An employee who feels he is being reprimanded
unjustly by a foreman may request and receive the representation of a
Committeeman or Steward from his area.
69 Section 5. The time limits herein are of essence, but can be
extended by mutual agreement between the parties on a given grievance. Any
grievance not filed or appealed within the established or extended time limits
shall no longer be processed as a grievance. Any answer from the Company not
received within the established or extended time limits shall be deemed a
granting of the grievance, but not thereby setting precedent.
ARTICLE 5 - HOURS OF WORK
70 Section 1. This section defines the normal hours of work and
shall not be construed as a guarantee of hours of work per day or week.
71 Section 2. The normal work week shall consist of five (5)
consecutive eight (8) hour days; starting with the shift change nearest to <PAGE>
<PAGE>76
12:00 p.m. Sunday. (For the purposes of this Agreement, the majority of the
hours worked on a regularly scheduled shift shall determine the day in
question.)
72 Section 3. Working hours, work days, or work week shall be
established by the Company, However if there is a permanent change in the
present starting time of the shifts, it will be by mutual agreement. The
Company will always reserve the right to add or delete shifts.
73 Section 4. A day may be a calendar day or any twenty - four (24)
hour continuous period. Starting time of employees shall not materially change
during the week, however, if the Company has a critical breakdown job that
requires a shift change during a given week the Union will make its best
effort to accommodate the needs of the Company.
74 Section 5. Employees required to report for work at the regular
starting time and prevented from performing services that day by reasons
solely within the control of the Company, shall be paid for actual time held,
but in no event shall be paid less than a minimum of four (4) hours at regular
rates.
75 Section 6. Minimum call - back time will be two (2) hours.
76 Section 7. Workers shall be given preference to work on either
first, second, or third shifts in accordance with their seniority status,
provided, however, the proper balance of skills, within each work
classification is maintained for efficient operation on each shift, as
determined by circumstances and the work load. If an employee has exercised
shift preference he must remain on that shift for the entire three (3) month
quarter beginning January 1, April 1, July 1, and October 1. Also any employee
has the option to exercise the above mentioned shift preference on (1) time at
any other time during the year.
77 Each department must have their own overtime agreement on how
overtime equalization is to be administered. These agreements will be posted
in the respective departments. These agreements will be in force during the
length of the Contract unless mutually agreed that it should be revised.
78 Section 8. Overtime: (i) Daily overtime in excess of eight
hours in any work day will normally be assigned to the employee in the job
classification who has been performing that work during that day. However, the
Company will attempt to equalize over the course of a calendar year such daily
over time within the job classification within those departments that allow
this type of scheduling of the available work. (ii) Saturday and Sunday
overtime: Saturday and Sunday overtime within an area that allows it will be
assigned and divided as equally as possible within that job classification in
those areas over the course of a calendar year. (iii) The employee assigned
to work overtime must in any case have the ability to perform the work as
demonstrated by that employee's past performance on the type of work the
overtime is being offered on. (iv) For equalization purposes, an employee
will be charged with all overtime made available to him. (v) When the Company
posts Saturday or Sunday overtime assignments, any employee who is unable to
accept that assignment must notify his foreman not later than the end of his
shift on the day of posting.
79 Section 9. Employees or Committeemen are entitled to reasonable
access to the overtime records for their job classification. The Company will
make available each quarter to the Committeeman from each Area a written list<PAGE>
<PAGE>77
of the running amount of overtime charged to each employee in that Area,
totaling the employee's amount of overtime worked, refused and assigned during
absence.
80 Section 10. One (1) ten (10) minute coffee break after two (2)
hours from start of shift, will be granted in all three Areas. However, the
past practice in the Machine Area of machines continuing to run during the
coffee break will continue.
81 Section 11. A fifteen (15) minute paid lunch break will be
granted in the Structural Area (2900), the Erection Area (3300), the Machine
Shop (3100), and the Maintenance Department (3200).
82 Unless the employee is scheduled for more than five (5) hours on
Saturday or Sunday, he will not receive a paid lunch.
ARTICLE 6 - RATE OF PAY
83 Section 1. For all eligible employees hereinafter during the
term of this Agreement, wages shall be as shown in Exhibit A.
84 Section 2. It is agreed that all employees working on the second
shift shall receive twenty cents ($.20) per hour, and employees working on the
third shift shall receive twenty-five cents ($.25) per hour as shift
differentials.
85 Section 3. Regular vacation pay is based on an eight (8) hour
day, computed on the current rate of pay for the job classification in which
the employee worked a majority of hours in the previous calendar year.
86 Section 4. Premium Pay: time and one - half shall be paid for
on the following basis:
87 (a) All overtime any employee works in excess of eight hours in
any twenty - four hour employee pay period.
88 (b) All overtime any employee works in excess of forty (40)
hours in any one week. Vacation days and holiday. Time off for compensable
injuries in the week they occur will count toward computing overtime.
89 (c) Saturday overtime will not be based on forty (40) hours but
rather five (5) consecutive work days or partial work days prior to Saturday.
90 Section 5. Premium Pay Double Time: Double time shall be paid
for on the following basis:
91 (a) Double time shall be paid for all work performed on Sunday
92 (b) Double time, in addition to Holiday Pay, shall be paid for
all work performed on Holidays designated in Section 7
Section 6. No employee shall be paid both daily and weekly
overtime for the same hours worked.
93 Section 7. Holiday Pay:
(a) Effective June 17, 1996, the designated paid holidays shall be New Year's
Eve, New Year's Day, Good Friday, Memorial Day, Fourth of July, Labor Day,
Thanksgiving Day, day after Thanksgiving, Christmas Eve, Christmas Day. These
Holidays will fall on the following dates:<PAGE>
<PAGE>78
Year 1 Year 2 Year 3
Fourth of July 07/04/96 07/04/97 07/03/98
Labor Day 09/02/96 09/01/97 09/07/98
Thanksgiving Day 11/28/96 11/27/97 11/26/98
Day After Thanks 11/29/96 11/28/97 11/27/98
Christmas Eve 12/24/96 12/24/97 12/24/98
Christmas Day 12/25/96 12/25/97 12/25/98
New Year's Eve 12/31/96 12/31/97 12/31/98
New Year's Day 01/01/97 01/01/98 01/01/99
Good Friday 03/28/97 04/10/98 04/02/99
Memorial Day 05/30/97 05/29/98 05/31/99
94 (b) The Company shall have the rights to schedule a Christmas
week shutdown. This schedule will be posted prior to April of the applicable
year whenever possible. The company will allow employees to schedule one (1)
week of their vacation on a daily basis so that some days may be used for the
Christmas week shutdown, if so scheduled. Employees will not be required to
schedule their regular vacation days to coincide with the Christmas shutdown.
However, if they do not, they will be required to take that time off without
pay.
95 (c) Whether or not work is performed on a holiday, employees
shall receive their straight time hourly rate of eight (8) hours of Holiday
Pay, provided the employee works the last scheduled work day prior to the
Holiday or the first scheduled work day following the Holiday.
96 (d) In the event appropriate evidence is submitted showing that
absence or tardiness from work prior to subsequent to the Holidays referred to
is occasioned by no fault of the employee in question or is the result of
actions beyond the control of said employee, the qualifying provisions may be
waived by the Company. The foreman's permission for an employee to work less
than either of the qualifying days shall entitle the employee to payment for
the holidays. An employee absent due to industrial injury shall receive pay
for the first Holiday following the injury, but shall not be eligible for
additional Holidays until he returns to work.
97 (e) Laid off employees will receive Holiday Pay for those
holidays falling within the first two (2) weeks of a layoff. Provided he has
worked his entire last scheduled work day prior to the Holiday. The only
exception to working the entire last day is the instance of an employee
missing part of that day due to an industrial injury. An employee will receive
Holiday Pay for the first Holiday falling during a period he is receiving
Sickness and Accident insurance benefits.
98 Section 8. In the event that any employee who is a member of the
National Guard or a member of any Reserve Training Program is called for his
regular training period, the Company will compensate said employee for the
difference between the amount paid said employee by the government and the
amount he otherwise would have earned during said period. This compensation
will be paid, however, on the basis of an eight (8) hour day, the number of
days the employee would have actually worked had he not been absent, but at no
time shall the compensation for absence because of military training for one
week exceed five (5) days, nor the maximum weekly hours exceed forty (40), nor
shall the total compensation for lost time because of absence due to military
training exceed ten (10) regular work days for any one period of training.
99 Section 9. Any Union employee being a member of the National <PAGE>
<PAGE>79
Guard or any other branch of the service, upon being called to duty in case of
a riot or other disorders, the Company will compensate the said employee for
the difference between the amount paid said employee by the government and the
amount which he would have earned during said period. This compensation will
be paid, however, on the basis of an eight (8) hour day, the number of days
the employee would have actually worked had he not been absent, but at no time
shall the compensation for absence exceed five (5) days, or the maximum weekly
hours exceed forty (40) hours. This provision will not exceed more than one
(1) week in any one year.
100 Section 10. In the event any employee is called for jury duty or
is subpoenaed to appear as a witness in a lawsuit other than one to which he
is a party, the Company will compensate employee time lost provided said
employee brings signed receipt from court that he did appear and for what
time. This compensation, however, will be paid on the basis of an eight (8)
hour day for the number of days the employee would actually have worked had he
not been called for jury or witness duty, but at no time shall the
compensation for one week of absence because of jury or witness duty exceed
five (5) days nor the maximum weekly hours exceed forty (40). It is agreed
further that any employee called for jury or witness duty on any day, and who
is excused from jury or witness duty during said day or portion of said day
shall immediately thereafter report to work at his regular employment for the
balance of said day, if his jury or witness duty on said day has not exceeded
one - half day. Employees on the second and third shift who are called for
jury or witness duty are to notify the Company of the weeks in which they are
to serve on jury or witness duty and the Company may, if advisable, shift
those employees to first shift to provide work on days which they are released
or served less than four hours. In the event an employee is subpoenaed by the
courts for a civil matter, the time missed will not be counted as an
occurrence provided the employee brings a signed receipt accounting for all
the time missed. Also if the employee is subpoenaed for a criminal matter, the
time will not be counted if he brings a signed receipt; as described above,
and if he is innocent of the charges. In both instances the receipt must be
presented to his foreman at the time he returns to work following the absence.
101 Section 11. Should the employee be so injured that it is
necessary for him to go to a doctor, and if after visiting the doctor he
returns to complete the balance of the shift, the time lost by him in going to
the doctor shall be treated as hours worked. Should the doctor provide the
employee with a written statement that return to work during the remaining
shift period is inadvisable and such statement is presented to his foreman,
then even though he does not work in the shift hours remaining after his
injury, such remaining shift hours, but only up to the eighth (8th) hour of
such shift, shall be treated as hours worked. This provision shall apply only
to the first visit to the doctor made on either the date of injury or on the
first day after the injury.
102 If an employee must return to the doctor for treatment of an on -
the - job injury and he must miss part of his shift in order to make this
appointment, he shall, if he notifies his foreman in advance, be excused and
will be paid for this portion of his shift as long as a form letter from the
Company has been verified by the doctor that he is unable to schedule the
employee at anytime after or before normal working hours or on a Saturday.
Also, if an employee is scheduled for an Independent Medical Exam by the
Company and in order to make that appointment he must miss part of his shift,
he will be paid for that portion of his shift.
103 An employee will be paid up to eight (8) hours at his regular <PAGE>
<PAGE>80
rate of pay for only the hours missed to attend the hearing while appearing at
his own Worker's Compensation hearings, but only if specific request for
appearance is received from the State agency.
104 Section 12. Allowance for Funeral Leave. When death occurs in an
employee's immediate family (i.e. employee's legal spouse, mother, father,
current mother - in - law, current father - in - law, son, daughter, brother,
sister, grandparent, step - parent, or step - child) an employee, upon
request, will be excused for up to three (3) consecutive scheduled work days
as fall either immediately before or on or immediately after the day of the
funeral. The employee shall receive pay for such excused scheduled shift, up
to a maximum of 8 hours, provided it is established that he attended the
funeral, unless such attendance is deemed impracticable. Payment shall be
eight times his basic hourly rate. An employee will not receive funeral pay
when it duplicates pay received for the time not worked for any other reason.
105 Subject to the same conditions as above, an employee, will be
excused on and receive pay for one (1) scheduled work day on the day of the
funeral of the grandchildren, current sister - in - law, current brother - in
- - - law, current son - in - law, current daughter - in - law, step brother, step
sister. Subject to the same conditions as above the employee will also be
excused without pay for up to two (2) scheduled work days as fall immediately
before or immediately after the day of the funeral.
106 Section 13. On weldments preheated above 225 degrees F, where
the welder is assigned to work directly over the preheated area, upon the
request of the welder, he will be changed after two (2) hours of such work and
be assigned other work. On weldments preheated above 150 degrees F, where the
welder is assigned to work inside the weldment, upon request of the welder he
will be changed after two (2) hours of such work and be assigned other work.
107 Section 14. Employees will be paid for time missed to donate
blood if they are on the first shift. The maximum amount of time paid will be
two (2) hours once a calendar year.
ARTICLE 7 - VACATIONS
108 Section 1 - Eligibility and Length of Vacation
1 or more yrs. (12 mos.) = 40 hrs. (1 week)
13 or more yrs. (36 mos.) = 80 hrs. (2 weeks)
10 or more yrs. (120 mos.) = 120 hrs. (3 weeks)
15 or more yrs. (180 mos.) = 160 hrs. (4 weeks)
109 Vacation may be requested on a day at a time basis if wanted. If
one or two days are being requested the employee must request 48 hours in
advance. If more than two days are being requested then the request must be
one week in advance.
110 Any employee who has perfect attendance in any 12 consecutive
working months will receive one additional day of vacation eligibility. The
only excused absences under this plan are the following:
1. Bereavement Leave, paid per contract
2. Jury Duty
3. Military Leave
4. Industrial Injury, day of injury only, one injury in a twelve month period<PAGE>
<PAGE>81
5. Tellers for International Election (President, Recording Secretary, and
Financial Secretary of the Local Union)
111 The additional vacation day may be taken in the calendar year it
was earned or the folliwing calendar year if the employee submits in writing
his desire to do so at the time he is notified of the additional vacation day.
112 To be eligible for a fully paid vacation, an employee must have
worked 1400 hours in the previous calendar year. In the event of layoff, sick
leave or personal leave of absence, an employee who has accumulated service
under the vacation schedule shall be paid pro rata for each hour worked in the
previous calendar year. Holiday and vacation days will be counted as hours
worked in this computation. Time off due to a workman's compensation injury
the year in which the injury occurs only, will be counted for the subsequent
year's vacation only.
113 Section 2. An employee who is discharged for cause prior to
December 31st shall not be entitled to vacation or vacation pay in the coming
year.
114 For each week of vacation entitlement the employee will receive
forty (40) hours pay computed at the current rate of pay for the job
classification in which the employee worked a majority of hours in the
previous calendar year.
115 As far as practical, the employees will be granted their vacation
time off at times they desire between January 1st and December 31st in
accordance with their seniority. In the event, the plant is shut down for the
vacation period, maintenance and inventory employees may be kept at work
during the shut down, but must be granted their vacation at some other time.
116 Employees shall receive all vacation pay due them the pay
following their termination.
117 Vacation notice slips to be passed out by March 15th. Vacation
notice slips to be returned by April 15th. Company to post vacation schedule
by May 15th.
118 After the vacation schedule has been posted, vacations may be
changed only with written permission of the Company. Anyone not scheduling
their vacation at that time, will have to take whatever vacation dates are
available.
119 Section 3. Employees receiving vacations or pay in lieu thereof,
will not be entitled to overtime for any part of said vacation. The Union and
the Company agree that their mutual objective is to afford maximum opportunity
to the employees to obtain their vacations and to attain maximum production.
All employees eligible for vacation shall be granted their vacation from work,
except that the Company may, due to operating requirements and employment
conditions, arrange with the written consent of an employee, that such
employee receive vacation allowance in lieu of any part of all of his actual
vacation. A copy of each consent shall be filed with the representative
designated by the Local Union.
120 Section 4. In the event any employee who has in excess of ten
(10) days vacation and is absent because of illness that is substantiated by a
doctor's certificate for five (5) or more consecutive working days at any time
during the calendar year in which the vacation is payable, such days of <PAGE>
<PAGE>82
absence at the employee's option may be considered as vacation time.
121 Section 5. Vacations will be taken as much as possible at a
single period and shall not be cumulative. Vacations must be taken prior to
December 31, unless an emergency has made it impossible to grant vacations in
special individual cases, in which event the Plant Manager shall allow such
vacations to be taken the first six (6) months of the following year.
122 Section 6. Weeks of regular vacation not covered by a vacation
shutdown, as per Article 7, Section 7, shall be granted according to seniority
and job classifications on each shift within each department. The Company
shall make an earnest effort to grant an employee his extra weeks of vacation
per the employee's request. The actual period in which vacations shall be
taken by eligible employees shall be determined by the Company to insure the
orderly operation of business of the Company.
123 Section 7. If the company deems it advisable to close the plant
for a vacation shutdown, the notice of such a shutdown shall be posted by
March 15th of the year in question. When a shutdown falls between the dates of
June 6 to August 15 employees will be required to schedule one (1) week of
their vacation days to coincide with the shutdown. In the event there is a
vacation shutdown, the Company will attempt to schedule it during the 2nd full
work week of the month of August, beginning in 1997.
ARTICLE 8 - SAFETY AND HEALTH
124 Section 1. The Company shall make provisions for the safety and
health of its employees at their place of employment during the hours of their
employment.
125 The Union shall cooperate with the Company in expanding the
effectiveness of the Safety and Health program for the employees. The Company
will reimburse any employee who provides certification for successfully
completing the Red Cross course in Standard First Aid provided at the Alliance
Red Cross Center. The reimbursement will be for the $15.00 fee and will
increase for any increases in the fee.
126 Section 2. Protective devices, wearing apparel and other
equipment necessary to properly protect employees from injury shall be
provided by the Company. The Company will provide for each shotblast operator
reasonable foot shields and hood, reasonable furnishing of coveralls for
Painters and Sandblasters. Reasonable glove protection for Burners up to
twice a year on a turn - in - basis, welder's gloves for submerged arc
application with reasonable controls on distribution, coveralls when required
for maintenance employees, $60.00 maximum after one (1) year of service for
metatarsal safety shoes or $30.00 for steel - toed safety shoes, for a
employee that has a medical condition prohibiting the employee from wearing
metatarsal safety shoes, non prescription safety glasses three (3) per year at
no cost to employee, Company - issued prescription safety glasses with glass
lens in single vision, bifocals, trifocals or occupationals. Any special
prescriptions, such as progressives and special lens coatings, which is an
additional fee, will be the responsibility of employee. Reasonable
replacement for on - the - job damage once a year at no cost to the employee.
Employees on lay-off or off on leave, (sickness & accident or Workers'
Compensation) are not entitled to purchase glasses through the company
program. If the employee chooses to buy his own prescription safety glasses,
he may do so through the Company approved sources and the Company will
reimburse him based on the following schedule,
<PAGE>
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* Single vision $21
* Bifocal $32
* Trifocal $41
* Occupationals $72
Note: These amounts will be increased subject to any change in the cost of
company supplied prescription safety glasses.
127 Section 3. There shall be established a Safety Committee for
said Company composed of three Union members and one Company representative.
128 Section 4. The duties of the Safety Committee are as follows:
129 (a) To hold regular scheduled monthly meetings;
130 (b) To consider recommendations and requests relative to health
and safety measures;
131 (c) To make inspections of machinery and safety conditions
through the plant of the Company;
132 (d) Upon recommendation of the Committee, the findings of said
committee shall be reported to the Company.
133 Advice of the Safety Committee, together with supporting
suggestions, recommendations, and reasons, shall be submitted to the
designated Company representative for his consideration and for such action as
he may consider consistent with the Company's responsibility to provide for
the safety and health of its employees during the hours of their employment
and the mutual objectives.
134 Section 5. The Company agrees to permit members of the
Compensation Committee to have access to reports which the Company is required
by law to keep to submit to the State Workmen's Compensation Agency upon
request to the Company's Safety Representative.
135 Section 6. The Company agrees that the Safety Committeemen on
the shift will be given the right to investigate lost time accidents with the
Company representative.
136 Section 7. Safety Committeemen will be paid for time spent on
the regular scheduled monthly meeting of the Safety Committee, up to a maximum
of two (2) hours, at straight time rates, whether or not the meeting time
occurs during their scheduled shift.
ARTICLE 9 - APPRENTICE
137 Section 1. The Company and Union will establish an apprentice/
training committee who will establish requirements and programs to fulfill
those requirements. This committee will provide for the apprenticeship program
in the machine shop and training programs in the assembly and structural
departments. There will not be ratio requirements associated with these
programs, but instead the goal is to satisfy the changing needs of the
Company's work load requirements by improving the skills of our present
employees. The Union will designate two (2) union employees and the Company
will designate two (2) management employees in each area where a program is to
be utilized to determine goals, requirements, implementation, qualifications
and costs.
138 In addition, the Company and Union will work together to develope<PAGE>
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a "co-op" educational program with local educational institutions, as mutually
acceptable to both the Company and the Union.
139 If the Union desires they may appoint one (1) person in each
department to monitor the grading of job related tests.
140 Section 2. In the event an Apprentice/Trainee fails to meet
school and work requirements Section 2. In the event an Apprentice/Trainee
fails to meet school and work requirements, he will be eliminated from the
Apprenticeship/Trainee Program. Any employees on the active employee roster
will be permitted to exert their seniority rights. Apprentices/Trainees who
were hired into the department as an Apprentice/Trainee having no former
seniority, will be terminated.
ARTICLE 10 - JOB BIDDING
Section 1.
141 (a) In the event of the creation of a new job classification or
the existence of the permanent vacancy in an existing job classification or
range, notice of availability of the jobs will be posted on the bulletin
boards plant - wide forthe period of three working days. The number of job
vacancies shall be specified at each posting. The Company agrees to post
general qualifications for all jobs posted for bid. Eligible employees
throughout the plant shall have the opportunity to apply for such openings by
filling out a job bid slip in triplicate form (one copy for the Company, one
for the Union and one for the employee). The awarding of the job shall be made
within seven (7) days after the end of the posting period. The name of the
employee awarded the job shall be given to the Union and posted on the
bulletin boards.
142 (b) In awarding the job, preference will be given in the
following order:
(i) Employees in the Area in which the job opening exists: then
(ii) All employees, plant - wide
143 (c) Any employee awarded the job bid will have up to five (5)
work days to accept the job. If an employee decides to turn the job down, he
will return to his previous job. Any employee who bids on a job and is awarded
will be subject to the criteria that falls under paragraph 157.
144 Within these preferences, the job will be awarded on the basis of
the necessary previous knowledge, experience, skill and apparent ability to
perform the job in question. If two or more bidders are relatively equal in
those regards, the job will be awarded on the basis of plant - wide seniority.
The employee awarded the job will be assured of a fair trial of up to fifteen
(15) working days. This period may be extended by mutual agreement of the
Company and Union in classifications having multiple grades, an employee will
not be considered for any grade other than the lowest grade, unless he has had
prior experience on the job in question, or experience in similar work. The
determination of the ability of an employee to satisfactorily perform the work
is to be the function of Management.
145 Section 2. If the employee awarded the job does not qualify
during the trial and training period, he shall be set back to his former job
classification and Area, and all employees affected thereby shall be set back
accordingly.
Section 3.
146 (a) If an employee is on a temporary transfer out of his regular<PAGE>
<PAGE>85
Area under Article 2, Section 8, for bidding preference purposes he shall be
deemed to be an incumbent in his regular Area.
147 (b) If an employee is working in another Area as a result of
bumping under Article 11 in connection with a workforce reduction, for bidding
preference purposes, he shall be deemed to be an incumbent in his regular
Area. If he is awarded a job through this bidding procedure, he will no longer
have recourse to recall under Article 11 to his previous job classification
and Area, but will thereafter follow the regular routine of job bidding as
applied to all employees and will have bidding preference only in the Area of
this job he was awarded.
148 (c) If an employee is laid off as a result of a reduction in the
workforce, he will be notified by telephone or letter of all jobs posted for
bid. He shall have bidding preference in his regular Area. If he is awarded
the bid, he shall be required before taking the job to state whether he is
taking the job (i) as a permanent job or (ii) as a temporary job.
149 (i) Permanent Job: He shall assume the new job without recourse
to recall to his former job classification under Article 11, and thereafter
shall have bidding preferences only in the Area of the new job.
150 (ii) Temporary Job: He shall assume his new job classification
on a temporary basis only and continue to have recourse to recall under his
former job classification under Article 11. While on such temporary job, he
shall be entitled to overtime equalization in that job classification and Area
under Article 5, Section 8, and shall have bidding preference only in the Area
of his former regular job classification.
151 Once a job has been posted in accordance with the job posting
procedure and has been filled by an employee as a temporary job, the Company
shall repost the job if that temporary employee is recalled to his regular job
classification.
152 (d) If an employee's job classification in his Area is
permanently eliminated, he may exercise his seniority rights under Article 11,
and that employee shall, for bidding purposes, have preference under Section 1
(b) of this Article in any and all Areas just as if he were an incumbent in
the Area where the vacancy occurs. If that employee is subsequently awarded a
job through the bidding procedure, he shall thereafter be deemed to be an
incumbent only in and having preference only in that Area.
153 Section 4. If there are no eligible, qualified employees who
have bid on the job, the job may be filled without regard to the job bidding
procedure. The Company will post and update every 90 days.
154 Section 5. Eligibility for job bidding will be governed as
follows:
155 (a) Probationary employees may bid for posted jobs but since
they have no seniority rights, they shall not have any of the rights of
seniority employees. If, but only if, there are not qualified bidders the
Company may, but is not required to, consider the bid of probationary
employees and award them the job.
156 (b) Employees on an Apprentice or training program are not
entitled to bid on any job.
<PAGE>
<PAGE>86
157 (c) Employees awarded a job may not bid for another posted
vacancy within 1 year of the award, except:
158 (i) to bid on another job due to sickness and physical
condition;
159 (ii) to bid on a newly - created job classification.
160 (iii) to bid on a job classification with an immediate higher
hourly rate of pay; or to bid on a job classification which may have an
immediate lower rate of pay, but which has a potential higher rate of pay in
a higher class;
161 (iv) to bid on a job which has been vacated due to death or
termination;
162 (v) to bid for shift preference.
163 (d) Employees awarded the job must accept it within five (5)
work days as per Article 10, Section 1, paragraph 143.
164 Section 6. Employees on vacation may call or visit the Company
to be informed of what jobs have been posted for bid while on vacation, and
they may come to the Company to complete job bid slips. Before leaving on
vacation, other than during a plant shutdown, employees may complete and sign
job bid slips for specific jobs which may be posted during their absence, and
leave the same with their foreman or Committeeman, who will be authorized to
submit the bid slip, should such jobs be posted.
165 Section 7. No job vacancies shall be posted for bid during any
vacation plant shutdown.
ARTICLE 11 - LAYOFF
166 Section 1. The Company will notify the Union of any anticipated
reduction of the work force or the work week five (5) working days in advance
of the date on which it is anticipated to begin, unless the cause and need for
such reduction was not known to the Company five (5) days in advance, in which
case the notice will be given as soon as the cause and the resultant need for
the reduction is known to the Company. Five (5) days does not constitute a
guarantee.
167 Section 2. Order of Reduction: In the event of a reduction in
the work force of a given job classification in a given Area, employees shall
be reduced from that job classification in that Area in the following order of
categories. Within each of these categories employees will be reduced in the
reverse order of their plant - wide seniority.
168 (a) First, employees who have not completed their probationary
period under Article 3, Section 2.
169 (b) Next, employees who had been on layoff, but who bid on the
job classification out of their Area and who declared they were taking it on
at temporary basis only under Article 10, Section 3 (c).
170 (c) Next, employees who had been on layoff, but who bid into
that job classification within their Area, and who declared they were taking
it on a temporary basis only under Article 10, Section 3 (c).
<PAGE>
<PAGE>87
171 (d) Next, all other employees in that job classification in that
Area.
Section 3. Bumping:
172 (a) An employee who is reduced from his job classification
within his Area under Section 2 shall have the following rights which must be
exercised within twenty - four (24) hours of notification of layoff:
173 (i) He may elect layoff; or
174 (ii) He may bump the least senior employee in any job
classification equal to or lower than his present job classification anywhere
in the plant which he is capable of then performing at the time he goes on the
job without training as determined by the Company based upon his work record
at the Company. He shall then have the recall rights set forth in Section 4
(a).
175 (iii) He may bump the least senior employee in any higher higher
- - - rated job classification in this Area or in a higher rated job
classification anywhere in the plant which job classification he has held on a
permanent basis and which he is still capable of performing at the time he
goes on the job. He will be placed in the highest pay grade that he had
previously held in that job classification. If he has held the top rate he
will be placed at level A and move up on merit or within six (6) months
maximum. However, he may bump the least senior employee in Job Class 1 without
any regard to prior experience.
176 (b) Any employee who is bumped by another, more senior employee
under the above provisions shall have the right to exercise his seniority to
elect layoff or to bump another employee under the same term as above.
177 (c) An employee being reduced from his classification or being
bumped by another employee shall have twenty - four (24) hours after being
notified of being reduced or being bumped to notify the Company whether he is
electing layoff or electing to bump. Once he has made his selection to elect
layoff or bump, he may not change it. An employee who fails to give the
Company notice of his election within said twenty - four (24) hours will be
considered to have elected layoff. However, the employee(s) to be laid off
will be those affected by the last bump election received by 4:00 p.m. on the
day of the end of the shift the layoff is to be in effect, Article 5, Section
5 shall not apply to the affected employee.
178 (d) In all cases, the right to bump must be consistent with the
efficiency of the operation and the safety of the employees, in the sole
discretion of the Company.
179 (e) Employees may not exercise the bumping rights of this
Section 3 into any Maintenance job classification during the Christmas plant
shutdown or during any vacation plant shutdown up to two (2) weeks.
180 Section 4. Recall: If, while any employees are laid off or are
working outside of their regular job classification as the result of
exercising their seniority rights to bump under Section 3 of this Article, the
work force in a job classification in any Area is again to be increased or a
vacancy occurs therein, employees will be recalled in accordance with the
following:
181 (a)(i) The most senior employee who is capable of then <PAGE>
<PAGE>88
performing that job classification at the time he goes on the job without
training as determined by the Company based upon his work record at the
Company shall be offered recall thereto.
182 (a)(ii) Employees who are laid - off (not working) shall have
the right to be recalled into the plant under (a) (i).
183 (a)(iii) Employees working outside of their regular job
classification (either by reason of having bumped under Section 3 or as a
result of his first recall under this Section 4 (a) (ii) shall have the right
to recall under (a) (i): provided it is to a job in an equal or higher job
classification and also shall have the further right to be recalled to their
regular job classification.
184 (a)(iv) The company will post notice of the availability of a
job classification for recall, marked with date and time of posting. Employees
working outside of their regular job classification shall have twenty - four
(24) hours to inform the company of their willingness to be recalled to that
job classification, and, if so recalled, must accept the same. Any employee
working outside of their job classification going on vacation may fill out a
recall slip listing the job classifications to which they wish to be recalled.
This recall slip may be given to their foreman or committeeman. If this recall
occurs during their vacation, they must accept it upon the end of their
scheduled vacation.
185 (a)(v) The Company will post the availability of a job
classification for recall. Employees who are laid off, who have filled out a
recall slip, listing the jobs they would like recall rights to prior to
posting of recall notice will be recalled by seniority. If so recalled,
employee must accept.
186 (b) If the job is not filled through the above recall procedure,
the Company will post the job as a permanent opening available for bid under
Article 10.
187 (c) The Company shall not be responsible for any error made in
recall, except to correct that error by the start of the next work day after
that error is called to its attention by the union or the employees affected
by the error.
188 (d) In all cases, the right to recall must be consistent with
the efficiency of the operations and the safety of the employees, in the sole
discretion of the Company.
Section 5. Extension of Recall:
189 (a) An employee who is recalled to his regular job
classification in his Area under Section 4, must accept recall to his regular
job classification.
190 (b) If the recall is to his regular job classification in his
area he must accept recall within 24 hours or he will be considered as having
quit. However, if he is employed somewhere else, and it is estimated that the
recall is for a short period of time (four (4) weeks or less), he may elect to
extend his layoff and let the Company call back the next qualified employee on
the seniority list in accordance with Section 4, if there is one. In the
event, he shall not be entitled to notices of bids under Article 10 of this
current Agreement. He must also make such a selection immediately upon
receiving the notice of recall or it will be assumed he is returning to work,<PAGE>
<PAGE>89
or in the event he is not accepting recall in 24 hours he will be considered
as having quit. If such employee is notified of recall under Section 4 a
second time, and does not report for work or signify within 24 hours of his
intention of doing so, he shall be considered as having quit.
191 If a person is recalled and he has accepted recall, he must begin
work within five (5) calendar days after receipt of the notification.
192 It must be emphasized that the four weeks does not constitute a
guarantee.
193 The 24 hours referred to in the above paragraphs will commence
upon time of receipt of notification. If an employee cannot be reached by
telephone and certified mail (with return receipt requested) is used and it is
returned unopened, then the employee will be terminated. Employees planning to
be away from home for 24 hours or more should contact the Company's Personnel
Department and provide phone number where they can be reached.
194 Section 6. Employees who are on layoff shall be notified by
certified mail (with receipt requested) of recall to work. All notices shall
be sent to the last known address of the employee as stated on the Company's
records. The employees are responsible for having the address and telephone
number at which the Company may reach them on file at all times. The Company
may rely upon these addresses and telephone numbers for all purposes. All
notices to employees affecting their employment with the Company will be sent
and/or telephoned to the address or telephone number on file.
195 Section 7. It is agreed that in the event the Union believes
that an employee has not been properly allowed to exercise his seniority under
Section 2, 3, 4, or 5 of this Article, the Union will verbally bring the
matter to the attention of the Company for correction. Within five (5) working
days after such notification, should the Union believe that the employee was
not permitted to properly exercise his seniority under Section 2, 3, 4, or 5,
the matter may be brought to the attention of the Company in writing at Step
Three of the Grievance Procedure for correction, but no claim or grievances
shall be retroactive beyond the date such written notice is first received by
the Company.
196 Section 8. Employees who are working outside their regular job
classification due to the application of this Article shall have the right to
overtime equalization under Article 5, Section 8 and to exercise shift
preferences under Article 5, Section 7 in the new classification in which they
are working.
ARTICLE 12 - EMPLOYEE BENEFITS
197 Section 1. Insurance: The Company will provide an insurance
Benefit Program, which will include the following:
- - -$1,000,000 Major Medical
- - -$225 Deductible per person, $675 per family
- - -80% co-insurance on the next $3,500 of eligible expenses
- - -100% payment thereafter
- - -Mandatory second surgical opinion through health care re-view systems
- - -Mandatory out-patient surgery for specific procedures
- - -Hospital pre-certification review through health care review systems
- - -Maximum per year $1,000 drug addiction treatment
- - -$1,000 alcoholism addiction treatment and $3,000 mental & nervous treatment.
Combined lifetime maximum $25,000
- - -Pre-existing clause for new hires only<PAGE>
<PAGE>90
198 Weekly Disability:
1st day Accident - 26 weeks
8th day illness - 26 weeks
Weekly Disability:
Effective June 17, 1996 $273.00 per week
Effective June 17, 1997 $281.00 per week
Effective June 17, 1998 $289.00 per week
199 Life Insurance:
Effective June 17, 1996 $18,000
Effective June 17, 1997 $19,000
Effective June 17, 1998 $20,000
Section 2 - 401 - K Plan
200 In keeping with Alliance Machine Company's (the Company)
commitment to a long range retirement program, we are pleased to announce that
a 401 (k) plan has been established effective June 1, 1987. This Company -
sponsored program has been designed in accordance with Section 401 (k) of the
Internal Revenue Code.
201 A 401 (k) plan is a qualified deferred compensation plan which
enables you to save money, lower taxes and invest in your financial future.
Under a 401 (k) plan, your elective contributions are made on a before - tax
basis, that is, the amount deferred will be excluded from your taxable income.
This may place you in a lower tax bracket and lower your taxes.
The following are some advantages of our 401 (k) plan:
202 1.Elective contributions may be made up to 15% of your salary,
not to exceed a maximum amount established by the Internal Revenue Service.
203 2.Your elective contributions lower your taxable in-come, federal
tax withholding, and you will currently pay less tax.
204 3.Due to lower taxes, elective contributions to our Plan will
increase your take - home pay in comparison with some other ways of saving.
205 4.The Company will contribute an amount equal to the following
schedule in any plan year in accordance with the bargaining unit agreement.
June 17, 1996 .35/Hr. Worked
June 17, 1997 .35/Hr. Worked
June 17, 1998 .40/Hr. Worked
206 5.Normally, under current federal tax laws, you will not be taxed
on any contributions to the plan, or any interest earned, until you receive
the money. When you finally receive your retirement benefit, you may be in a
lower tax bracket than you are now.
207 6.Cash payments may receive favorable tax treatment.
208 7.The Company will pay all plan expenses.
209 An important point to understand is that to fully benefit from
this program you must be prepared, by means of salary reduction, to contribute
to your financial future.
210 We realize that it may be difficult for some of you to commit a
portion of your income to this program, but we strongly encourage you to
participate at some level. We believe this program will allow you the <PAGE>
<PAGE>91
opportunity to accumulate more for your future than under any other plan we
can offer. Only you can determine whether you can afford the financial
commitment. We are confident that you will participate and benefit from the
program.
ARTICLE 13 - GENERAL PROVISIONS
211 Section 1. Severance Allowance:
212 (a) Conditions of Allowance: When in the sole judgement of the
Company, it decides to close permanently the plant or discontinue permanently
a department of the plant or substantial portions thereof and terminate the
employment of individuals, an employee whose employment is terminated either
directly or indirectly as a result thereof because he was not entitled to
other employment with the Company under the provision of Article 3, Seniority,
of this Agreement, shall be entitled to a severance allowance in accordance
with and subject to the following provisions:
213 (b) Eligibility: Such an employee, to be eligible for a
severance allowance, shall have accumulated three or more years of continuous
Company service from the date of the contract.
214 (c) Scale of Allowance: An eligible individual shall receive
severance allowance based upon the following weeks for the corresponding
continuous Company service:
Weeks of
Continuous Company Service Severance Allowance
3 years to 5 years 1 week
Over 5 years 2 weeks
215 (d) Calculation of Allowance: A week's severance allowance
shall be determined in accordance with the provisions for calculations of
vacation allowance set forth in Article 6, Section 3, Rate of Pay, for
vacation.
216 (e) Payment of Allowance: Payment shall be made in a lump sum
at the time of termination. Acceptance of severance allowance shall terminate
employment and continuous service for all purposes under this Agreement.
217 Section 2. Strikes and Lockouts: During the term of this
Agreement, or any of the extensions thereof, the Union, its agents and
representatives, will not engage in, authorize, instigate, aid or condone a
strike or work stoppage, nor will any employee or employee member of said
Union take part in a strike, individual slowdown in the rate of production, or
any interference with or stoppage of the Company's work. Any individual
employee who violates the provisions by reasons of an individual slow - down
or interference with the rate of production of the Company's work shall be
subject to disciplinary action.
218 Section 3. The Company agrees that during the period of this
Agreement there shall be no lockouts.
219 Section 4. Duration: The provisions of this Agreement shall
become effective June 17, 1996, and shall continue in effect to and including
11:59 p.m. of June 20, 1999. This agreement shall continue in effect for
yearly periods after its termination date unless notice in writing of
termination shall be given by either party to the other, not less than sixty
(60) days prior to June 20, 1999. Either party may, on or before April 20,
1999, give notice to the other party of a desire to negotiate with respect to<PAGE>
<PAGE>92
the terms and conditions of a new agreement. If such notice is given, the
parties shall meet within thirty (30) days thereafter to negotiate with
respect to a new agreement. If the parties shall not agree with respect to a
new agreement by 11:59 p.m. of June 20, 1999, either party may thereafter
resort to strike or lockout, as the case may be, in support of its position,
with respect to such matters, as well as any other matters in dispute.
220 Section 5. Notice hereunder shall be given by certified mail and
shall be completed at the time of mailing. If addressed to the contracting
Company at Alliance, Ohio, and to the Union as follows: United Steelworkers
of America, AFL - CIO, Five Gateway Center, Pittsburgh, Pennsylvania 15222.
221 Either party hereto may be like written notice change the address
to which certified mail notices required hereunder shall be sent.
EXHIBIT A
JOB CLASS RATES BY JOB LEVEL
6/17/96 6/17/97 6/17/98
LEVEL RATE/HR RATE/HR RATE/HR
JOB CLASS 1
General Laborer STD 9.099 9.472 9.756
A 8.797 9.161 9.436
B 8.495 8.850 9.116
C 8.195 8.541 8.797
D 7.893 8.230 8.477
JOB CLASS 2
Grinder STD 10.413 10.825 11.150
Shot Blast Operator A 10.113 10.516 10.831
B 9.811 10.205 10.511
C 9.509 9.894 10.191
D 9.207 9.583 9.870
JOB CLASS 3
Material Handler STD 11.060 11.492 11.837
Crane Operator A 10.757 11.180 11.515
Spray Painter B 10.457 10.871 11.197
Cat Operator C 10.156 10.561 10.878
Straightener D 9.880 10.251 10.559
Truck Driver
JOB CLASS 4
Burner STD 11.969 12.428 12.801
A 11.667 12.117 12.481
B 11.365 11.806 12.160
C 11.064 11.496 11.841
D 10.761 11.184 11.520
JOB CLASS 5
Machine Operator STD 12.124 12.588 12.966
Layout Man A 11.822 12.277 12.645
B 11.521 11.967 12.326
C 11.219 11.656 12.006
D 10.918 11.346 11.686
<PAGE>
<PAGE>93
JOB CLASS 6
Small Machine STD 12.434 12.907 13.294
Tool Operator A 12.132 12.596 12.974
Welder B 11.832 12.287 12.656
Assembler "B" C 11.530 11.976 12.335
Electrician "B" D 11.227 11.664 12.014
JOB CLASS 7
Assembler "A" STD 12.747 13.229 13.626
Electrician "A" A 12.447 12.920 13.308
Fitter B 12.144 12.608 12.986
Template Maker C 11.843 12.298 12.667
D 11.541 11.987 12.347
JOB CLASS 8
Maintenance Man STD 12.899 13.386 13.788
Large Machine A 12.597 13.075 13.467
Tool Operator B 12.296 12.765 13.148
C 11.993 12.453 12.827
D 11.693 12.144 12.508
JOB CLASS 9
Machinist STD 13.214 13.710 14.121
Lead Maintenance A 12.911 13.398 13.800
Man B 12.610 13.088 13.481
C 12.309 12.778 13.161
D 12.009 12.469 12.843
APPRENTICE
6th Apprentice 12.309 12.778 13.161
5th Apprentice 11.573 12.020 12.381
4th Apprentice 10.851 11.277 11.615
3rd Apprentice 10.127 10.531 10.847
2nd Apprentice 9.392 9.774 10.067
1st Apprentice 8.657 9.017 9.288
RATE PROGRESSIONS
223 The pay rates will reflect general increases of 3% in the first
year, 3% + $.10/hr. in the second year and 3% in the third year.
224 In job classes 1 through 3, progression will be automatic from D
to STD. These increases will be based on six (6) months worked on any job in
any job class.
225 In job classes 4 through 9, progression will be automatic from D
to A but A to STD will be based on merit. Automatic increases will be based on
six (6) months worked on a job but the merit increase can be granted at any
time based on the discretion of the foreman.
226 * Rate changes resulting from bidding and bumping job classes 1
through 3
Any employee who bids or bumps on a job in a higher or lower job
class will receive the rate of pay at the level equal to his time worked in
any job class. Example, six (6) months worked equals level C or eighteen (18)
months worked equals level A.
227 * Rate changes resulting from bidding and bumping job classes 4
through 9<PAGE>
<PAGE>94
Any employee who bids on and receives a job in a higher job class
or bumps into a higher job class will receive the level of pay equal to or the
next higher level of pay up to level A. Example, employee in job class 4 level
C making $11.064 bids and receives a job in job class 6. His pay level in 6
will be D at $11.227 since that is the next highest level of pay.
228 Any employee who bids or bumps on and receives a job in a lower
or equal job class will receive the level of pay equal to the next lower level
of pay or level B whichever is lower. Example, employee in job class 9 level A
making $12.911 bids or bumps on and receives job class 7 job. His pay level in
7 will be $12.144.
229 Employees who fall below STD level will be allowed to progress
under the terms of exhibit A.
Apprentice will be listed as a separate job class.
230 * Exception to the above will be made for employees falling
under Article 11, Section 3, Paragraph 159.
PROGRESSION - GRANDFATHERED
Job Classes 1, 2 and 3
231 1.If a grandfathered employee bumps down or up to avoid layoff he
will be paid the following corresponding rates. A lateral bump will cause no
rate change.
232 2.If a grandfathered employee bids up or down he will be paid the
following corresponding rates.
233 3.If a grandfathered employee bids lateral, he will be paid his
same present rate.
Effective Effective Effective
June 17, 1996 June 17, 1997 June 17, 1998
Job Class 1 11.025 11.456 11.800
Job Class 2 11.329 11.769 12.122
Job Class 3 11.387 11.828 12.183
234 4.Other than Job Classes 1, 2, and 3, if a grandfathered employee
bids down or lateral he will be paid under new pay scale.
<PAGE>
<PAGE>95
THE ALLIANCE MACHINE COMPANY
BY: Christopher Sause - President
Larry Grossi - Vice President of Finance
and Administration
Gene Stroia - Manager of Manufacturing
Margaret Swisher - Personnel Administrator
UNITED STEELWORKERS OF AMERICA
AFL - CIO - and its LOCAL NO. 2361
BY: George Becker, International President
Leo W. Gerard, Internatinal Secretary - Treasurer
Richard H. Davis - International Vice President,
Administration
Leon Lynch - International Vice President,
Human Affairs
Frank Vickers, District Director
Lee Hilson - Staff Representative
Larry Dramble - President, Local 2361
Larry Freeman - Vice President, Local 2361
Gary Barnes - Recording Secretary, Local 2361
COMMITTEEMEN: Charles Augustein
Larry Freeman
James Grimm
Robert Hahn
Rick Heestand
Larry Lashley
<PAGE>
<PAGE>96
Charles E. Bradley
c/o Stanwich Partners, Inc.
One Stamford Landing
62 Southfield Avenue
Stamford, Connecticut 06902
June 18, 1996
Chatwins Group, Inc.
300 Weyman Plaza
Suite 340
Pittsburgh, PA 15236
Dear Sirs and Madams:
Reference is made to the Promissory Note, dated June 14, 1995 (the
"Parkdale Note"), in the original principal amount of $5,800,000 issued by
Chatwins Group, Inc. ("CGI") to Parkdale Holdings Corporation, N.V.
("Parkdale"), the Allonge dated September 14, 1995, attached to the Parkdale
Note and the subsequent transfer by Parkdale of all its right, title and
interest to the Parkdale Note to Charles E. Bradley, Sr. ("Bradley"), and the
Allonge dated January 31, 1996.
Bradley agrees with CGI to amend the Parkdale Note as follows: the
Maturity Date set forth in Section 1 thereof shall be extended to December 31,
1996. The other terms of the Parkdale Note shall remain in full force and
effect and shall not be altered or amended in any respect. The parties agree
that to effect the foregoing an allonge executed by CGI in the form of
Attachment A hereto shall be attached to and become a part of the Note.
This letter agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to the application of
principles of conflicts of laws.
Sincerely,
---------------------------------
Charles E. Bradley, Sr.
Accepted and agreed as
of June 18, 1996.
CHATWINS GROUP, INC.
By: ----------------------------
Name: Russell S. Carolus
Title: Vice President
<PAGE>
<PAGE>97
ATTACHMENT A
Third Allonge To Be Attached To
Promissory Note Dated June 14, 1995
Of
Chatwins Group, Inc.
1. The "Maturity Date" set forth in Section 1 of the attached Promissory
Note is hereby amended to be December 31, 1996.
Dated: June 18, 1996
CHATWINS GROUP, INC.
By: ----------------------------
Name: Russell S. Carolus
Title: Vice President
<PAGE>
<PAGE>98
JOINT VENTURE AGREEMENT
THIS AGREEMENT is between Klemp de Mexico, S.A. de C.V. a corporation
organized under the laws of the United Mexican States ("Klemp"), Consolidated
Fabricators Inc, a corporation organized under the laws of Massachusetts
("CFI"), Mr. Gary Johnson, Mr. Ernest Balazs, and Mr. Alfred Beaulieu, and is
made in reference to the following facts and other recitals:
A. The parties are in the business of metal fabrications and have
substantial and valuable experience in such business.
B. The parties wish to incorporate a Mexican corporation,
(the "Company"), so that the Company, owned by the parties be
engaged in manufacturing of metal fabrications.
THEREFORE, in consideration of the foregoing and the mutual promises
contained in this Agreement, the parties hereto agree as follows:
1. PURPOSE OF THIS AGREEMENT.
1.1 Purpose. This Agreement is intended to govern the present
and future business relationship of the parties solely with
respect to the ownership and operation of the Company, and to
provide for the future management and operation of the Company.
The Company shall be formed to operate in the United Mexican
States and to own and operate related real estate and related
businesses.
1.2 Charter. The parties agree that the charter (including the
Articles of Incorporation and Bylaws) of the Company shall be
substantially the same as those attached hereto as Exhibit 1.2.
1.3 Required Filings. Each of the parties hereto shall make,
execute, register and file all charter documents, certificates,
deeds, agreements and other instruments as may be necessary or
appropriate for the incorporation, management and operation of
the business of the Company as contemplated by this Agreement.
2. CAPITALIZATION, SHARE ISSUANCE, GUARANTIES.
2.1 Composition of Capital Stock.
2.1.1 The capital stock of the Company shall consist of both
fixed Shares and variable Shares. The minimum fixed
capital stock of the Company without the right of
withdrawal shall be $375,000 Pesos, represented by
375,000 totally subscribed Shares of capital stock.
2.1.2 Each Share of capital stock of the Company (the"Shares")
will have one vote and shall be alike in all respects,
and the holders thereof shall be entitled, in proportion
to their respective holdings of such Shares, to identical
ownership rights and privileges, except as otherwise
provided herein or in the Articles of Incorporation and
Bylaws of the Company.
<PAGE>
<PAGE>99
2.2 Ownership of Shares. The ownership of the Shares of the Company
shall be owned by the parties hereto as follows:
Klemp de Mexico, S.A. de C.V. 50.10%
Consolidated Fabricators Inc. 43.90%
Gary Johnson 2.00%
Ernest Balazs 2.00%
Alfred Beaulieu 2.00%
2.3 Cash Payments. All payments for Shares hereunder shall be in
cash, unless in-kind payments are agreed upon by the parties.
2.4 Preemptive Rights to Acquire New Shares. If the capital stock of
the Company is increased by contribution of new capital, the
Shareholders of such company shall have preemptive rights to
subscribe for any new Shares, provided such rights will not exist
when new Shares are issued under Section 2.6.2 below.
2.5 Additional Capital Contributions.
2.5.1 The parties shall make additional capital contributions
and/or loans to the Company in the amounts and at the
times decided by the affirmative vote of not less than
seventy percent (70%) of the total issued and outstanding
capital stock of the Company.
2.5.2 The parties have decided and agreed that they shall make
additional capital contributions in the aggregate amount
of U.S.$200,000, at the exchange rate of $7.5 Pesos per
Dollar in the time and manner specified in the initial
plan in Exhibit 2.5.2.
2.6 Failure to Make Additional Capital Contributions. In the event
that any of the parties (the "Non-Contributing Party") fails to
make or advance all or any portion of an additional capital
contribution such party is required to make under Section 2.5.1
or Section 2.5.2 ("Delinquent Advance"), such party shall be in
breach of its obligations hereunder and, provided that the other
parties (the "Contributing Parties") have advanced the full
amount that the Contributing Party was obligated to make, the
Contributing Parties shall have the following remedies
exercisable by written notice within thirty (30) Days following
the date of delinquency:
2.6.1 The Contributing Parties by unanimous agreement among
themselves, may give notice of an election to invoke
immediately the Buy-Out provisions of Section 7.3 hereof
("Buy-Out Notice") and Section 7.3 shall then apply, but
only with respect to the interest of the Non-Contributing
Party or Parties in the Company, or
2.6.2 The Contributing Parties may advance to the Company in
cash an amount equal to the Delinquent Advance, and treat
the advance either as (i) a capital stock contribution,
in which event such parties shall be issued additional
Shares in the Company at the subscription value
determined at the time the additional capital stock
contribution was decided (or, if no subscription value <PAGE>
<PAGE>100
was so determined, at the par value), or (ii) a loan to
the Company, in which event the loan shall be repayable
upon demand and shall bear interest at its then current
borrowing rate from its principal lender (which may be
an interest rate) plus two percent (2%). If the Company
does not have a principal lender at the time, such loan
shall bear interest at US prime plus two percent (2%) per
annum. The foregoing election must be made by the
Contributing Parties in writing at the time they make
such advance and such election shall be irrevocable.
2.6.3 In the event the Contributing Parties or any of them,
elect to make an advance pursuant to Section 2.6.2,
above, as either a capital stock contribution or a loan,
each such Contributing Party shall have the right (but
not the obligation) to make such an advance in an amount
equal to the amount of the Delinquent Advance multiplied
by a fraction the numerator of which is the number of
fixed and variable shares of capital stock of the Company
owned by such Contributing Party and the denominator of
which is the total number of shares owned by all the
Contributing Parties desiring to make an advance. If any
Contributing Party elects not to advance its full prorata
portion of the Delinquent Advance as determined above,
the remaining Contributing Parties may (but shall not be
obligated to) make additional advances in accordance with
the foregoing until the full amount of the Delinquent
Advance has been advanced.
2.7 Loans, Credits and Guaranties.
2.7.1 All loans or credits required by the Company shall be
structured to be financed solely by the Company and, if
possible, on a non-recourse basis.
2.7.2 The parties shall not be required to provide leasing,
mortgage or other guaranties in favor of third-party
creditors of the Company.
2.7.3 However, if unanimously approved in writing by the
parties hereto, or, if approved by any party or parties
hereto, such guaranties shall be provided by the party
or parties approving such guaranties proportionally among
such approving parties based on the ratio that the fixed
and variable capital of the Company owned by each
approving party bears to the total of the fixed and
variable capital of the Company owned by all the
approving parties, and such guaranties shall not
terminate without the written agreement of the
guaranteeing parties.
2.8 Non-Transferability of Shares.
2.8.1 The parties shall not voluntarily sell, transfer, assign,
pledge or otherwise dispose of all or any portion of
their Shares in the Company, without the prior approval
of the Company's Board of Directors, except (1) to an
Affiliate of any of the parties or to a wholly owned <PAGE>
<PAGE>101
subsidiary of any of the parties, as the case may be,
that has assumed and agreed to be bound by the provisions
of this Agreement by an assumption agreement in form and
substance satisfactory to the other party, or (2) in
connection with a "Buy-Out" pursuant to Section 7.3
hereof.
2.8.2 If a party violates or attempts to violate Section 2.8.1,
the other parties may give notice of an election to
invoke immediately the Buy-Out provisions of Section 7.3
hereof ("Buy-Out Notice") and Section 7.3 shall then
apply.
2.9 Other Remedies. The exercise by any party of any remedy
provided in Sections 2.6 or 2.8 shall be cumulative and in
addition to any other remedy available to the Company or to such
party, such as arbitration under Section 10.8.2 hereof.
2.10 Governmental Consents. The Company and the parties hereto shall
file such notices and shall obtain, or cause to be obtained, any
permits, consents, approvals, authorizations, qualifications or
registrations required by any governmental authority (whether in
the United States of America or in the United Mexican States) to
issue any Shares.
2.11 Notices and Legends. The certificates representing the Shares
shall bear a legend reflecting the restrictions on transfer
provided for in Section 2.8.1 above as well as any other notices
or written legends required by the charter of the Company.
2.12 Shareholder Advances. A party may make a voluntary advance to
the Company at any time, but solely to fund working capital needs
of the Company's operations incurred in the ordinary course of
business and solely with the prior written approval of the Board
of Directors. Such advance will be made in U.S Dollars and
treated as a loan, and it will earn interest at the applicable
rate provided under Section 2.6.2 (ii).
3. OPERATIONS.
3.1 Manner of Operation. The Company shall be operated in
accordance with the objectives of the Business Plan.
3.2 Location of Principal Office. The principal office of the
Company shall be located in Lerma, State of Mexico. Other offices
of the Company shall be located at such places as the Board of
Directors shall determine.
3.3 Accounting.
3.3.1 The fiscal year of the Company will begin on January 1
and end on December 31 of each calendar year, except the
first fiscal year which will begin on the date of
incorporation and will end on December 31 of the same
year.
3.3.2 The accounting methods and systems employed by the
Company shall conform to the generally accepted <PAGE>
<PAGE>102
accounting principles of the United Mexican States as
customarily employed by corporations of a similar nature.
3.4 Payment of Expenses. All expenses of the business and
operations of the Company shall be paid out of the capital or
earnings of the Company and shall not be the responsibility of
the parties hereto.
3.5 Insurance. The Company shall maintain in force policies of
insurance, insuring its assets and business against such losses
and risks in such amounts as its Board of Director shall
determine and in accordance with the laws of the United Mexican
States.
3.6 Business Plan.
3.6.1 The parties hereby agree to the Business Plan, which
shall consist of the initial plan set forth in Exhibit
3.6 hereof, and to the additional capital contributions
established under Section 2.5.2 above.
3.6.2 The General Director will communicate to the Board of
Directors of the Company, no later than July 31, 1996,
a more detailed plan which, if adopted by the Board of
Directors, will become part of, or modify, the Business
Plan.
3.7 Auditors. The external auditors shall be selected by the Board
of Directors and shall be a major international accounting firm
with offices in Mexico City.
3.8 Examiners. The parties shall each be entitled respectively to
appoint one examiner ("comisario"), or may for any period agree
to appoint any other party's examiner.
3.9 Taxes. The parties acknowledge that the Company shall be
included in Klemp's consolidated tax returns. However, any tax
benefits accruing to the Company shall be allocated to the
parties in accordance with their percentages in the capital stock
of the Company.
4. MANAGEMENT.
4.1 Board of Directors.
4.1.1 The Company shall be managed by a four member Board of
Directors. Each party hereto holding 35% or more of the
Shares of the capital stock shall designate two members
of the Board of Directors. The parties may mutually agree
to name alternates.
4.1.2 At each Shareholders' Meeting held for the purpose of
electing members to the Board of Directors, the parties
shall vote their Shares to ensure such designees shall
be elected.
4.1.3 The chairman of the Board of Directors of the Company
shall always be chosen from among the directors <PAGE>
<PAGE>103
designated by Klemp, but the Chairman shall not have a
tie-breaking vote or any other special or extraordinary
rights or privileges.
4.1.4 The Board of Directors of the Company shall meet not less
than one time per year. The powers, duties, compensation
and other terms and conditions of the members of the
Board of Directors shall be as set forth in the charter
of the Company.
4.2 Board Quorum & Voting. No meeting of any Board of Directors of
the Company shall occur unless four directors are present and
unless at least two of the directors designated by each party,
who has the right to designate, are present. All decisions of the
Board of Directors of the Company shall require the affirmative
unanimous vote of the entire Board of Directors.
4.3 Officers.
4.3.1 At each meeting of the Board of Directors of the Company
at which officers are elected, the parties shall cause
their designees on the Board of Directors to vote for the
Management Personnel, and, thus, to elect these persons
to the positions for which they have been designated.
4.3.2 Officers who are Management Personnel shall have
authority to undertake and enter into any Obligation (i)
that is provided for in the Business Plan or (ii) that
has been approved by the Board of Directors. They shall
also be given Powers of Attorney in the form of Exhibit
4.3.2.
4.4 Shareholders' Meetings. Ordinary Shareholders' Meetings of the
Company shall deal only with the matters mentioned in Article 181
of the General Corporation Law of the United Mexican States,
Extraordinary Shareholders' Meetings shall deal with all other
matters to be considered by the shareholders. The affirmative
vote of at least seventy percent (70%) of the total capital stock
of the Company shall be required for action by the shareholders
at an Extraordinary Shareholders' Meeting.
4.5 Corporate Resolutions. To give effect to the purposes of this
Agreement, the parties shall promptly cause shareholder
resolutions and Board of Directors resolutions in a form
substantially the same as set forth in Exhibit 4.5 to be adopted
respectively by the shareholders and Board of Directors of the
Company.
4.6 Access to Information. The officers of the Company shall keep
its Board of Directors informed of the material financial,
business, marketing and other general information necessary for
the Board of Directors to fulfill its responsibilities and
duties.
4.7 Audits. Each party shall have the right, at its own expense,
to have an independent audit of the financial condition of the
Company performed by auditors of its own selection at any time
during the term of this Agreement and for a period of three years<PAGE>
<PAGE>104
thereafter.
4.8 Training of Employees. The parties will jointly and
cooperatively train employees of the Company (1) in its daily
operations and (2) in the discharge of the Company's
administrative, financial, marketing and related needs.
4.9 Other Agreements. Other agreements between the parties hereto
or any of their Affiliates may be negotiated by the parties in
good faith and on a mutually convenient basis.
5. REPRESENTATIONS AND WARRANTIES.
5.1 Representation and Warranties of Klemp. Klemp represents and
warrants to the other parties that:
5.1.1 Organization and Standing. Klemp is a corporation
organized, existing and in good standing under the laws
of the United Mexican States, with the requisite power
to enter this Agreement and to fulfill its obligations
hereunder.
5.1.2 Authority. Klemp has the right, power and authority to
execute, deliver and perform this Agreement and has taken
all required corporate action to approve this Agreement.
This Agreement constitutes a valid and binding obligation
of Klemp enforceable in accordance with its terms, except
to the extent that enforcement may be subject to
bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights
and to general equity principles.
5.1.3 Absence of Conflicts. Entering this Agreement and
performing all of its obligations hereunder does not (1)
violate or conflict with the Articles of Incorporation
or Bylaws of Klemp or any agreement or instrument binding
on Klemp (2) violate or conflict with any law, rule,
judgment, order or the like applicable to Klemp, or (3)
require the consent or approval of any other person or
entity.
5.1.4 Pending Proceedings. There is no dispute,
investigation, litigation or other proceeding pending or
overtly threatened against Klemp which, if unfavorably
concluded, would adversely affect the ability of Klemp
to enter this Agreement or to fulfill its obligations
hereunder.
5.2 Representations and Warranties of CFI. CFI hereby represents
and warrants to the other parties that:
5.2.1 Organization and Standing. CFI is a corporation
organized, existing and in good standing under the laws
of Massachusetts, with the requisite power to enter this
Agreement and to fulfill its obligations hereunder.
5.2.2 Authority. CFI has the right, power and authority to
execute, deliver and perform this Agreement and has taken<PAGE>
<PAGE>105
all required corporate action to approve this Agreement.
This Agreement constitutes a valid and binding obligation
of CFI enforceable in accordance with its terms, except
to the extent that enforcement may be subject to
bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights
and to general equity principles.
5.2.3 Absence of Conflicts. Entering this Agreement and
performing all of its obligations hereunder does not (1)
violate or conflict with the Articles of Incorporation
or Bylaws of CFI or any agreement or instrument binding
on CFI, (2) violate or conflict with any law,
rule.
5.2.4 Pending Proceedings. There is no dispute,
investigation, litigation or other proceeding pending or
overtly threatened against CFI which, if unfavorably
concluded, would adversely affect the ability of CFI to
enter this Agreement or to fulfill its obligations
hereunder.
5.3 Representations and Warranties of Mr. Gary Johnson. Mr. Johnson
hereby represents and warrants to the other parties that:
5.3.1 Authority. Mr. Johnson has the right, power and
authority to execute, deliver and perform this Agreement.
This Agreement constitutes a valid and binding obligation
of Mr. Johnson enforceable in accordance with its terms,
except to the extent that enforcement may be subject to
bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights
and to general equity principles.
5.3.2 Absence of Conflicts. Entering this Agreement and
performing all of its obligations hereunder does not (1)
violate or conflict with any agreement or instrument
binding on Mr. Johnson, (2) violate or conflict with any
law, rule, judgment, order or the like applicable to Mr.
Johnson, or (3) require the consent or approval of any
other person or entity.
5.3.3 Pending Proceedings. There is no dispute,
investigation, litigation or other proceeding pending or
overtly threatened against Mr. Johnson which, if
unfavorably concluded, would adversely affect the ability
of Mr. Johnson to enter this Agreement or to fulfill his
obligations hereunder.
5.4 Representations and Warranties of Mr. Ernest Balazs. Mr. Balazs
hereby represents and warrants to the other parties that:
5.4.1 Authority. Mr. Balazs has the right, power and
authority to execute, deliver and perform this Agreement.
This Agreement constitutes a valid and binding obligation
of Mr. Balazs enforceable in accordance with its terms,
except to the extent that enforcement may be subject to
bankruptcy, insolvency and other laws of general <PAGE>
<PAGE>106
applicability relating to or affecting creditors' rights
and to general equity principles.
5.4.2 Absence of Conflicts. Entering this Agreement and
performing all of its obligations hereunder does not (1)
violate or conflict with any agreement or instrument
binding on Mr. Balazs, (2) violate or conflict with any
law, rule, judgment, order or the like applicable to Mr.
Balazs, or (3) require the consent or approval of any
other person or entity.
5.4.3 Pending Proceedings. There is no dispute,
investigation, litigation or other proceeding pending or
overtly threatened against Mr. Balazs which, if
unfavorably concluded, would adversely affect the ability
of Mr. Balazs to enter this Agreement or to fulfill his
obligations hereunder.
5.5 Representations and Warranties of Mr. Alfred Beaulieu. Mr.
Beaulieu hereby represents and warrants to the other parties
that:
5.5.1 Authority. Mr. Beaulieu has the right, power and
authority to execute, deliver and perform this Agreement.
This Agreement constitutes a valid and binding obligation
of Mr. Beaulieu enforceable in accordance with its terms,
except to the extent that enforcement may be subject to
bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights
and to general equity principles.
5.5.2 Absence of Conflicts. Entering this Agreement and
performing all of its obligations hereunder does not (1)
violate or conflict with any agreement or instrument
binding on Mr. Beaulieu, (2) violate or conflict with any
law, rule, judgment, order or the like applicable to Mr.
Beaulieu, or (3) require the consent or approval of any
other person or entity.
5.5.3 Pending Proceedings. There is no dispute,
investigation, litigation or other proceeding pending or
overtly threatened against Mr. Beaulieu which, if
unfavorably concluded, would adversely affect the ability
of Mr. Beaulieu to enter this Agreement or to fulfill his
obligations hereunder.
6. NON-COMPETITION AND OTHER COVENANTS.
6.1 Non-competition by Klemp. Without the prior written approval
of the parties during the term of this Agreement (and, if it is
a defaulting party under Sections 7.2 and 8.4, for a period of
five years thereafter), neither Klemp nor any of its Affiliates
shall directly or indirectly, purchase products, equipment or
services of a kind competitive with those of the Company from any
other company or entity in Mexico.
6.2 Non-competition by CFI. Without the prior written approval of
the parties, during the term of this Agreement (and, if it is a <PAGE>
<PAGE>107
defaulting party under Sections 7.2 and 8.4, for a period of five
years thereafter), neither CFI nor any of its Affiliates shall
directly or indirectly, purchase products, equipment or services
of a kind competitive with those of the Company from any other
company or entity in Mexico.
6.3 Non-competition by Mr. Gary Johnson. Without the prior written
approval of the parties, during the term of this Agreement (and,
if he is a defaulting party under Sections 7.2 and 8.4, for a
period of five years thereafter), Mr. Johnson shall not purchase
products, equipment or services of a kind competitive with those
of the Company from any other company or entity in Mexico.
6.4 Non-competition by Mr. Ernest Balazs. Without the prior written
approval of the parties, during the term of this Agreement (and,
if he is a defaulting party under Sections 7.2 and 8.4, for a
period of five years thereafter), Mr. Balazs shall not purchase
products, equipment or services of a kind competitive with those
of the Company from any other company or entity in Mexico.
6.5 Non-competition by Mr. Alfred Beaulieu. Without the prior
written approval of the parties, during the term of this
Agreement (and, if he is a defaulting party under Sections 7.2
and 8.4, for a period of five years thereafter), Mr. Beaulieu
shall not purchase products, equipment or services of a kind
competitive with those of the Company from any other company or
entity in Mexico.
6.6 Best Efforts. The parties shall use all reasonable efforts to
carry out the terms and purposes of this Agreement.
6.7 Cooperation. The parties shall cooperate with each other and
shall cause their employees to cooperate to support the
businesses and operations of the Company, in accordance with the
Business Plan.
7. DEADLOCK, DEFAULT, & BUY-OUT.
7.1 Deadlock of Shareholders or Directors.
7.1.1 Deadlock Notice. If at any time, the Shareholders or
Board of Directors of the Company become (or remain)
deadlocked over or, because of a lack of a quorum or a
required majority, are unable to act or agree upon any
matter including any inability to agree on additional
capital requirements or the provisions of guaranties for
the Company (a "Deadlock"), any party may give a notice
of deadlock to the other party ("Deadlock Notice").
7.1.2 Consultation Period. Within sixty (60) Days after any
Deadlock Notice is given ("Consultation Period"), chief
executive officers of the parties shall meet personally
and attempt to resolve the Deadlock, and any resolution
shall be set forth in a written agreement among the
parties.
7.1.3 Mediation Period. If the Deadlock is not resolved by
a written agreement during the Consultation Period, then <PAGE>
<PAGE>108
within the immediately following sixty (60) Days
("Mediation Period") the parties will attempt to have the
Deadlock resolved by non-binding mediation under Section
7.5 below.
7.1.4 Buy-Out Notice. If the Deadlock is not resolved by a
written agreement during the Consultation Period and
Mediation Period, either may give notice of an election
to invoke the Buy-Out provisions of Section 7.3 hereof
("Buy-Out Notice") and Section 7.3 shall apply.
7.2 Default and Insolvency.
7.2.1 Default Notice. Upon a Default by any party (the
"Defaulting Party"), any other party may give written
notice of the Default ("Default Notice") to the
Defaulting Party specifying the Default. The Default
Notice shall be given within a reasonable time (but in
any event within 90 Days) after discovery of the Default.
7.2.2 Consultation Period. Within sixty (60) Days after any
Default Notice is given ("Consultation Period"), chief
executive officers of the parties shall meet personally
and attempt to resolve the Default, and any resolution
shall be set forth in a written agreement among the
parties.
7.2.3 Mediation Period. If the Default is not resolved by a
written agreement during the Consultation Period, then
within the immediately following sixty (60) Days
("Mediation Period") the parties will attempt to have the
Default resolved by non-binding mediation under Section
7.5 below.
7.2.4 Buy-Out Notice. If the Default (i) is not resolved by
a written agreement during the Consultation Period and
Mediation Period and (ii) is not cured within 120 Days
of the Default Notice, the non-defaulting party may give
notice of an election to invoke the Buy-Out provisions
of Section 7.3 hereof ("Buy-Out Notice") and Section 7.3
shall apply.
7.2.5 Arbitration Remedy. Any party may in any case seek a
remedy by arbitration under Section 10.8 below. Any bona
fide dispute between the parties over the existence or
nature of a Default or the cure thereof shall be resolved
pursuant to the terms of Section 10.8.
7.2.6 Insolvency Notice. If a party is insolvent, has been
declared bankrupt, has had a receiver or trustee
appointed to manage its assets or affairs, or is the
subject or a petition for insolvency of bankruptcy that
has not been discharged within sixty (60) Days of its
filing ("Insolvent Party"), any other party may give the
insolvent Party written notice thereof and elect to
invoke the Buy-Out provisions of Section 7.3 hereof
("Insolvency Notice") and Section 7.3 shall apply.
<PAGE>
<PAGE>109
7.3 Buy-Out.
7.3.1 Determine Fair Market Value. In the event of a Buy-Out
Notice under Sections 2.6.1, 2.8, 7.1.4, 7.2.4, 7.8 or
an Insolvency Notice under Section 7.2.6 above, the Fair
Market Value of the Company as of the date the Buy-Out
Notice is given shall be determined under Section 7.4
below.
7.3.2 Klemp Election. Klemp shall then have thirty (30) Days
from the date upon which the Fair Market Value shall have
been determined in which to elect (for itself or an
Affiliate), by written notice, to purchase all of the
Shares of the other parties in the Company for a price
equal to one hundred percent (100%) of the Fair Market
Value multiplied by the other parties' percentage
ownership of the Shares of the Company.
7.3.3 CFI Election. If within the 30-Day period described in
Section 7.3.2 Klemp has not elected to purchase the other
parties' Shares, CFI shall thereupon have a further
thirty (30) Days in which to elect (for itself or an
Affiliate), by written notice, to purchase all of the
Shares of the other parties in the Company for a price
equal to one hundred percent (100%) of the Fair Market
Value multiplied by the other parties' percentage
ownership of the Shares of the Company.
7.3.4 Mr. Gary Johnson Election. If within the 30-Day period
described in Section 7.3.3 CFI has not elected to
purchase the other parties' Shares, Mr. Johnson shall
thereupon have a further thirty (30) Days in which to
elect (for himself), by written notice, to purchase all
of the Shares of the other parties in the Company for a
price equal to one hundred percent (100%) of the Fair
Market Value multiplied by the other parties' percentage
ownership of the Shares of the Company.
7.3.5 Mr. Ernest Balazs Election. If within the 30-Day period
described in Section 7.3.4 Mr. Johnson has not elected
to purchase the other parties' Shares, Mr. Balazs shall
thereupon have a further thirty (30) Days in which to
elect (for himself), by written notice, to purchase all
of the Shares of the other parties in the Company for a
price equal to one hundred percent (100%) of the Fair
Market Value multiplied by the other parties' percentage
ownership of the Shares of the Company.
7.3.6 Mr. Alfred Beaulieu Election. If within the 30-Day
period described in Section 7.3.5 Mr. Balazs has not
elected to purchase the other parties' Shares, Mr.
Beaulieu shall thereupon have a further thirty (30) Days
in which to elect (for himself), by written notice, to
purchase all of the Shares of the other parties in the
Company for a price equal to one hundred percent (100%)
of the Fair Market Value multiplied by the other parties'
percentage ownership of the Shares of the Company.
<PAGE>
<PAGE>110
7.3.7 Adjustment of Fair Market Value. If no election has
been made under Sections 7.3.2 to 7.3.6 above, then,
immediately upon expiration of the 30-Day period
described in Section 7.3.6, the Fair Market Value shall
become an amount that is ninety percent (90%) of the
previous Fair Market Value, and the procedures of
Sections 7.3.2, to 7.3.6 and this 7.3.7 will continue to
be repeated in sequence until an election is made under
Section 7.3.2, Section 7.3.3, Section 7.3.4, Section
7.3.5. or Section 7.3.6.
7.3.8 Purchase Terms. Once an election is made under Section
7.3.2, Section 7.3.3, Section 7.3.4, Section 7.3.5. or
Section 7.3.6, then (i) the parties shall promptly
perform all acts required of them and use their best
efforts to cause third parties to perform all acts
required to enable the purchaser to consummate forthwith
its purchase of the Shares (the "Required Acts"), and
(ii) the purchaser shall pay the purchase price in cash
and in U.S. Dollars within 120 Days after the date of the
election or within twenty (20) Days after completion of
the Required Acts, whichever occurs earlier.
7.4 Fair Market Value.
7.4.1 Proposed & Agreed Values. Within thirty (30) Days after
any Buy-Out Notice is given under Section 7.3 above,
Klemp and CFI shall communicate to each other by written
notice a proposed fair market value in U.S. dollars (the
"Proposed Value") and attempt to arrive at an agreed Fair
Market Value in U.S. dollars for the Company. Any such
agreed-upon value, when approved in writing by the
parties, shall be deemed to be the Fair Market Value.
7.4.2 Appraiser Determines Fair Market Value. If no such
agreement has been reached within the 30-Day period
described in Section 7.4.1, then the Fair Market Value
in U.S. dollars shall be determined in writing by an
independent appraiser.
7.4.3 Selection of Appraiser. The Company's external auditors
shall serve as the appraiser or, if unwilling to do so,
appoint the appraiser or, if no appraiser has been
appointed within sixty (60) Days after the Buy-Out Notice
is given, the President of Mexico's Association of
Charted Accountants or other authority agreed on in
writing by the parties shall at the request of any party
appoint the appraiser. The appraiser shall in all cases
be a member of a major international accounting firm with
offices in Mexico City.
7.4.4 Cost. The fees and expenses of the appraiser shall be
borne equally by the parties.
7.4.5 Basis of Appraisal. The appraiser is to make his or her
own determination in writing of the fair market value in
U.S. dollars of the Shares of the Company, based on what
an arm's length purchaser would pay for the Shares taking<PAGE>
<PAGE>111
into account the going concern value of the Company (if
still carrying on business).
7.4.6 Assistance. The parties shall give all reasonable
assistance to the appraiser, and require the officers,
directors and auditors of the Company to give such
assistance. The parties may make written representations
to the appraiser, but the appraiser will not be obligated
to agree with them.
7.4.7 Appraised Value. Within sixty (60) Days after the
appointment of the appraiser (or as soon thereafter as
it can be accomplished), the appraiser shall submit to
the parties the fair market value as determined by the
appraiser (the "Appraised Value") together with a copy
of a written appraisal report prepared by such appraiser
with respect to such value.
7.4.8 Use of Proposed or Appraised Value. If the appraised
value determined in the Appraised Value is higher than
the higher of either party's Proposed Values (or, if only
one Proposed Value was timely communicated, that Proposed
Value), then the second higher Proposed Value shall be
the Fair Market Value. Otherwise, the Appraised Value
determined by the appraiser shall be the Fair Market
Value.
7.4.9 Date Fair Market Value Determined. The Fair Market
Value shall be deemed determined on (i) the date of any
written approval of an agreed Fair Market Value under
Section 7.4.1, or (ii) the date the written appraisal
report prepared by the appraiser under Section 7.4.7 is
given to the last party to receive it, or (iii) if the
Fair Market Value has been reduced under Section 7.3.7,
the time described in Section 7.3.7.
7.5 Mediation Procedure. Mediation under this Agreement shall occur
under the then current Center of Public Resources ("CPR") Model
Procedure for Mediation of Business Disputes (Model Procedure).
The mediator will be selected from the CPR Panels of Neutrals
under the Model Procedure, unless the parties have first selected
a different mediator.
7.6 Interim Operation. During any period of Deadlock, Default,
Dispute, existence of an Insolvent Party, Consultation Period,
Mediation Period, Buy-Out and any period thereafter until a sale
is concluded under Section 7.3, the parties shall continue to
operate the Company in accordance with all matters that have been
agreed upon including this Agreement, the Management Agreement
and the Business Plan, and otherwise in the best interests of the
shareholders.
7.7 Other Remedies Upon Default or Sale. The provisions of this
Section 7 are not intended to be penal clauses, and the rights
therein shall be in addition to and not in substitution for any
other remedies that may be available to a non-defaulting party.
No sale under Section 7.3 shall relieve any party from any
obligations accrued to the date of such sale or relieve a <PAGE>
<PAGE>112
defaulting party from liability and damages to any other party
for breach of this Agreement, except that such defaulting party
shall have no further liability with respect to any Delinquent
Advance of such party.
7.8 Change in Control. If there is a change in control with respect
to either party, the other parties may within thirty days of
receiving notice of the change in control elect by written notice
to invoke immediately the Buy-Out provisions of Section 7.3
hereof ("Buy-Out Notice") and Section 7.3 shall then apply;
provided that:
7.8.1 The election must be made within one (1) year of the
effective Date of this Agreement, and
7.8.2 The party making the election may not be in Default under
this Agreement and the Deadlock, Default and Buy-Out
procedures of Sections 7.1, 7.2 or 7.3 shall not
otherwise have commenced.
8. TERM, TERMINATION & DISSOLUTION
8.1 Term. The term of this Agreement shall be from the Effective
Date until terminated under Section 8.2.
8.2 Termination of Agreement. This Agreement shall be terminated
on the date:
8.2.1 The parties agree in writing to terminate the Agreement;
8.2.2 A sale is completed by Klemp or CFI of all its Shares in
the Company by written agreement or under the "Buy-Out"
provisions of Section 8.3 above;
8.2.3 120 Days after the charter of the Company expires, or is
revoked provided it is not reinstated (or a new charter
is not issued) within these 120 Days.
8.3 Survival of Provisions. Sections 6, 7.5, 7.7, 8.4, 8.5, 9, 10,
any other provision hereof which specifically so provides, and
any provision hereof where the context so requires, shall survive
any termination of this Agreement. Termination shall not affect
any liability or obligation accrued before the date of
termination.
8.4 Post-Termination Competition. After the date of a termination,
the parties and their affiliates may compete with one another in
the United States of America and the United Mexican States
subject to the provisions of this Agreement including the
provisions of Section 9 hereof relating to confidentiality and
return of materials embodying Confidential Information (as
defined in Section 9.2); provided, however, that in the event of
termination of this Agreement upon a Buy-Out of a party's Shares
following a Default or other breach hereof, the defaulting or
breaching party shall remain bound by the provisions of Section
6.1, 6.2, 6.3, 6.4 or 6.5 hereof (as applicable) for a period of
five years following the date of termination.
<PAGE>
<PAGE>113
8.5 Dissolution. Dissolution of the Company shall occur only in
accordance with the applicable provisions of law and the charter
of the Company.
9. CONFIDENTIALITY.
9.1 Duty of Confidentiality. Each party acknowledges that it will
be made aware of and have access to Confidential Information (as
defined in Section 9.2). No party hereto shall disclose, during
the term of this Agreement or thereafter, any Confidential
information to any person other than an affiliate, agent or
employee of the parties, and only in furtherance of the interests
of the Company, unless prior written consent to such disclosure
has been obtained from other party.
9.2 Confidential Information. For purpose of this Section 9,
Confidential Information shall mean all confidential or
proprietary information owned, possessed or used by the parties
or their affiliates, including, but not limited to, trade secrets
and know-how and other such information or data which is declared
to be confidential or proprietary by any party to this Agreement
prior to its disclosure. Such information must be in writing or,
if disclosed orally, must be reduced to writing within 10 days
after such oral disclosure. Any such written material must be
marked "confidential" or "proprietary". Confidential
Information for purposes of this Section 9 shall not include
information which: (1) was in the public domain at the time it
was disclosed, (2) was already validly in a recipients's
possession at the time it was disclosed, and the evidence of such
possession is reasonably satisfactory to the party seeking to
restrict disclosure, (3) was independently from a source other
than a disclosing party without the disclosing party breaching
its obligations hereunder.
9.3 Measures by Affiliates. The parties shall cause their
affiliates, the Company, and the employees and agents of each of
the foregoing, not to disclose, and to exercise the same degree
of care to protect, the Confidential Information of the parties
that it would use to preserve and safeguard its own confidential
information. Such care shall include, but not be limited to,
requiring any such entities, or their agents and employees, to
execute a reasonable confidentiality agreement in a form
submitted by one party to any other party.
9.4 Return of Confidential Information. Upon the termination of
this Agreement, each party shall return to the others, and shall
cause the Company to so return all materials embodying
Confidential Information which such party has received from any
of the others since the execution of this Agreement.
10. MISCELLANEOUS.
10.1 Assignment. No party to this Agreement may assign, transfer or
otherwise convey any or all of its rights or obligations
hereunder without the prior consent of the others, except to an
affiliate to whom the Shares have been conveyed as permitted by
Section 2.8 above. No such assignment to an affiliate shall
relieve the assigning party of any of its obligations hereunder.<PAGE>
<PAGE>114
10.2 Entire Agreement. This Agreement (including all exhibits
hereto), together with the Management Agreement, sets forth the
entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior discussions, understanding
and agreements relating to the subject matter hereof.
10.3 Severability. If any one or more of the provisions contained
in this Agreement or in any document executed in connection
herewith shall be held invalid, illegal or unenforceable in any
respect under applicable law, the validity, legality, and
enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired; provided, however, that
in such case the parties shall use their best efforts to achieve
the purpose of the affected provision in a manner which is not
invalid, illegal or unenforceable.
10.4 Governing Law. This Agreement and all actions and arbitrations
contemplated hereby shall be governed by and construed and
enforced in accordance with the internal laws of the United
Mexican States, excluding the principles of conflict of laws
thereof.
10.5 Governing Text and Language. The parties shall execute five
English language originals of this Agreement, one to be held by
each party. The parties understand and agree that this document
has been prepared in the English language and that the English
language is the official language of this Agreement. The parties
shall also promptly cause an official certified Spanish language
text to be prepared, but should any discrepancy of interpretation
occur between the English original and the Spanish text, the
English original shall be controlling.
10.6 No Waiver of Rights. Except as otherwise provided herein, no
failure or delay on the part of either party in the exercise of
any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such power or
right preclude other or further exercise thereof or of any other
right or power.
10.7 Force Majeure.
10.7.1 Failure on the part of a party to perform any of its
obligations hereunder will not be deemed to be a breach
of the Agreement to the extent that such failure arises
from force majeure. If through force majeure the
fulfillment by either party of any obligation set forth
in this Agreement will be delayed, the period of such
delay will not be counted in computing periods prescribed
by this Agreement.
10.7.2 Any party failing to perform its obligations under this
Agreement because of force majeure shall give notice in
writing of such force majeure as soon as possible after
the occurrence to the other party.
10.7.3 Force majeure will mean any war, civil commotion, strike,
lockout, accident, epidemic, or other event (whether
similar of dissimilar to the foregoing) that is fully <PAGE>
<PAGE>115
beyond the reasonable control of the parties, and that
directly prevents a party from performing an obligation
hereunder.
10.7.4 Any party hereto who fails because of force majeure to
perform an obligation hereunder will upon the cessation
of the force majeure take all reasonable steps within its
power to resume with the least possible delay compliance
with that obligation.
10.8 Dispute Resolution.
10.8.1 The parties shall attempt to settle any Dispute between
them by consultation and non-binding mediation, during
a Consultation Period and Mediation Period, as provided
by Sections 8.1.2, 8.1.3, 8.2.2, 8.2.3, and 8.5 above.
If no Notice of Deadlock or Notice of Default has been
given, a party shall first give a written notice
specifying the Dispute and the Consultation Period will
begin with that notice.
10.8.2 If the Dispute is not resolved by written agreement
within the Consultation Period and the Mediation Period,
it shall be resolved by binding arbitration under the
Center for Public Resources Rules for Non-Administered
Arbitration of Business Disputes, in English at New York
City, NY before one neutral arbitrator who may be a
national of any party and who shall be a lawyer with at
least 15 years experience in commercial law. In the
event the parties are unable to agree on a neutral
arbitrator within thirty days after any party's demand
for arbitration, the Center for Public Resources shall
be authorized to appoint an arbitrator from the CPR
Panels of Neutrals. All documents and information
relevant to the claim or dispute in the possession of any
party shall be made available to the other party not
later than sixty (60) Days after the demand of
arbitration is served, and the arbitrator may permit such
deposition or other discovery deemed necessary for a fair
hearing. The hearing may not exceed two Days. The award
shall be rendered within 120 Days of the demand. The
arbitrator may not award interim and final injunctive
relief and other remedies, and may not award punitive
damages. No time limit herein is jurisdictional. Any
award of the arbitrator shall be final and not subject
to appeal or review, and may be confirmed or enforced in
any court having jurisdiction and under the New York
Convention on the Recognition and Enforcement of Foreign
Arbitral Awards.
10.8.3 Notwithstanding Sections 10.8.1 and 10.8.2 above, the
parties may bring court proceedings or claims against
each other only (i) as part of separate litigation
commenced by an unrelated third party, or (ii) if not
first sought from the arbitrator, solely to obtain
preliminary injunctive relief of other interim remedies
pending conclusion of the arbitration.
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<PAGE>116
10.8.4 The arbitrator shall be authorized to allocate the costs
of the arbitration proceedings among the parties in a
manner deemed equitable by the arbitrator.
Notwithstanding the foregoing, each party shall bear its
own costs for lawyers or witnesses.
10.9 Notices. All notices and other communications hereunder shall
be in writing in the English language and may be personally
delivered or sent by telefax and the confirmed by certified or
registered first class air mail. Any such notice or other
communication shall be deemed effectively given (a) on the date
of delivery if personally delivered; or (b) on the first business
day after being sent by telefax. All such notices and
communications shall be delivered or sent to the addresses below
or such other address(es) as a party may specify in a written
notice:
a) If to Klemp:
Rio Balsas No. 80 - 3rd. Floor
Col. Cuauhtemoc
06500 Mexico, D.F.
Tel.: 533-6162
Fax: 514-5362
b) If to CFI:
Route 3, Box 581
Old Laurens Highway
Clinton, South Carolina 29325
Tel.: 803-833-4472
Fax: 803-833-4899
c) If to Mr. Gary Johnson:
Route 3, Box 581
Old Laurens Highway
Clinton, South Carolina 29325
Tel.: 803-833-4472
Fax: 803-833-4899
d) If to Mr. Ernest Balazs:
17 St. Mark Street
Auburn, Massachusetts 01501
Tel.: 508-832-9686
Fax: 508-832-7369
e) If to Mr. Alfred Beaulieu:
17 St. Mark Street
Auburn, Massachusetts 01501
Tel.: 508-832-9686
Fax: 508-832-7369
10.10 Exhibits. The exhibits hereto are an integral part of this
Agreement and all references herein to this Agreement shall
encompass such Exhibits.<PAGE>
<PAGE>117
10.11 Counterparts. This Agreement may be executed simultaneously in
any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
10.12 Headings. The headings of the sections and paragraphs of this
Agreement have been inserted for convenience of reference only
and do not constitute a part of this Agreement.
10.13 Amendment and Modification. This Agreement may be amended or
modified only by a writing executed by all parties.
10.14 Further Instruments and Acts. The parties hereto will execute
and deliver such further instruments and do such further acts as
may be necessary or proper to carry out more effectively the
purposes of this Agreement.
INTENDING TO BE LEGALLY BOUND, the parties have caused this Agreement to
be executed by their duly authorized officers as of the _____ day of
________________, 1996.
By:____________________________ By:____________________________
____________________________ ____________________________
<PAGE>
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EXHIBIT 1.2
CFI-KLEMP DE MEXICO, S.A. DE C.V.
CHAPTER I
NAME, DOMICILE, PURPOSE AND DURATION.
FIRST.- NAME. The name of the Company is CFI-KLEMP DE MEXICO. This
denomination shall always be followed by the words SOCIEDAD ANONIMA DE CAPITAL
VARIABLE or their abbreviation S.A. DE C.V.
SECOND.- DOMICILE. The domicile of the Company is Lerma, State of
Mexico, but the Company may establish agencies or branches elsewhere in the
Republic of Mexico and designate conventional domiciles for the execution of
specific acts and contracts.
THIRD.- PURPOSES. The purposes of the Company are:
a) To manufacture, purchase, sell, import and export of metal
fabrications, and in general all kind of products.
b) To establish agencies or branches in the United Mexican States or
abroad.
c) To render technical, professional, administrative and consultant
services related to the purpose, as well as to hire workers, technicians,
distributors and administrative personnel.
d) To acquire, hold and dispose of, in any legal manner, all kinds of
shares, interests or participations in other corporations or associations,
whether of a civil or mercantile nature, consistent with these corporate
purposes.
e) To acquire, own, lease and encumber in any legal manner such real or
personal properties as may be required by or convenient for the corporate
purpose.
f) To represent all kinds of companies and individuals within or outside
of the Republic of Mexico as agent, commission agent, representative or
attorney-in-fact.
g) To lend and borrow money with or without mortgage or pledge security
or in any other legal manner and to guarantee the obligations of third persons
by means of bond, mortgage, pledge, or otherwise.
h) To sign and grant all kinds of credit instruments and other documents
and contracts of indebtedness and to guarantee the payment thereof in any
legal manner.
i) To acquire and dispose of in any legal manner such patents, patent
rights, inventions, trade-marks, copyrights and trade names as may be required
or convenient for attainment of the corporate purpose.
j) To render any and all services whether of a civil, administrative or
mercantile nature relating to the corporate purpose, and
k) In general, to carry out and perform any and all business or <PAGE>
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activities relating to the corporate purpose.
FOURTH.- DURATION. The term of duration of the Company shall be
ninety-nine years, counted from the date of the Articles of Incorporation.
CHAPTER II
CAPITAL STOCK AND SHARES
FIFTH.- CAPITAL STOCK. The capital stock of the company shall be
variable, with a minimum of $375,000.00 (THREE HUNDRED AND SEVENTY FIVE
THOUSAND PESOS, MEXICAN CURRENCY), represented by 375,000 shares with a par
value of $1.00 (ONE PESO, MEXICAN CURRENCY), each, and an unlimited maximum.
SIXTH.- SHARES. The shares which represent the capital stock shall be of
free subscription and may be subscribed or acquired by Mexican or foreign
individuals, companies or economic entities. The shares shall be represented
by provisional and, subsequently, by final stock certificates.
The final stock certificates shall be printed, taken from stub-books and
cover one or more shares; they shall be numbered consecutively and shall bear
the autograph signatures of the President and of the Secretary of the Board or
of any two Directors. The recitals of Article 125 of the General Corporation
Law and Clauses Sixth, Seventh and Thirty-Fifth of these By-Laws shall be
transcribed on the final and provisional stock certificates. Save in the case
of legal issuance of more than one series for reasons of preferential rights
of different participation in dividends or other reasons, shares will confer
on their holders the same rights and impose the same obligations with respect
to: a) profit participation; b) distribution of losses up to the amount of the
par value of each share subscribed and not paid in; c) participation in
General Shareholder's Meetings; and d) any other rights or responsibilities
set out in these By-laws and in the law.
Every shareholder as such submits and is subject to the stipulations of
the Articles of Incorporation and the resolutions duly adopted by the
Shareholders in a General Meeting or by the Board of Directors.
SEVENTH.- REGISTRATION OF SHAREHOLDERS AND STOCK TRANSFERS. The Company
shall deem as owner of the shares any person who is registered as such in the
Stock Register to be kept by the Company. Upon request of any interested
party, the Company shall record in said Register any transfers made.
No shareholder may sell, encumber or transfer his shares, unless the
shareholder obtains prior written approval from the Board of Directors.
The transfer of shares will be executed by endorsement and delivery of
the share certificate, without prejudice to any other legal means of transfer,
and the transfer will take effect from the date it takes place, with respect
to the signatory, and from the date of its registration in the Stock Registry
book with respect to the corporation. When the Company receives notice of a
share transfer, signed by the endorser, or when it is presented with the
certificate bearing the endorsement, in compliance with the procedure
established in the preceding paragraph, the Secretary of the Board of
Directors will record the transfer in the Stock Registry book.
At the request of the owner and at its expense, share certificates can be
exchanged for others of different denominations, provided that the new
certificate or certificates represent the same number of shares as the old <PAGE>
<PAGE>120
ones given in exchange.
In case of loss, theft, total destruction, mutilation or serious
deterioration of share certificates, their cancellation and replacement will
be subject to the dispositions of the Second Section of the First Chapter, of
the First Title of the General Law of Credit Instruments and Operations in
force and effect, with the corresponding expense being for the account of the
interested party.
EIGHTH.- CAPITAL STOCK INCREASES AND REDUCTIONS. The variable capital
stock of the Company may be increased or reduced without need of amending the
Corporate By-Laws. The only formality required for said increase or reduction
will be the approval by the shareholders in an Extraordinary Meeting. Every
increase or reduction of the capital stock of the Company shall be recorded in
a Stock Register kept for such purpose by the Company.
a) Capital increases. In a capital stock increase the shareholders shall
have the preferential right to subscribe the shares issued in proportion to
the number of shares held by them. No capital increase may be declared until
all shares previously issued by the Company have been fully subscribed and
paid for.
b) Capital Reductions. Reductions of the capital stock of the Company
shall be carried out by amortization of whole shares, by reimbursement to the
shareholders. The shares to be canceled shall be determined by unanimous
resolution of the shareholders or, in default thereof, by drawing before a
Notary or Licensed Broker.
In this case, after said shares have been determined a notice shall be
published in the Federal Daily Gazette and the amount of the reimbursement
shall from said date remain at the disposal of the respective shareholders, in
the Company offices, without drawing interest.
The shareholders shall have the right to withdraw all or any part of
their contributions, and obtain reimbursement for their shares, in accordance
with Articles 220 and 221 of the General Law of Mercantile Corporations,
provided they so notify the Company five years in advance. Reimbursement of
the shares shall be made in proportion to the net worth of the Company in
accordance with the last approved balance sheet and against delivery and
cancellation of the respective shares.
The right to withdraw said contributions may not be exercised when as a
result of same the capital stock of the Company is reduced to less than the
minimum.
CHAPTER III
SHAREHOLDERS' MEETINGS
NINTH.- SUPREME AUTHORITY. The supreme authority of the Company is
vested in the shareholders convened in a General Meeting, who may adopt all
kinds of resolutions and appoint and remove any officer. Their resolutions
shall be enforced by the Board of Directors or the person or persons expressly
designated therefore by the shareholders.
The resolutions of the shareholders shall be binding even on absentees or
dissenters except for the right of opposition provided in the General
Corporation Law.
<PAGE>
<PAGE>121
TENTH.- TYPES OF SHAREHOLDERS' MEETING. General Shareholders' Meetings
shall be Ordinary and Extraordinary.
Ordinary Shareholder' Meetings are those held to deal exclusively with
the matters mentioned in paragraphs noted with roman numerals one, two and
three of Article 181 of the General Corporation Law.
Extraordinary Shareholders' Meetings are those held to deal with any of the
matters mentioned in Article 182 as well as any other matter that is not
reserved for Ordinary Shareholder's Meetings.
ELEVENTH.- MEETINGS. Ordinary and Extraordinary Shareholders' Meetings
shall be held in the corporate domicile at any time when called, except in
case of fortuitous circumstances or force majeure, and except as provided in
the last paragraph of Clause Twelfth.
Ordinary Meetings shall be held at least once each year, within four
months following the close of the fiscal year, to discuss, approve or modify
the report of the Board of Directors, the financial statements, the report of
the Examiner, the distribution of profits if any, as well as to appoint the
members of the Board of Directors and the Examiner, and determine their
remuneration, if any.
Extraordinary Shareholders' Meetings shall be held as many times as
called, according to these By-laws and the law.
TWELFTH.- CALLS. Calls for Ordinary and Extraordinary Shareholders'
Meetings shall be made by the President and the Secretary of the Board or by
two Directors or the Examiner. The call shall be made by means of a notice
published in a newspaper of wide circulation in the corporate domicile thirty
calendar days before the date set for the Meeting and by means of a notice
sent with the same anticipation by telex, fax or telegram and confirmed by air
mail confirmed receipt or courier addressed to each shareholder at his
domicile or to the place that he may have designated for such purpose. The
call shall set forth the hour, date and place of the Meeting and the agenda,
and shall be signed by the person issuing the call.
No call shall be required when all the shares of the capital stock of the
Company are represented in a Shareholders' Meeting nor in the case that a duly
convened Meeting is to be continued, provided that when the Meeting was
postponed, the date and hour for its continuation were determined.
Resolutions adopted outside of a duly convened Meeting, even if they are
adopted outside of the corporate domicile, by unanimous vote of all the
shareholders entitled to vote, shall be as valid and binding as if such
resolutions had been passed at a duly convened General or special
Shareholders' Meeting, if such resolutions are confirmed in writing.
THIRTEENTH.- QUORUM IN ORDINARY SHAREHOLDERS' MEETINGS. Ordinary
Shareholders' Meetings shall be deemed as duly convened pursuant to first call
when at least 50% plus one of the shares of capital stock of the Company are
represented therein. In case of second or subsequent calls, said Meetings
shall be deemed as duly convened irrespective of the number of shares
represented therein. In both cases resolutions shall be adopted by majority
vote of the shares represented in said Meetings.
FOURTEENTH.- QUORUM IN EXTRAORDINARY SHAREHOLDERS' MEETINGS.
Extraordinary Shareholders' Meetings shall be deemed as duly convened <PAGE>
<PAGE>122
pursuant to first or subsequent call when at least 60% of the shares of
capital stock of the Company are represented therein. In order to be valid
resolutions taken in Extraordinary
Shareholders' Meetings shall require the affirmative vote of shares
representing at least 70% of the capital stock of the Company.
FIFTEENTH.- REQUISITES FOR ATTENDING SHAREHOLDERS' MEETINGS.
Shareholders can attend Shareholder's Meetings in person or through a
representative holding a general or special power of attorney, a letter proxy
signed by the shareholders being sufficient in the latter case.
For the shareholders to be admitted to the Meetings, their registration
as shareholders in the Stock Registry book or other proof of their legal
capacity, will be sufficient.
SIXTEENTH.- PROCEDURE IN SHAREHOLDERS' MEETINGS. The procedure in
General Ordinary and Extraordinary Shareholders' Meetings shall be as follows:
a) The President and the Secretary of the Company shall act as President
and Secretary, respectively, of Shareholders' Meetings, and in default
thereof, the person appointed therefore by the shareholders.
b) The President shall appoint one or more tellers to verify the number
of shares represented at the Meetings and to count the votes.
c) If the required quorum is present, the President shall declare the
Meeting duly convened and proceed to transact the business on the agenda.
d) Minutes of all Shareholders' Meetings shall be drawn up, entered in
the respective book and signed by the President and the Secretary of the
Meeting and by the attending Examiners. The documents evidencing that the
call, if any, was made as required by the Corporate By-Laws, shall be attached
to the minute file, as well as the attendance list, the letter powers of
attorney or an extract of the power of attorney prepared by the tellers, the
reports, opinions and other documents submitted for consideration of the
shareholders, and a copy of the minutes. The Minutes shall be sent to all the
shareholders by the Secretary by registered air mail within 21 days after the
date of Meeting.
CHAPTER IV
ADMINISTRATION
SEVENTEENTH.- ADMINISTRATION. The administration of the Company shall be
entrusted to a Board of Directors. The Board of Directors shall be composed
of four Regular Directors. Each Shareholder or group of Shareholders
representing 20% of the capital stock of the Company shall have the right to
appoint a Regular Director and an Alternate Director.
The Regular Directors shall be substituted during their temporary
absences by the Alternates specifically designated to substitute each Regular
Director, but if no such special designation has been made, the Regular
Director shall designate the Alternate who shall substitute for him.
The shareholders in a Meeting may at any time appoint and remove any
Director, observing, however, the right of the minority shareholders.
EIGHTEENTH.- DIRECTORS. The Directors may but need not be shareholders <PAGE>
<PAGE>123
of the Company, they shall hold their position for one year as a general rule,
but may be reelected and in any case shall continue to discharge their duties
until their successors take office.
NINETEENTH.- PRESIDENT AND SECRETARY. The shareholders, in a General
Ordinary Shareholders' Meeting, or the Board of Directors may appoint the
President of the Board from among the members of said body, who shall not have
the casting vote in case of a tie in the voting of the Board.
A Board Secretary may also be appointed, who may but need not be a
Director or shareholder.
The President of the Board shall have exclusively those powers conferred
upon him by the Board of Directors.
TWENTIETH.- POWERS. The Board of Directors shall have the following
powers:
a) General power of attorney for lawsuits and collections, in the terms
of the first paragraph of Article 2554 of the Civil Code for the Federal
District, with all general and such special powers as are mentioned in Article
2587 of said Code, including but not limited to the following:
To exercise all types of rights and actions before any and all
authorities and Boards of Conciliation and arbitration; to submit to any
jurisdiction; to desist from injunction (amparo) proceedings; to file charges
and complaints as aggrieved party and assist the District Attorney; and to
sign such documents as may be required in the exercise of this power of
attorney;
b) General power of attorney for acts of administration, in the terms of
the second paragraph of said Article 2554, with powers to carry out all
operations inherent in the corporate purpose;
c) General Power of attorney for acts of dominion, in the terms of the
third paragraph of said Article 2554;
d) Power to grant and sign credit instruments in accordance with Article
9 of the General Law of Credit Instruments and Operations;
e) Power to carry out and enforce the resolutions adopted in General
Shareholders' Meetings;
f) Power to revoke and confer general and special powers of attorney
within the scope of the aforementioned powers.
TWENTY-FIRST.- BOARD MEETINGS. Board of Directors' Meetings shall be
held in the corporate domicile or in any other place in the Republic of Mexico
or abroad that may be previously determined in the respective call.
Board Meetings may be held at any time but not less than once each year
and shall be convened by the President or the Secretary of the Board or by two
Directors or the Examiner of the Company. The person convening the Meeting
shall inform the Board Secretary, who shall immediately issue the respective
call.
Calls shall be made in writing and sent by telex, fax or telegram,
confirmed by registered air mail, to each of the Regular Directors and <PAGE>
<PAGE>124
Examiners, at least 30 calendar days in advance, to their domicile or the
place which each Director has designated for such purpose. Calls shall
specify the hour, date and place of the Meeting and its purpose or the agenda,
and shall be signed by the person issuing the call.
TWENTY-SECOND.- QUORUM AND VOTING. A Board Meeting may be validly held
pursuant to first or subsequent calls when at least four Board members are
present, and resolutions shall be adopted by a vote of at least four Board
members. If a Board Meeting cannot be held for lack of a quorum on second
call, the President and the Secretary or any two Board members shall convoke
to an Extraordinary Shareholders Meeting for the specific purpose of dealing
with the proposed agenda of the Board Meeting.
A resolution of the Board adopted by all members shall be as valid and
binding as if such resolution had been passed at a duly convened Meeting of
the Board if it is confirmed in writing.
TWENTY-THIRD.- MINUTES. From each Meeting of the Board the minutes will
be placed in the corresponding book and shall be signed by the person
presiding, the acting secretary and the examiner in attendance.
TWENTY-FOURTH.- GENERAL MANAGER. The Extraordinary Shareholders' Meeting
or the Board of Directors shall appoint the General Manager, who may, but need
not be, shareholder of the Company.
CHAPTER V
EXAMINER
TWENTY-FIFTH.- FINANCIAL REVIEW. The financial review of the Company
shall be entrusted to one or more Examiners and their alternates, as may be
determined by the shareholders in a General Meeting.
Any shareholders representing 25% of the capital stock of the Company may
appoint an Examiner and his alternate in addition to those already appointed.
TWENTY-SIXTH.- EXAMINER. The Examiners may but need not be shareholders
of the Company and shall hold their position for one year, as a general rule,
but shall continue to discharge their duties until their successors take
office.
The remuneration of the Examiners, if any, shall be fixed by the
shareholders in a General Ordinary Meeting.
TWENTY-SEVENTH.- POWERS AND DUTIES. Examiners shall have the powers and
duties provided in the General Corporation Law.
CHAPTER VI
FISCAL YEAR, BALANCE SHEET, PROFITS AND LOSSES
TWENTY-EIGHTH.- FISCAL YEAR. The fiscal year of the Company shall be a
calendar year.
TWENTY-NINTH.- BALANCE SHEET. A Balance Sheet shall be prepared within
three months following the close of the fiscal year and kept in the principal
offices of the corporate domicile, available to the Company shareholders and
officers, together with its supporting documents, one month before the <PAGE>
<PAGE>125
respective Annual Shareholders' Meeting is held.
THIRTY.- PROFITS. The profits obtained in each fiscal year shall be
applied as follows:
a) First the amount agreed upon by the General Ordinary Shareholders'
Meeting will be set aside for the establishment or reconstitution, as the case
may be, of the Legal Reserve Fund, an amount that at minimum will be 5% of the
net profit, until an amount equal to one fifth of the capital stock is
accumulated.
b) Such sum as may be determined by the shareholders shall be set aside
for creating or increasing reinvestment, contingency or such special reserves
as may be deemed advisable;
c) Such sum as may be determined by the shareholders shall be distributed
to the shareholders in proportion to the number of their shares;
d) The remainder, if any, shall be passed to the Undistributed Profits
account.
THIRTY-FIRST.- LOSSES. The shareholders shall be liable for the Company
losses but their liability shall be limited to payment of the unpaid portion
of their shares; hence, the owners of fully-paid shares shall have no
liability whatsoever.
CHAPTER VII
DISSOLUTION AND LIQUIDATION
THIRTY-SECOND.- CAUSES FOR DISSOLUTION. The Company shall be dissolved:
a) Upon expiration of the term fixed in these By-Laws;
b) If continued execution of the corporate purposes shall become
impossible;
c) By resolution of the shareholders adopted in accordance with these
By-Laws and the Law;
d) If the number of shareholders shall be reduced to less than two;
e) In case of loss of two-thirds of the corporate capital unless the
shareholders restore or reduce same.
THIRTY-THIRD.- LIQUIDATION.
a) Upon dissolution, the Company shall be placed in liquidation which
shall be entrusted to one or more Receivers, as determined by the shareholders
in an Extraordinary Meeting.
b) The Directors shall continue in the discharge of their duties until
the appointment of the Receivers shall have been recorded in the Public
Registry of Commerce and the Receivers shall have taken office.
c) The liquidation shall be conducted as prescribed in the General
Corporation Law but the shareholders, upon determining to liquidate, shall
establish the rules which, in addition to the provisions of Law and these <PAGE>
<PAGE>126
By-Laws, shall govern all action taken by the Receivers.
d) The General Shareholders' Meeting wherein the final balance sheet is
approved must be presided over by one of the Receivers. The Receivers shall
have the authority vested in the Board of Directors and the duties and
obligations granted to the Receivers by the General Corporation Law. The
Examiners shall discharge the same duties during the liquidation as during the
normal existence of the Company.
CHAPTER VIII
GENERAL PROVISIONS
THIRTY-FOURTH.- FOUNDERS. The founders do not reserve to themselves any
special participation in the Company profits.
THIRTY-FIFTH.- FOREIGNERS. Any foreigner who upon incorporation or at
any time thereafter acquires an interest or participation in the Company
and/or the property rights, concessions, participations or interests owned by
such companies or the rights and obligations derived from the agreements to
which such companies are parties with Mexican authorities, shall be considered
ipso facto as a Mexican citizen with respect to such interest, participation,
concession, right obligation and agreement and it shall be understood that he
agrees not to seek the protection of his government under penalty, in case of
breaching said agreement, of forfeiting such interest or participation to the
Mexican Nation.
THIRTY-SIXTH.- SUPPLETORY LAW. In all matters not specifically provided
for herein, the provisions of the General Corporation Law shall govern.
<PAGE>
<PAGE>127
EXHIBIT 2.5.2
The parties shall pay the aggregate amount of $750,000.00 (SEVEN HUNDRED
FIFTY THOUSAND PESOS 00/100) upon incorporation of the Company.
The parties shall pay the aggregate amount of $350,000.00 (THREE HUNDRED
FIFTY THOUSAND PESOS 00/100) on April 15, 1996.
The parties shall pay the aggregate amount of $350,000.00 (THREE HUNDRED
FIFTY THOUSAND PESOS 00/100) on May 15, 1996.
The parties shall pay the aggregate amount of $350,000.00 (THREE HUNDRED
FIFTY THOUSAND PESOS 00/100) on June 15, 1996.
<TABLE>
<CAPTION> Payment Schedule Detail
Incorporation April 15 May 15 June 15
<S> <C> <C> <C> <C>
CFI $329,250 $153,650 $153,650 $153,650
Klemp 375,750 175,350 175,350 175,350
Gary Johnson 15,000 7,000 7,000 7,000
Ernest Balazs 15,000 7,000 7,000 7,000
Alfred Beaulieu 15,000 7,000 7,000 7,000
-------- -------- -------- --------
TOTAL $750,000 $350,000 $350,000 $350,000
======== ======== ======== ========
</TABLE>
Exchange Rate: $7.5 Pesos per Dollar.
<PAGE>
<PAGE>128
EXHIBIT 3.6
CFI - KLEMP DE MEXICO
1996 - 1998 BUSINESS PLAN
CFI-KLEMP DE MEXICO is being formed as a Joint Venture to take advantage of
worldwide market opportunities in large fabrications associated with power
plant and related infrastructure development. Such fabrications include
turbine enclosures, platforms and railings. Both CFI and Klemp have expertise
in the manufacture and marketing of fabricated metal products and the Joint
Venture represents a sound combination of the respective company abilities.
The Joint Venture will work directly with CFI (U.S.) and major OEM's such as
Westinghouse, GE and Siemens in the development of orders that may be shipped
globally. Product manufacture will be done at a 3,200 M2 facility in Lerma,
Edo. de Mexico. Mr. Rudi Samuel will be Director General responsible for
operations.
Business start-up will begin in March, 1996 and will accelerate to the first
phase of full production by end of June, 1996. Key managers will be in place
by early April 1996. Approximately $400,000 of orders are in hand at business
start-up.
Sales, cost and profit projections are shown in the attached exhibit. Sales
are projected at $1,025,000 in 1996, expanding to $3,500,000 in fiscal 1998.
Material and labor cost percentages will remain relatively constant at a
combined 62% of sales, while fixed and administrative costs will decline from
26% in 1996 to 11% in 1998. The business is projected to be profitable
throughout the plan period except in the initial plan period.
<TABLE>
<CAPTION> BUSINESS PLAN FINANCIAL PROJECTIONS 1996-1998
1996 1997 1998
<S> <C> <C> <C>
SALES $1,025,000 $2,200,000 $3,500,000
COST:
MATERIAL 461,000 (45%) 990,000 (45%) 1,575,000 (45%)
LABOR 174,000 (17%) 374,000 (17%) 595,000 (17%)
---------- ---------- ----------
635,000 (62%) 1,364,000 (62%) 2,170,000 (62%)
---------- ---------- ----------
OVERHEAD:
FACILITY 100,000 (10%) 120,000 (6%) 120,000 (3%)
SALARY 120,000 (12%) 150,000 (7%) 200,000 (6%)
OTHER 45,000 (4%) 55,000 (2%) 65,000 (2%)
---------- ---------- ----------
265,000 (26%) 325,000 (15%) 385,000 (11%)
---------- ---------- ----------
TOTAL 900,000 (88%) 1,689,000 (77%) 2,555,000 (73%)
---------- ---------- ----------
PBT 125,000 (12%) 511,000 (23%) 945,000 (27%)
========== ========== ==========
</TABLE>
<PAGE>
<PAGE>129
<TABLE>
<CAPTION> 1996 MONTHLY OPERATING PROJECTIONS
($ IN 000'S)
MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SALES $ 20 $ 65 $ 90 $ 90 $120 $120 $130 $130 $130 $130 $1,025
MTL 9 30 40 40 55 55 58 58 58 58 461
LABOR 3 11 16 16 20 20 22 22 22 22 174
RENT 10 10 10 10 10 10 10 10 10 10 100
SALARY 12 12 12 12 12 12 12 12 12 12 120
TRAVEL 2 2 2 2 2 2 2 2 2 2 20
EQ. LEASE 1 1 1 1 1 1 1 1 1 1 10
SECURITY 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 5
OTHER 1 1 1 1 1 1 1 1 1 1 10
TOTAL 38.5 67.5 82.5 82.5 101.5 101.5 106.5 106.5 106.5 106.5 900
NET CASH (18.5) (2.5) 7.5 7.5 18.5 18.5 23.5 23.5 23.5 23.5
CUMULATIVE (18.5) (21)(13.5) (6) 12.5 31 54.5 78 101.5 125
</TABLE>
<PAGE>
<PAGE>130
EXHIBIT 4.3.2
It is resolved that a power of attorney is granted to Messrs. Ruid Samuel
Birkenfeld, Walter Kellogg and Gary Johnson jointly any two of them, to act in
the name and on behalf of the Company, with the following authority:
General power of attorney for acts of administration pursuant to the second
paragraph of article 2554 of the Civil Code for the Federal District and the
corresponding Articles of the Civil Codes for the other States of the Republic
of Mexico.
General power of attorney for lawsuits and collections pursuant to the first
paragraph of Article 2554 of the Civil Code for the Federal District and the
corresponding Articles of the Civil Codes for all the other States of the
Republic of Mexico, with all of the general authority and such authority as
may require a special clause pursuant to Article 2587 of the Civil Code for
the Federal District and the corresponding Articles of the Civil Codes for all
the other States of the Republic of Mexico, such as but not limited to the
following authority: to exercise all kinds of rights and actions before any
authorities of the Federation, the States, the Federal District and the
Municipalities, whether under voluntary, adversary or joint jurisdiction, and
whether they are civil, judicial or administrative authorities or labor
authorities, whether Conciliation Boards or Arbitration Courts, whether local
or federal; to answer complaints and file exceptions and counterclaims; to
submit to any jurisdiction; to answer and propound interrogatories; to
challenge magistrates, judges, clerks, experts and other persons challengeable
under Law; to withdraw from the main cause of action, its incidentals, any
appeal and amparo proceedings, which they may file as many times as they may
deem advisable; to produce all kinds of evidence; to acknowledge signatures
and documents, and to object to them and to challenge them on the grounds that
they are false; to attend meetings, proceedings and actions; to bid and outbid
and to obtain for the grantor company to award of all kinds of properties, and
assign rights under any title; to file accusations, denunciations and
complaints; to grant acquittals and to join criminal causes of action or
assist the public prosecutor, in which causes of action they may exercise the
fullest authority that may be required. This power of attorney is also
granted for the purpose of Articles 11, 692, Section II; 786 and 876 of the
Federal Labor Law.
Power of attorney to intervene in credito operations and to execute all types
of credit instruments pursuant to article 9 of the General Law for Credit
Instruments and Operations, to open bank accounts and to issue checks against
the bank accounts opened or to be opened by the Company and to designate the
persons authorized to sign the checks.
Power of attorney in labor matters pursuant to articles 11, 692, sections II
and III, and others of the Federal Labor Law, with the authority such as but
nor limited to; represent the Company in the hearings referred to in articles
876 and 878 of the above mentioned law and in general in any stage of labor
proceedings against the Company; to appear before all types of labor
authorities referred to in article 523 of the above mentioned law; to perform
all kind of procedures as required to solve the Company's matters; and to act
or execute any agreement related to labor relationships.
It is resolved that a power of attorney is granted to Messrs. Jorge Leon
Orantes, Jaime Roberto Rendon Graniell, Juan Carlos Jimenez Villasenor, Jose
Oscar Gonzalez Gonzalez, Jorge Bernardo Sierra Navarro, Jaime Delgado Reyes,
Lorenia Espinosa Urbano, Francisco Capetillo Traeger, Julio Flores Luna, <PAGE>
<PAGE>131
Gustavo Garcia Cuencia, Victor Adame Calderon, Jose Luis Lopez Ramirez, Raul
Moreyra Suarez, Alejandro Calderon Aguilera, Octavio Varela Mejia, Luis Hector
Trujillo Saca, David H. Brill, Luis Capin Lopez, Enrique Ramirez Ramirez,
Adriana de Aguinaga Girault, Jose Luis Martinez Fernandez, Maria Antonieta
Tena Sanchez and Manuel Andres Traslosheros Romero, jointly or severally, to
act in the name and on behalf of the Company, with the following authority:
General power of attorney for lawsuits and collections pursuant to the first
paragraph or Article 2554 of the Civil Code for the Federal District and the
corresponding Articles of the Civil Codes for all the States of the Republic
of Mexico, with all of the general authority and such authority as may require
a special clause pursuant to Article 2587 of the Civil Code for the Federal
District and the corresponding Articles of the Civil Codes for all the States
of the Republic of Mexico, such as but not limited to the following authority:
to exercise all kinds of rights and actions before any authorities of the
Federation, the States, the Federal District and the Municipalities, whether
under voluntary, adversary or joint jurisdiction, and whether they are civil,
judicial or administrative authorities or labor authorities, whether
Conciliation Boards of Arbitration Courts, whether local or federal; to answer
complaints and file exceptions and counterclaims; to submit to any
jurisdiction; to answer and propound interrogatories; to challenge
magistrates, judges, clerks, experts and other persons challengeable under
Law; to withdraw from the main cause of action, its incidentals, any appeal
and amparo proceedings, which they may file as many times as they deem
advisable; to produce all kinds of evidence: to acknowledge signatures and
documents, and to object to them and to challenge them on the grounds that
they are false; to attend meetings, proceedings and actions; to bid or outbid
and to obtain for the grantor company the award of all kinds of properties,
and assign rights under any title; to
file accusations, denunciations and complaints; to grant acquittals and to
join criminal causes of action or assist the public prosecutor, in which
causes of action they may exercise the fullest authority that may be required.
<PAGE>
<PAGE>132
EXHIBIT 4.5
It is resolved that a the Board of Directors of the Company be composed
as follows:
Gerald McClure
Walter Kellogg
Jack McSweeney
Gary Johnson
It is resolved that Mr. Miguel Kafka be appointed Examiner of the
Company.
It is resolved that Mr. Rudi Samuel Birkenfeld be appointed General
Director of the Company.
<PAGE>
<PAGE>133
SECOND AMENDMENT TO LEASE AGREEMENT
THIS SECOND AMENDMENT TO LEASE AGREEMENT (hereinafter referred to as the
"Second Amendment") is made as of the 25th day of March, 1996, by and between
WEEKS REALTY, L.P., (hereinafter referred to as "Landlord"), and CHATWINS
GROUP, INC., (hereinafter referred to as "Tenant").
WITNESSETH:
WHEREAS, RTF Properties, L.P. and Tenant entered into that certain Lease
Agreement dated May 31, 1994, as assigned to Landlord by that certain Lease
Assignment dated August 1, 1994, as amended by that certain First Amendment to
Lease Agreement dated August 9, 1994 (hereinafter referred to as the
"Agreement") for the lease of 127,800 sq. ft. of office/warehouse space in
Northpoint Park located at the intersection of Georgia Highway No. 92 and
Interstate Highway No. 75 in Cherokee County, Georgia, and certain easements,
rights and privileges appurtenant thereto (hereinafter referred to as the
"Leased Premises"); and
WHEREAS, Weeks Realty, L.P. succeeded to the interest of the Landlord
under the Agreement and is the Landlord with respect to the Leased Premises;
WHEREAS, Landlord and Tenant desire to enter into this Second Amendment
in order to amend certain terms and conditions of the Lease upon terms and
conditions mutually acceptable to Landlord and Tenant;
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) paid by
Landlord and Tenant to one another, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
Landlord and Tenant, Landlord and Tenant amend the Agreement as follows:
1. Section 2.01 of the Agreement is hereby amended to set forth that
the commencement date is March 13, 1995 and the lease term shall continue
until midnight on March 12, 2005.
2. Pursuant to Paragraph 7.01, Tenant and Landlord have agreed to a
Change Order to the Plans and Specifications, attached hereto as Exhibit "A".
Paragraph 3.01 of the Agreement is hereby amended to provide that the base
rental for the Leased Premises shall be as set forth below:
Years 1 - 5 $351,705.60/year $29,308.80/month
Years 6 - 10 $392,473.80/year $32,706.15/month
which payments shall be due and payable on or before the first day of each
calendar month during the term, together with any other additional rental as
set forth in the Agreement.
3. At beneficial occupancy, several areas of the concrete slab
experienced cracking as a result of crane loading and adverse weather
conditions as more specifically described in the report and floor plan
prepared by Atlanta Testing & Engineering dated February 1, 1996 attached as
Exhibit B. Although the Tenant is responsible for the floor pursuant to the
terms of the Agreement, Landlord and Tenant agree that the responsibility for
repairs to the concrete slab in the manufacturing and warehouse area shall be
separated as follows:
(a) In the event that the cracking interferes with Tenant's
use of the Leased Premises and Tenant and Landlord reasonably determine that <PAGE>
<PAGE>134
it is necessary to replace the slab sections in those areas, Landlord shall be
solely responsible for removing and replacing in an expeditious manner those
concrete slab sections noted in accordance with the original design. Landlord
shall cause such work to be performed in a manner that does not unreasonably
interfere with Tenant's use of the Leased Premises. Upon satisfactory
completion of this replacement and acceptance by an independent third party
structural engineer, the responsibility for any further repairs shall reside
with Tenant. Notwithstanding this paragraph 3(a) or anything to the contrary
contained in the Lease, Landlord acknowledges and agrees that Tenant shall
have no responsibility whatsoever for said cracking or any further cracking
directly relating to the cracking identified on said Exhibit B.
(b) Notwithstanding that which is set out in Paragraph 3(a)
above, Tenant shall be responsible for the repair of any concrete slab
sections in the manufacturing and warehouse area throughout the term of the
lease that have not been specifically identified as Landlord's responsibility
in the report attached as Exhibit B (including specifically, during any
construction warranty periods).
4. Except as expressly modified by this Second Amendment, all
provisions, terms and conditions of the Agreement shall remain in full force
and effect.
5. In the event a provision of this Second Amendment conflicts with a
provision of the Agreement, the Second Amendment shall supersede and control.
6. All terms and phrases used herein shall have the same meaning as
assigned to them in the Agreement.
7. This Second Amendment shall not be of any legal effect or
consequence unless signed by Landlord and Tenant, and once signed by Landlord
and Tenant it shall be binding upon and inure to the benefit of Landlord,
Tenant, and their respective legal representatives, successors and assigns.
8. This Second Amendment has been executed and shall be construed
under the laws of the State of Georgia.
<PAGE>
<PAGE>135
IN WITNESS WHEREOF, the undersigned have caused this Second Amendment to
be executed under seal and delivered as of the day and year first above
written.
Signed, sealed and delivered LANDLORD: WEEKS REALTY, L.P.,
in the presence of: a Georgia limited partnership
____________________________
Witness By: Weeks Corporation,
a Georgia corporation,
____________________________ its General Partner
Notary Public
By: ______________________
Name:______________________
Title:_____________________
(Corporate Seal)
Signed, sealed and delivered TENANT: CHATWINS GROUP, INC.
in the presence of:
____________________________
Witness By: ___________________________
Name:__________________________
____________________________ Its:___________________________
Notary Public
ATTEST:
By: ____________________________
Name:___________________________
Its:____________________________
(Corporate Seal)
<PAGE>
<PAGE>136
THIRD AMENDMENT TO LEASE AGREEMENT
THIS THIRD AMENDMENT TO LEASE AGREEMENT (hereinafter referred to as the
"Third Amendment") is made as of the 10th day of June 1996, by and between
WEEKS REALTY, L.P. (hereinafter referred to as "Landlord") and CHATWINS GROUP,
INC. (hereinafter referred to as "Tenant").
WITNESSETH:
WHEREAS, RTF Properties, L.P. and Tenant entered into that certain Lease
Agreement dated May 31, 1994, as assigned to Landlord by that certain Lease
Assignment dated August 1, 1994, as amended by that certain First Amendment to
Lease Agreement dated August 9, 1994, and as further amended by that certain
Second Amendment to Lease Agreement dated March 25, 1996 (hereinafter
collectively referred to as the "Agreement") for the lease of 127,800 sq. ft.
of space at Northpoint Park located at the intersection of Georgia Highway No.
92 and Interstate Highway No. 75 in Cherokee County, Georgia and certain
easements, rights and privileges appurtenant thereto (hereinafter referred to
as the "Leased Premises"); and
WHEREAS, Tenant desires to exercise its option under Section 35 of the
Agreement to lease an additional 95,100 square feet of space to be constructed
as an expansion to the Building (hereinafter the "Additional Space"); and
WHEREAS, Landlord and Tenant desire to enter into this Third Amendment in
order to provide for said expansion of the Leased Premises and to provide for
an extension of the term of the Lease upon terms and conditions mutually
acceptable to Landlord and Tenant;
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) paid by
Landlord and Tenant to one another, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
Landlord and Tenant, Landlord and Tenant amend the Agreement as follows:
1. Effective upon substantial completion of construction of the
improvements to the Additional Space as hereinafter defined ("Substantial
Completion of the Additional Space"), paragraph 1.01 of the Agreement is
hereby amended to provide for the lease by Tenant of an additional 95,100
square feet of space which together with the 127,800 square feet being leased
by Tenant under the Agreement (hereinafter the "Existing Space"), equals a
total of 222,900 square feet (the Additional Space, the Land, and the Existing
Space shall be collectively hereinafter referred to as the "Leased Premises"
for all purposes of the Agreement, as amended hereby). Substantial Completion
of the Additional Space shall mean the earlier of: (1) completion of
construction of the Additional Space substantially in accordance with the
Approved Plans and Specifications (as hereinafter defined), subject only to
punchlist items as specified in the next succeeding sentence; or (2) the date
upon which the Additional Space is in fact substantially occupied by Tenant
for the conduct of its business therein. It is understood and agreed by
Landlord and Tenant that in order to achieve Substantial Completion of the
Additional Space the only permitted incomplete or defective punchlist items
must be those which , if taken either individually or in the aggregate, do not
materially or substantially interfere with Tenant's taking possession of,
moving its personal property and effects into, or using and enjoying the
Additional Space for the purposes for which it was intended. Landlord agrees
to provide to Tenant at least fifteen (15) days prior written notice of the
date on which it expects to achieve Substantial Completion of the Additional
Space. <PAGE>
<PAGE>137
2. Paragraph 2.01 of the Agreement is hereby amended to provide that
the term of the lease shall be extended for an additional three (3) year
period continuing until midnight on March 12, 2008.
3. Paragraph 3.01 of the Agreement is hereby amended to provide that
commencing on Substantial Completion of the Additional Space, Tenant shall pay
the base rental as set forth below:
ADDITIONAL SPACE BASE RENTAL:
Substantial Completion - 3/12/00 $25,597.75/mo. $307,173.00/year
March 13, 2000 - March 12, 2005 $26,548.75/mo. $318,585.00/year
March 13, 2005 - March 12, 2008 $29,243.25/mo. $350,919.00/year
EXISTING SPACE BASE RENTAL:
March 13, 1995 - March 12, 2000 $29,308.80/mo. $351,705.60/year
March 13, 2000 - March 12, 2005 $32,706.15/mo. $392,473.80/year
March 13, 2005 - March 12, 2008 $35,997.00/mo. $431,964.00/year
TOTAL LEASED PREMISES BASE RENTAL:
3/13/95 - Substantial Completion $29,308.80/mo. $351,705.60/year
Substantial Completion - 3/12/00 $54,906.55/mo. $658,878.60/year
March 13, 2000 - March 12, 2005 $59,254.90/mo. $711,058.80/year
March 13, 2005 - March 12, 2008 $65,240.25/mo. $782,883.00/year
which payments shall be due and payable on or before the first day of each
calendar month during the applicable term, together with any other additional
rental as set forth hereunder or as set forth in the Agreement.
4. The base rental provided in paragraph 3 hereof, includes all costs
and expenses of construction of the Additional Space on the basis set forth in
the preliminary site plan and specifications (hereinafter referred to as the
"Preliminary Site Plan and Specifications"), attached hereto as Exhibit A.
Landlord and Tenant agree that, at Landlord's sole cost and expense, final
plans and specifications shall be prepared to match the design criteria
contained in Exhibit A and shall be submitted to Tenant for approval (after
approval by Tenant, hereinafter the "Approved Plans and Specifications"). Any
modifications to the scope that is defined by the Preliminary Site Plan and
Specifications shall be considered Change Orders (as defined below).
(A) The Additional Space shall be constructed by Landlord in
compliance with all federal, state, county, municipal or local government
laws, ordinances regulations, rules and orders (including, without limitation,
the Occupational Safety and Health Act of 1970, as amended) and shall be of
similar quality as the Existing Space. All costs of construction of the
Additional Space pursuant to the Approved Plans and Specifications and in
accordance with the allowances set forth therein shall be borne by Landlord.
Changes in the Approved Plans and Specifications shall be made only pursuant
to written change order (hereafter a "Change Order") signed by both Tenant and<PAGE>
<PAGE>138
Landlord and shall be in compliance with the Protective Covenants. Such
Change Order shall specify the cost of such change (which shall be the sum of
all actual out of pocket costs and expenses attributable thereto and the cost
of financing with respect thereto), and any additional time required for
Substantial Completion required by reason of such change. In the event of an
increase or decrease in the cost of construction resulting from Change Orders
requested by Tenant and from costs incurred either less than or in excess of
the allowances set forth in the Approved Plans and Specifications, the base
rental shall be adjusted upwards or down by multiplying 11% times the net
increases or decreases. The total amount allowed of increase or decrease
pursuant to this Paragraph 4(A) shall be $100,000.00. In the event of an
increase above $100,000.00 in the cost of construction by reason of any
specialty items (above building standard) requested by Tenant or increase in
office build out requested by Tenant, at Tenant's option, Landlord shall
invoice Tenant for the net increase upon Substantial Completion of the
Additional Space, in which event Tenant shall pay Landlord the amount thereof
within twenty (20) business days after delivery of such invoice, or Landlord
shall amortize the cost of construction of such items or build out over the
term at a rate equal to 10.5% per annum. Landlord shall indemnify and hold
Tenant harmless from or in connection with any occurrence during construction
of the Additional Space, unless such claims or demands are caused, directly or
indirectly, by any act or negligence of Tenant or its agents, contractors,
employees or invitees.
(B) Tenant shall have a representative review and approve
proposed drawings and details for conformity with the Approved Plans and
Specifications. So long as such proposed drawings and construction schedule
are delivered to Tenant in a timely manner, such review shall be conducted so
as not to delay the construction schedule. During the course of construction
of the Additional Space, Tenant may enter upon the Additional Space for
purposes of inspecting and reviewing the work, taking measurements, making
plans, installing trade fixtures and telephones, erecting temporary or
permanent signs and doing such other work as may be appropriate or desirable
without being deemed thereby to have taken possession or obligated itself to
pay rent but Tenant agrees that: (a) Landlord shall have no liability for
injury to any person or damage to any property of Tenant stored on the
Additional Space except for damages caused by the willful act or negligence of
Landlord or its employees or agents, (b) Tenant shall not interfere with
Landlord's construction work on the Additional Space, (c) Tenant shall
indemnify, protect and hold harmless Landlord from and against any and all
claims, demands, damages, losses, costs, expenses, liabilities and actions at
law or in equity based upon any occurrence or condition arising out of or
attributable to Tenant's exercise of such right except for demands, damages,
losses, costs, expenses, liabilities and actions caused by the willful act or
negligence of Landlord or its employees or agents, and (d) Tenant shall be
solely responsible for the permitting of any such work it performs. At least
forty-five (45) days before Substantial Completion of the Additional Space,
Landlord shall give Tenant written notice of such projected date of
Substantial Completion of the Additional Space. From the date such notice is
given, Tenant, its agents, and its employees shall have access to the Leased
Premises for the purpose of installing furniture, fixtures, equipment and
other items necessary for the commencement of Tenant's operations; provided
that Tenant has the approval of any applicable governmental authority for its
activities in the Leased Premises, that there shall be no interference with
the completion of the construction nor shall Tenant begin conducting its
business in the Leased Premises during such forty-five (45) day period.
(C) No later than Substantial Completion of the Additional <PAGE>
<PAGE>139
Space, Tenant and Landlord shall prepare an agreed final punch list setting
forth the work, if any, remaining to be done, or requiring correction, on the
Additional Space, and Landlord shall promptly commence, and thereafter with
due diligence prosecute to completion, the work required by said punch list
(which shall in no event include, except on condition Tenant shall pay to
Landlord the actual cost thereof plus ten percent (10%) of such amount, work
required as a consequence of injury or damage to the Additional Space
attributable to Tenant, its agents, employees, contractors or movers). If the
parties cannot agree upon the final punch list, then the punch list shall be
determined by an independent professional engineer employed by the mutual
agreement of Landlord and Tenant.
5. Landlord agrees at its expense during the term of the Agreement to
keep in good repair, the roof and structural components of the Additional
Space, except that repairs rendered necessary by the negligence of Tenant, its
agents, employees or invitees shall be undertaken by Landlord at Tenant's
expense payable, as additional rent, upon demand. Notwithstanding anything
elsewhere in the Agreement to the contrary, Landlord shall, at its sole cost
and expense, upon notice by Tenant (with a copy of such notice being sent to
the holders of any mortgages, or deeds to secure debt, which notice shall also
provide such holders with an opportunity to cure such defect within said
thirty (30) day period) but only for a period of one (1) year immediately
subsequent to the Substantial Completion of the Additional Space, repair,
replace or otherwise correct structural or other construction defects, as well
as defects in any of the additional items to be constructed or installed by
Landlord in accordance with the Agreement, provided that any correction or
repair of any defect or condition caused by the acts or failure to act of
Tenant, its agents, contractors, employees or invitees shall be paid by Tenant
as herein provided.
6. Landlord's obligation to construct the Additional Space is subject
to Landlord's acquiring the real property adjacent to the Leased Premises
necessary to construct the Additional Space. Landlord shall use diligent
efforts, following the final execution and delivery by Landlord and Tenant of
this Third Amendment to acquire said real property; if Landlord is unable,
within ninety (90) days following the execution and delivery of this Third
Amendment, to acquire said real property, on terms and conditions satisfactory
to Landlord in Landlord's sole and absolute discretion, Landlord shall have
the right to rescind Tenant's election to lease the Additional Space.
Thereafter, the Agreement and all of the terms and conditions thereof (other
than Article 35 thereof) shall remain in full force and effect.
7. Landlord has agreed to use its diligent good faith efforts to
cause Substantial Completion of the Additional Space to occur on or before
February 1, 1997 provided that Tenant approves the construction drawings
within fourteen (14) calendar days of Tenant's receipt of such construction
drawings. In the event of any delay in Substantial Completion of the
Additional Space beyond March 1, 1997 for any reason other than justifiable
weather related delays approved by tenant in writing or delays by Tenant, its
agents, employees or invitees, Landlord shall pay to Tenant as liquidated
damages the amount of $500.00 per day for the first seven days of such delay
and $800.00 per day thereafter for each day of such delay until Substantial
Completion of the Additional Space shall occur. Landlord agrees to give
Tenant notice of any weather related delay detailing the reason for and the
extent of such delay promptly upon commencement of such delay for Tenant's
review and approval. Landlord and Tenant acknowledge that Tenant's actual
damages in the event of a default by Landlord under the Agreement will be
difficult to ascertain, and that the liquidated damages provided above <PAGE>
<PAGE>140
represent Tenant's best estimate of such damages. The parties expressly
acknowledge that the foregoing liquidated damages are intended not as a
penalty, but as full liquidated damages, as permitted by Section 13-6-7 of the
Official Code of Ga. Annotated.
8. Landlord and Tenant agree that Tenant has exercised its option to
lease additional space under Article 35 of the Agreement and Landlord and
Tenant agree that Tenant shall no longer have any rights under Article 35 in
the event Landlord rescinds this Third Amendment as provided in Section 6 of
this Third Amendment or upon Substantial Completion of the Additional Space.
In no event shall the immediately preceding sentence limit any rights of
Tenant under any other provision of the Agreement.
9. Landlord agrees that on or before Substantial Completion of the
Additional Space, Landlord shall have the Additional Space and the land upon
which it is located fully re-zoned by the appropriate governmental authority
to the same classification as the Leased Premises so that the entire Leased
Premises (including the Additional Space) is zoned to permit the Tenant's
intended use. In the event such re-zoning does not occur on or before
Substantial Completion of the Additional Space, Tenant, at its option, may
terminate this Third Amendment. Landlord shall deliver evidence of such re-
zoning promptly to Tenant. Except as expressly modified by this Third
Amendment, all provisions, terms and conditions of the Agreement shall remain
in full force and effect.
10. In the event a provision of this Third Amendment conflicts with a
provision of the Agreement, the Third Amendment shall supersede and control.
11. All terms and phrases used herein and not defined shall have the
same meaning as assigned to them in the Agreement.
12. This Third Amendment shall not be of any legal effect or
consequence unless signed by Landlord and Tenant, and once signed by Landlord
and Tenant it shall be binding upon and inure to the benefit of Landlord,
Tenant, and their respective legal representatives, successors and assigns.
13. This Third Amendment has been executed and shall be construed
under the laws of the State of Georgia.
<PAGE>
<PAGE>141
IN WITNESS WHEREOF, the undersigned have caused this Third Amendment to
be executed under seal and delivered as of the day and year first above
written.
Signed, sealed and delivered LANDLORD: WEEKS REALTY, L.P.,
in the presence of: a Georgia limited partnership
By: Weeks Corporation,
____________________________ a Georgia corporation,
Witness its General Partner
____________________________ By:______________________________
Notary Public Name:___________________________
Its:______________________________
ATTEST:
By:_____________________________
Name:__________________________
Its:_____________________________
[Corporate Seal]
Signed, sealed and delivered TENANT: CHATWINS GROUP, INC.
in the presence of:
____________________________ By:___________________________
Witness Name:_________________________
Its:__________________________
____________________________
Notary Public
ATTEST:
By:____________________________
Name:_________________________
Its:____________________________
[Corporate Seal]
<TABLE> <S> <C>
<ARTICLE>5
<LEGEND>
This schedule contains summary financial information extracted from the
registrant's financial statements included in the Form 10-Q for the period-end
indicated below and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 377
<SECURITIES> 0
<RECEIVABLES> 29,605
<ALLOWANCES> 664
<INVENTORY> 20,093
<CURRENT-ASSETS> 53,094
<PP&E> 46,020
<DEPRECIATION> 18,256
<TOTAL-ASSETS> 104,336
<CURRENT-LIABILITIES> 25,077
<BONDS> 49,864
0
7,342
<COMMON> 3
<OTHER-SE> (6,894)
<TOTAL-LIABILITY-AND-EQUITY> 104,336
<SALES> 77,966
<TOTAL-REVENUES> 77,966
<CGS> 62,038
<TOTAL-COSTS> 62,038
<OTHER-EXPENSES> 10,803
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,758
<INCOME-PRETAX> 367
<INCOME-TAX> 65
<INCOME-CONTINUING> 102
<DISCONTINUED> 428
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 530
<EPS-PRIMARY> 1.03
<EPS-DILUTED> 1.03
</TABLE>
