<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended July 31, 1996
or
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ________ to _________
Commission File No. 0-22724
CABLE DESIGN TECHNOLOGIES CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware 36-3601505
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Foster Plaza 7
661 Andersen Drive
Pittsburgh, PA 15220
(Address of Principal Executive Offices and Zip Code)
(412) 937-2300
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
Common Stock, $.01 par value National Association of Securities Dealers
Automated Quotation System (National Market System)
("NASDAQ / NMS")
Securities registered pursuant to Section 12(g) of the Act: None
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 proceeding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of regulation S-K is not contained herein, and will be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
________________________________________________________________________________
Exhibit Index on Page 16
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The aggregate market value of the registrant's voting stock held by non-
affiliates of the registrant at September 30, 1996, is $516,772,935.
The number of shares outstanding of the registrant's Common Stock at
September 30, 1996, is 18,188,210.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Cable Design Technologies Corporation Proxy Statement for the
Annual Meeting of Shareholders to be held on December 12, 1996, (the "Proxy
Statement") are incorporated by reference into Part III.
Portions of the 1996 Cable Design Technologies Corporation Annual Report to
Shareholders (the "1996 Annual Report") are incorporated by reference into Parts
I, II and IV.
<PAGE>
CABLE DESIGN TECHNOLOGIES CORPORATION
Table of Contents
<TABLE>
<CAPTION>
PART I Page
<S> <C> <C>
Item 1. Business........................................................ 2
Item 2. Properties...................................................... 6
Item 3. Legal Proceedings............................................... 6
Item 4. Submission of Matters to a Vote of Security Holders............. 6
Item 4.1. Executive Officers of the Registrant............................ 7
PART II
Item 5. Market for the Registrant's Common Stock
and Related Stockholder Matters................................. 8
Item 6. Selected Financial Data......................................... 8
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations................... 8
Item 8. Financial Statements and Supplementary Data..................... 8
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.......................... 8
PART III
Item 10. Directors and Executive Officers of
the Registrant.................................................. 8
Item 11. Executive Compensation.......................................... 9
Item 12. Security Ownership of Certain Beneficial
Owners and Management........................................... 9
Item 13. Certain Relationships and Related Transactions.................. 9
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K......................................... 9
Signatures...................................................... 14
</TABLE>
<PAGE>
PART I.
ITEM 1. BUSINESS
(a). General Description of Business
Cable Design Technologies Corporation (the "Company", the "Registrant" or
"CDT") was incorporated on May 18, 1988 under the laws of the State of Delaware
with its principal office located at 661 Andersen Drive, Pittsburgh,
Pennsylvania 15220 (Telephone: 412-937-2300).
CDT is a designer and manufacturer of technologically advanced electronic
data transmission cables and connectors made of copper, fiber optics and
copper/fiber optic composites for network structured wiring systems; automation,
sound & safety; computer interconnect, and communications applications.
The Company, as it exists today, was incorporated on May 18, 1988, but was
conceived in 1985 by its current President and Chief Executive Officer, Paul
Olson, together with other members of current management, shortly after
acquiring the West Penn Wire Corporation ("West Penn/CDT"). In 1988, the
Company underwent a recapitalization pursuant to which GTC Fund II purchased a
controlling interest in the Company. On July 14, 1988, the Company acquired all
of the outstanding capital stock of Cable Design Technologies Inc. (formerly
Intercole Inc.).
In March 1986, the Company acquired Mohawk Wire & Cable Corporation
("Mohawk/CDT") , a cable manufacturer with established relationships with
companies involved in the early stages of computer cable network development.
In December 1988, the Company purchased Montrose Products Company
("Montrose/CDT"), a specialty electronic cable company with established
relationships with IBM and other major purchasers of computer interconnect
products. In August 1990, the Company formed CDT International Inc. ("CDT
International") to respond to increasing demand for data transmission cable
products in international markets. In May 1991, the Company expanded its
international presence by purchasing Anglo-American Cable Ltd. ("Anglo/CDT"), a
European cable distributor. In March 1993, the Company established Phalo/CDT to
further increase its production capabilities and broaden its product line. In
May 1994, the Company acquired all the outstanding stock of Nya NEK Kabel AB
("NEK/CDT"), located near Gothenburg, Sweden, to enter the sophisticated
broadcast, Cable Television (CATV) and antenna cable markets and to expand
network systems cable manufacturing capacity into Europe. In June 1995, the
Company purchased all of the operating assets of Manhattan Electric Cable
Corporation ("Manhattan/CDT") based in Rye, New York to enhance sales of
specialty electronic cables for industrial automation and robotic applications.
Subsequently, in August 1995, the Company purchased Cole-Flex Corporation
of West Babylon, New York to combine its sleeving and tubing capabilities with
Manhattan/CDT. In September 1995, the Company purchased the operating assets of
the Raydex Division of Volex Group, p.l.c. ("Raydex/CDT") (United Kingdom) to
provide additional international manufacturing capabilities of specialty and
high performance electronic cables for computer network systems,
telecommunications, aerospace, CATV, and industrial applications. Effective
February 2, 1996, the Company acquired the assets of Northern Telecom Limited's
("Nortel") communications cables and IBDN network structured wiring products
businesses ("NORDX/CDT") (Canada). On June 4, 1996, the Company acquired the
stock of Cekan A/S ("Cekan/CDT") (Denmark), a manufacturer of high performance,
telecommunications connectors, and on June 24, 1996, the Company acquired, in
exchange for shares of its common stock, X-Mark Industries ("X-Mark/CDT")
(Washington, PA), a manufacturer of specialized metal enclosures for network
systems.
2
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(b). Products
The markets served by the Company principally involve products for computer
local area networks (LANS) and wide area networks (WANS), structured wiring
products, computer interconnect, automation, sound & safety applications and
communications cable applications.
Network Structured Wiring - This product group encompasses the cables,
-------------------------
connectors, racks, panels, outlets and interconnecting hardware to complete the
end-to-end network system requirements of LANS and WANS. Additional capital
expenditures and new acquisitions have greatly increased the Company's capacity
in this product area. Sales of network structured wiring products were $73.2
million in fiscal 1994, $102.4 million in fiscal 1995 and $186.2 million in
fiscal 1996. Sales of these products represented approximately 50%, 54% and 52%
of the Company's total sales for the fiscal years ending July 31, 1994, 1995 and
1996, respectively.
Automation, Sound & Safety - Automation, sound & safety encompasses three
--------------------------
distinct applications for data and signal transmission cables. Automation
applications include climate control and sophisticated security and signal
systems involving motion detection, electronic card and video surveillance
technologies. Sound includes voice activation, evacuation and other similar
systems and safety cable refers to certain attributes of data transmission cable
that improve the safety and performance of such cable under hazardous
conditions, particularly in buildings for advanced fire alarm and safety
systems.
The Company's sales in this market were $39.7, $47.2 and $68.7 million in
fiscal 1994, 1995 and 1996, respectively. Sales of these products represented
27%, 25% and 19% of the Company's total sales in fiscal 1994, 1995 and 1996,
respectively.
Computer Interconnect - Computer interconnect refers to a family of data
---------------------
transmission cables used to internally connect components of computers,
telecommunication switching and related electronic equipment, and to externally
connect large and small computers to a variety of peripheral devices. Sales of
these products were $18.5, $22.9 and $18.8 million for fiscal 1994, 1995 and
1996, respectively. Sales of these products represented approximately 13%, 12%
and 5% of the Company's total sales for the years ending July 31, 1994, 1995 and
1996, respectively.
Communications - Through the acquisition of NORDX/CDT, the Company entered
--------------
the market for outside communications, switchboard and equipment cable. This
product group is primarily manufactured by its Kingston, Ontario facility, which
is the largest communications cable operation in Canada. Sales of this product
group were $49.4 million for the six month post-acquisition period in fiscal
1996 and represented approximately 14% of the Company's total sales.
Other - The Company also manufactures products for a variety of other
-----
electronic wire and cable applications and markets, including broadcast, CATV,
microwave antenna, medical electronics, electronic testing equipment, automotive
electronics, robotics, electronically controlled factory equipment, copiers,
home entertainment and appliances.
A business unrelated to the Company's core business manufactures precision
molds used by major tire manufacturers.
3
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(c). Raw Materials
The principal raw materials used by CDT are copper and insulating
compounds. Raw materials are purchased on a consolidated basis whenever
possible to reduce costs and improve supplier service levels. Copper is
purchased from several domestic suppliers. Price terms are generally producers'
prices at time of shipment. The Company generally does not engage in hedging
transactions for the purchase of copper. Currently, world stocks of and capacity
for copper are adequate to meet the Company's requirements. CDT purchases
insulating compounds from many suppliers. The inability of one of such
suppliers to supply such insulating material could have an adverse effect on
CDT's business until a replacement supplier is found or substitute materials are
approved for use. Other raw materials used by CDT include, Teflon(R), Lexan(R)
reels, tapes, optical fiber, textiles, chemicals and other insulating materials.
Currently, supplies of these other raw materials are adequate to meet the
Company's needs and are expected to remain so for the foreseeable future.
(d). Customers
The Company sells its products directly to original equipment manufacturers
(OEMs), regional Bell operating companies and established distributors. The
Company supports over 9,000 customers, with no single customer representing more
than 10% of its sales.
(e). Competition
The specialty electronic data transmission cable market is highly
competitive. Although some of the Company's competitors are substantially
larger and have greater resources than the Company, management believes that it
competes successfully in its markets due to its experienced management team,
large sales force, established reputation, large number of customer approved
specifications and emphasis on quality.
The principal competitive factors in all product markets are availability,
customer support, distribution strength, price and product features. The
relative importance of each of these factors varies depending on the specific
product category. As products mature, competitive forces often tend to make the
products more of a commodity and subject to greater price competition.
In the market for computer network structured wiring products, the Company
competes with a large number of competitors, several of which are significantly
larger than the Company. The Company competes in the network structured wiring
market by adapting to shifting customer demand for new products, and in the case
of NORDX/CDT, by offering complete, certified network structured wiring systems.
Product price and engineering capabilities are principal factors which affect
competition in the computer interconnect market. In the automation, sound &
safety market, the Company competes against a relatively large number of
companies, most of which are smaller in size than the Company. Product prices,
company reputation and product integrity are principal factors which affect
competition in the automation, sound & safety market. In the markets for
communications, switchboard and equipment cable, price, reputation, production
quality and availability are principal competitive factors.
(f). Inventory and Backlog
As of July 31, 1996, working capital was $135.8 million compared to $41.5
million at July 31, 1995. Backlog was $45.6 million at July 31, 1996, compared
to $63.8 million at July 31, 1995.
4
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The $18.2 million decrease in backlog during the fiscal year ended July 31,
1996, was primarily the result of the disruption in the Category 5 Teflon(R)
plenum network cable market early in the third quarter of fiscal 1996 due to a
build-up of distributor inventories of these products and a greater availability
of Teflon(R) raw material. As a result of this disruption, order input for
Category 5 Teflon(R) plenum network cables was reduced and the outstanding
protective orders which had been placed by distributors for these products were
canceled. Increases in the backlog for other products and the addition of the
backlog for acquired business partially offset this decrease. The Company
believes that substantially all of the backlog is shippable within the next
twelve months. Generally, customers may cancel orders for standard cable
products without penalty upon thirty days notice.
(g). Environment
The Company is subject to numerous United States and Canadian federal,
state, provincial, local and foreign laws and regulations relating to the
storage, handling, emission and discharge of materials into the environment,
including the United States Comprehensive Environmental Response, Compensation
and Liability Act (CERCLA), the Clean Water Act, the Clean Air Act, the
Emergency Planning and Community Right-To-Know Act and the Resource Conservation
and Recovery Act. Regulations of particular significance to the Company include
those pertaining to handling and disposal of solid and hazardous waste,
discharge of process wastewater and storm water and release of hazardous
chemicals. Although the Company believes it is in substantial compliance with
such laws and regulation, the Company may from time to time not be in full
compliance and may be subject to fines or other penalties for noncompliance.
The Company does not currently anticipate any material adverse effect on
its results of operations, financial condition or competitive position as a
result of compliance with federal, state, provincial, local or foreign
environmental laws or regulations. However, some risk of environmental
liability and other costs is inherent in the nature of the Company's business,
and there can be no assurance that material environmental costs will not arise.
Moreover, it is possible that future developments, such as promulgation of
implementing regulations for the 1990 amendments to the Clean Air Act and other
increasingly strict requirements of environmental laws and enforcement policies
thereunder, could lead to material costs of environmental compliance and cleanup
by the Company.
(h). Employees
As of July 31, 1996, the Company had approximately 2,178 full time
employees, of which approximately 796 were represented by labor unions. The
Company has not experienced any work stoppages at its plants and believes its
current relations with its employees are good, however, there can be no
assurance that conflicts will not arise with such unions or other employee
groups or that such conflicts would not have a material adverse effect on the
Company's business.
(i). Foreign Operations
See Footnote #14 as presented in the Company's Notes to Consolidated
Financial Statements.
5
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ITEM 2. PROPERTIES
The Company uses various owned or leased properties as manufacturing
facilities, warehouses and sales office facilities. The Company believes that
current facilities, together with planned expenditures for normal maintenance,
capacity and technological improvements and the expenditures for the facilities
described in the next paragraph will provide adequate production capacity to
meet expected demand for its products.
Listed below are the principal manufacturing and sales facilities operated
by the Company. In addition, the Company also leases approximately 65,000
square feet of other warehouse and sales facilities.
<TABLE>
<CAPTION>
Owned or Approx.
Location Use Leased Sq. Feet
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Auburn, MA Manufacturing, Sales and Administration Owned 146,000
Gjern, Denmark Manufacturing, Sales and Administration Owned 13,000
Gothenburg, Sweden Manufacturing, Sales and Administration Owned 58,000
Houston, TX Warehousing Leased 21,700
Kingston, Canada Manufacturing Owned 525,000
Leominster, MA Manufacturing, Sales and Administration Leased 162,000
Littleborough, United Kingdom Manufacturing Leased 35,000
Manchester, CT Warehousing Leased 70,000
Manchester, CT Manufacturing Leased 55,000
Manchester, CT Manufacturing Leased 40,000
Manchester, CT Warehousing Leased 80,000
Montreal, Canada Manufacturing Leased 416,000
Montreal, Canada Administration and Sales Leased 35,000
Saybrook, CA Warehousing Leased 28,000
Skelmersdale, United Kingdom Manufacturing, Sales and Administration Leased 95,000
Wadsworth, OH Manufacturing, Sales and Administration Owned 39,000
Waynesburg, PA Manufacturing Owned 42,000
Washington, PA Manufacturing, Sales and Administration Owned 80,000
Washington, PA Manufacturing, Sales and Administration Owned 123,000
Washington, PA Warehousing Leased 30,000
Washington, PA Manufacturing Leased 83,000
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to various legal proceedings and administrative
actions, all of which are of an ordinary or routine nature incidental to the
operations of the Company. In the opinion of the Company's management, such
proceedings and actions should not, individually or in the aggregate, have a
material adverse effect on the Company's results of operations or financial
condition.
AT&T has asserted certain intellectual property claims against certain
intellectual property owned or used by NORDX/CDT. AT&T has claimed that both
NORDX/CDT's IBDN Copper Cable (Land Lines) and BIX (Category 5) Modular
Connectors are covered by U.S. patents currently held by AT&T. In addition, AT&T
has forwarded to Nortel a cease and desist letter objecting to NORDX/CDT's use
of the trademark Optimax. The Company does not believe that resolution of such
claims would have a material adverse effect on its results of operations.
Superior Modular Products, Inc., has offered NORDX/CDT a non-exclusive license
under a patent it contends applies to certain NORDX/CDT patch panels. The matter
is currently under negotiation and, at the present time, the Company does not
believe a resolution would have a material adverse effect on its results of
operations.
Berk-Tek, Inc. ("Berk-Tek"), has offered the Company a non-exclusive license
under a patent it contends applies to certain cables sold by Mohawk/CDT. The
Company's special patent counsel has provided an opinion that its products do
not infringe any valid claims, and, consequently, the offer has been declined.
Berk-Tek has filed an application to reissue the patent in consideration of
relevant prior art which has been identified by the Company and others, and has
re-offered a non-exclusive license. Currently, the probability that Berk-Tek's
application to reissue the patent will be granted cannot be determined and,
therefore, based upon the opinion of the Company's special patent counsel, at
this time, the Company does not believe a resolution of this matter would have a
material adverse effect on its results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year covered by this report no
matter was submitted to a vote of security holders.
6
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ITEM 4.1. EXECUTIVE OFFICERS OF THE REGISTRANT
Age Present Office and Experience
- --- -----------------------------
63 Paul M. Olson has been President and a director of the Company since 1985,
and Chief Executive Officer of the Company since 1993. From 1972 to 1984
Mr. Olson was the President of Phalo Corporation, a wire and cable
manufacturer, and directed sales and marketing at Phalo Corporation from
1967 to 1972. From 1963 to 1967, Mr. Olson was employed at General Electric
and from 1960 to 1963, at General Cable, in wire and cable related sales
and marketing positions.
54 George C. Graeber has been an Executive Vice President of the Company and
President of Montrose/CDT since 1994. From 1992 to 1994, Mr. Graeber was
Executive Vice President of the Company and President of Phalo/CDT. From
1990 to 1992 Mr. Graeber was a Vice President and General Manager at
Anixter Brothers, Inc., a private international distributor of cable and
communications equipment. From 1989 to 1990 Mr. Graeber was a consultant
for Manhattan Electric Cable, a wire and cable company. From 1983 to 1989
he was President and from 1979 to 1983 he was Vice President-General
Manager of Brand Rex Cable, a wire and cable company. Mr. Graeber has a
Masters degree in Electrical Engineering from the University of Connecticut
in 1968.
54 Michael A. Dudley has been an Executive Vice President of the Company and
President - CDT International since 1991. From 1988 to 1991 he was the
President of Superior Optics, a division of Superior Teletec, Inc., a
publicly traded company that manufactures communications cable. Mr. Dudley
has a doctorate degree in Material Science from The National College of
Rubber Technology in London, England.
46 Normand R. Bourque has been an Executive Vice President of the Company and
President and Chief Executive Officer of NORDX/CDT since its acquisition.
Prior to the acquisition, Mr. Bourque was Vice President-Cable Group at
Nortel from 1991 to 1995 and Vice President, Operations-Cable Group from
1989 to 1991. From 1985 to 1988, Mr. Bourque was Vice President and General
Manager-Transmission Networks at Nortel, and prior to that, held a number
of positions in general management and finance at Nortel. Mr. Bourque has a
Bachelor's Degree in Business Administration from the Ecole des Hautes
Etudes Commerciales in Montreal, Canada.
57 Dave R. Harden has been a Senior Vice President of the Company since 1988.
He founded West Penn Wire in 1971, with Donald Hastings, and operated that
company until 1984 when it was acquired by the Company. From 1984 until
1988 he was an Executive Vice President of West Penn.
62 Donald J. Hastings has been a Senior Vice President of the Company since
1988. He founded West Penn in 1971 with Dave Harden and operated that
company until 1984 when it was acquired by the Company. From 1984 until
1988, he was an Executive Vice President of West Penn/CDT.
46 Kenneth O. Hale has been Vice President, Chief Financial Officer and
Secretary of the Company since 1987. Mr. Hale holds a Certified Public
Accountant's certificate and an MBA in finance from the University of
Missouri.
7
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
As of October 18, 1996, there were 118 holders of record of the Company's
Common Stock.
Additional information required by this item is set forth under the heading
"Directors, Officers, and Corporate Information" on page 40 of the 1996 Annual
Report and is incorporated herein by reference.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
Information required by this item is set forth under the heading "Selected
Historical Consolidated Financial Data" on page 39 of the 1996 Annual Report and
is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations appears on pages 9-13 of the 1996 Annual Report to Stockholders and
is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item is set forth on pages 15 through 38 of
the 1996 Annual Report and is incorporated herein by reference and filed
electronically herewith as Exhibit 13.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
a. Information concerning the Registrant's directors is set forth in the
Registrant's definitive proxy statement to be filed with the Securities and
Exchange Commission on or before November 20, 1996. Such information is
incorporated herein by reference.
b. Information concerning executive officers of the Registrant is set forth in
Item 4.1 of Part I at page 7 of this Report under the heading
"Executive Officers of the Registrant".
8
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Item 11. EXECUTIVE COMPENSATION
Information concerning executive officers of the Registrant is set forth in
the Registrant's definitive proxy statement to be filed with the Securities
and Exchange Commission on or before November 20, 1996. Such information is
incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information concerning security ownership of certain beneficial owners and
management is set forth in the Registrant's definitive proxy statement to
be filed with the Securities and Exchange Commission on or before November
20, 1996. Such information is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND TRANSACTIONS
Information concerning certain relationships and related transactions is
set forth in the Registrant's definitive proxy statement to be file with
the Securities and Exchange Commission on or before November 20, 1996. Such
information is incorporated herein by reference.
PART IV.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
1. The following documents are included in the 1996 Annual Report, pages
15 through 38, and are incorporated herein by referenced:
a. Consolidated Statements of Income for the years ended July 31,
1996, 1995 and 1994.
b. Consolidated Balance Sheets as of July 31, 1996 and 1995
c. Consolidated Statements of Cash Flow for the years ended July 31,
1996, 1995 and 1994.
d. Consolidated Statements of Stockholder Equity for the years ended
July 31, 1996, 1995 and 1994.
e. Notes to Consolidated Financial Statements.
2. The following documents are filed as part of this report:
a. Report of Independent Public Accountants on Schedules.
b. Financial Statement Schedules for the three years ended July 31,
1996.
c. Schedule VII Valuation and Qualifying Accounts.
3. List of Exhibits
2.1 - Asset Purchase Agreement, dated as of September 15, 1995,
among Broomco (915) Limited, Volex Group plc and Cable Design
Technologies Corporation
9
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("CDT") (with respect to Section 12 thereof only).
Incorporated by reference to Exhibit 2.1 to CDT's Report on
Form 8-K filed with the Commission on October 10, 1995.
2.2 - Asset Purchase Agreement by and among Cable Design
Technologies (CDT) Canada Inc., Cable Design Technologies
Corporation and Northern Telecom Limited, dated as of December
19, 1995. Incorporated by reference to Exhibit 10.16 CDT's
Registration Statement on Form S-3 (File No. 333-00554).
3.1 - Amended and Restated Certificate of Incorporation of CDT, as
amended to date. Incorporated by reference to Exhibit 3.1 to
CDT's registration statement on Form S-1 (File No. 33-69992).
3.2 - By-Laws of CDT, as amended to date, incorporated by reference
to Exhibit 3.2 to CDT's registration statement on Form S-1
(File No. 33-69992).
4.1 - Form of certificate representing shares of the Common Stock of
CDT. Incorporated by reference to Exhibit 4.1 to CDT's
registration statement on Form S-1 (File No. 33-69992).
10.1 - Amended and Restated Credit Agreement, dated as of May 13,
1994, among CDT, CDT Inc., The First National Bank of Boston,
Banque Paribas, Chicago Branch, Continental Bank N.A. and
other lenders party thereto. Incorporated by reference to
Exhibit 10.1 to CDT's Quarterly Report on Form 10-Q, as filed
on June 13, 1994.
10.2 - First Amendment to Amended and Restated Credit Agreement,
dated as of August 31, 1994, among CDT, CDT Inc., The First
National Bank of Boston, Banque Paribas, Chicago Branch,
Continental Bank N.A. and other lenders party thereto.
Incorporated by reference to Exhibit 10.2 to CDT's Annual
Report on Form 10-K, as filed on October 31, 1994.
10.3 - Agreement (Call and Put Option related to Lease) among Peter
Alan Jarman, Prudence Anne Jarman and Anglo-American.
Incorporated by reference to Exhibit 10.9 to CDT's
registration statement on Form S-1 (File No. 33-69992).
10.4 - CDT Long-Term Performance Incentive Plan (adopted on September
23, 1993). Incorporated by reference to Exhibit 10.18 to CDT's
registration statement on Form S-1 (File No. 33-69992).
10.5 - CDT Stock Option Plan. Incorporated by reference to Exhibit
4.3 to CDT's registration statement on Form S-8 as filed on
December 22, 1993.
10.6 - Cable Design Technologies Corporation Management Stock Award
Plan (adopted on September 23, 1993). Incorporated by
reference to Exhibit 4.3 to CDT's registration statement on
Form S-8, as filed on May 2, 1994.
10
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10.7 - Agreement between Admiral and International Union, United
Automobile, Aerospace and Agricultural Implement Workers of
America (UAW), Amalgamated Local No. 70, dated as of August 3,
1990, and subsequent agreement dated as of August 3, 1993.
Incorporated by reference to Exhibit 10.19 to CDT's
registration statement on Form S-1 (File No. 33-69992).
10.8 - Description of CDT Bonus Plan. Incorporated by reference to
Exhibit 10.20 to CDT's registration statement on Form S-1
(File No. 33-69992).
10.9 - Stock Appreciation Rights Agreement between CDT and Paul M.
Olson, dated as of March 17, 1992. Incorporated by reference
to Exhibit 10.22 to CDT's registration statement on Form S-1
(File No. 33-69992).
10.10 - Lease Agreement between Phalo and First Hartford Realty Corp.,
dated as of November 9, 1992. Incorporated by reference to
Exhibit 10.23 to CDT's registration statement on Form S-1
(File No. 33-69992).
10.11 - Lease Agreement between Mohawk and 9 Mohawk Drive Realty
Trust, dated as of March 24, 1986. Incorporated by reference
to Exhibit 10.24 to CDT's registration statement on Form S-1
(File No. 33-69992).
10.12 - Lease Agreement between Anglo-American, Peter Alan Jarman and
Prudence Anne Jarman, dated as of July 12, 1991. Incorporated
by reference to Exhibit 10.25 to CDT's registration statement
to Form S-1 (File No. 33-69992).
10.13 - Consulting Agreement, dated as of July 14, 1988, and amendment
thereto, dated as of July 14, 1988, between Golder, Thoma,
Cressey & Rauner and CDT. Incorporated by reference to Exhibit
10.13 to CDT's Annual Report on Form 10-K, as filed on October
31, 1994.
10.14 - Consulting Agreement, dated as of July 14, 1988, and amendment
thereto, dated as of July 14, 1994, between Northern
Investment Ltd. Partnership II and CDT. Incorporated by
reference to Exhibit 10.14 to CDT's Annual Report on Form 10-
K, as filed on October 31, 1994.
10.15 - Registration Agreement among CDT, GTC Fund II, The Prudential
Insurance Company of America and Pruco Life Insurance Company,
dated as of July 14, 1988, as amended. Incorporated by
reference to Exhibit 10.21 to CDT's registration statement on
Form S-1 (File No. 33-69992).
10.16 - Bank Commitment Letter dated January 22, 1996, among CDT, The
First National Bank of Boston, Banque Paribas, Chicago Branch,
Bank of America Illinois, Bank of America Canada and other
lenders party thereto. Incorporated by reference to Exhibit
10.17 to CDT's Registration Statement on Form S-3 (File No.
333-00554).
10.17 - Second Amended and Restated Loan Agreement dated February 2,
1996, among CDT, The First National Bank of Boston, Banque
Paribas, Chicago Branch, Bank of America Illinois, Bank of
America Canada and other lenders party thereto. Incorporated
by reference to Exhibit 10.16 to CDT's Report on Form 8-K, as
filed on February 20, 1996.
11
<PAGE>
10.18 - Employment Agreement dated February 2, 1996, among CDT,
NORDX/CDT and Normand Bourque. Incorporated by reference to
Exhibit 10.17 to CDT's Report on Form 8-K as filed on February
20, 1996.
10.19 - Collective Labour Agreement dated June 10, 1996, between
NORDX/CDT and Canadian Union of Communications Workers Unit
4.**
10.20 - Lease Agreement between NORDX/CDT and Northern Telecom Limited
dated February 2, 1996, governing the Lachine, Quebec
facility.**
10.21 - Lease Agreement between NORDX/CDT and Northern Telecom Limited
dated February 2, 1996, governing the St. Laurent, Quebec
facility.**
10.22 - Lease Agreement between NORDX/CDT and Northern Telecom Limited
dated February 2, 1996, governing the Kingston, Ontario
facility.**
10.23 - 1996 Amendment of Lease between Mohawk and 9 Mohawk Drive
Realty, dated as of September 3, 1996.**
10.24 - First Amendment to Second Amended and Restated Loan Agreement
dated July 31, 1996 among CDT, The First National Bank of
Boston, Banque Paribas, Chicago Branch, Bank of America
Illinois, Bank of America Canada and other Lenders party
thereto.**
10.25 - Second Amendment to Second Amended and Restated Loan Agreement
dated July 31, 1996 among CDT, The First National Bank of
Boston, Banque Paribas, Chicago Branch, Bank of America
Illinois, Bank of America Canada and other Lenders party
thereto.**
11.1 - Computation of Earnings per Share.**
13.1 - CDT 1996 Annual Report to stockholders, including financial
statements, portions of which are incorporated herein by
reference.**
21.1 - List of Subsidiaries of CDT.**
23.1 - Consent of Arthur Andersen LLP.**
99.1 - Legal Charge, dated as of September 22, 1995, between Broomco
(915) Limited, as Charger, and Volex Group plc. Incorporated
by reference to Exhibit 99.1 to CDT's Report on Form 8-K filed
with the Commission on October 10, 1995.
99.2 - Agreement for the Granting of Leases, dated as of September
15, 1995, among Volex Group plc, Broomco (915) Limited and
Cable Design Technologies Corporation. Incorporated by
reference to Exhibit 99.2 to CDT's Report on Form 8-K filed on
October 10, 1995.
99.3 - Lease of property known as Python Mill, Church Street,
Littleborough, dated as of September 27, 1995, among Volex
Group plc, Broomco (915) Limited and Cable Design Technologies
Corporation. Incorporated by reference to Exhibit 99.3 to
CDT's Report on Form 8-K filed on October 10, 1995.
12
<PAGE>
99.4 - Lease of property known as land lying to the south of Railway
Road, Skelmersdale, dated as of September 27, 1995, among
Volex Group plc, Broomco (915) Limited and Cable Design
Technologies Corporation. Incorporated by reference to Exhibit
99.4 to CDT's Report on Form 8-K filed on October 10, 1995.
** Filed Herein
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the 4th Quarter of
the Year Ended July 31, 1996.
13
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereto duly authorized.
Cable Design Technologies Corporation
By: Paul M. Olson October 29, 1996
/s/ Paul M. Olson
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
Bryan C. Cressy Chairman of the Board October 29, 1996
/s/ Bryan C. Cressey Director
Paul M. Olson Director, President Chief October 29, 1996
/s/ Paul M. Olson Executive Officer (Principal
Executive Officer)
Kenneth O. Hale Vice President, Chief Financial October 29, 1996
/s/ Kenneth O. Hale Officer, Secretary (Principal Financial
and Principal Accounting Officer)
Bernard J. Bannan Director October 29, 1996
/s/ Bernard J. Bannan
Myron S. Gelbach, Jr. Director October 29, 1996
/s/ Myron S. Gelbach, Jr.
Michael F. O. Harris Director October 29, 1996
/s/ Michael F. O. Harris
Glenn Kalnasy Director October 29, 1996
/s/ Glenn Kalnasy
Richard C. Tuttle Director October 29, 1996
/s/ Richard C. Tuttle
</TABLE>
14
<PAGE>
CABLE DESIGN TECHNOLOGIES CORPORATION
SCHEDULE VII VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED JULY 31, 1996, 1995, 1994
<TABLE>
<CAPTION>
Additions to Additions Balance
Balance at Reserve from Charged to at
Beginning of Acquisitions Costs and Reduction End of
Period in FY 1996 Expenses from Reserve Period
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(Dollars in thousands)
Year Ended July 31, 1994
Inventory reserves $1,297 $ 176 $(301) $1,172
Allowance for
uncollectible
accounts/sales
returns 1,277 284 (505) 1,056
Year Ended July 31, 1995
Inventory reserves $1,172 $ 219 $ ---- $1,391
Allowance for
uncollectible
accounts/sales
returns 1,056 952 (455) 1,553
Year Ended July 31, 1996
Inventory reserves $1,391 $4,877 $2,108 $(215) $8,161
Allowance for
uncollectible
accounts/sales
returns 1,553 89 1,542 (524) 2,660
</TABLE>
15
<PAGE>
CABLE DESIGN TECHNOLOGIES CORPORATION
INDEX TO EXHIBITS FILED HEREIN
JULY 31, 1996
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT PAGE
<S> <C> <C>
10.19 Collective Labour Agreement, dated June 10, 1996,
between NORDX/CDT and Canadian Union of
Communications Workers Unit 4.
10.20 Lease Agreement between NORDX/CDT and Northern
Telecom Limited dated February 2, 1996, governing the
Lachine, Quebec facility.
10.21 Lease Agreement between NORDX/CDT and Northern
Telecom Limited dated February 2, 1996, governing the
St. Laurent, Quebec facility.
10.22 Lease Agreement between NORDX/CDT and Northern
Telecom Limited dated February 2, 1996, governing the
Kingston, Ontario facility.
10.23 1996 Amendment of Lease between Mohawk and 9 Mohawk Drive
Realty, dated as of September 3, 1996.
10.24 First Amendment to Second Amended and Restated Loan Agreement
dated July 31, 1996 among CDT, The First National Bank of
Boston, Banque Paribas, Chicago Branch, Bank of America
Illinois, Bank of America Canada and other Lenders party
thereto.
10.25 Second Amendment to Second Amended and Restated Loan Agreement
dated July 31, 1996 among CDT, The First National Bank of
Boston, Banque Paribas, Chicago Branch, Bank of America
Illinois, Bank of America Canada and other Lenders party
thereto.
11.1 Computation of Earnings per share
13.1 1996 Annual Report to Stockholders
21.1 List of Subsidiaries of Cable Design Technologies
Corporation
23.1 Consent of Arthur Andersen LLP
</TABLE>
16
--
<PAGE>
EXHIBIT 10.19
COLLECTIVE LABOUR
AGREEMENT
ENTERED INTO BY
NORDX/CDT, INC.
AND
CANADIAN UNION OF
COMMUNICATION WORKERS
UNIT 4
EFFECTIVE
FROM JUNE 10, 1996 TO JUNE 9, 2001
<PAGE>
INDEX - ARTICLES
Article 1 - Recognition 7
Article 2 - General purpose 7
Article 3 - Management rights 8
Article 4 - Non-discrimination 9
* Article 5 - Representation 9
Article 6 - Complaints and grievances 11
Article 7 - Arbitration 15
Article 8 - Union activities during working hours 17
Article 9 - Access to personnel cards 17
Article 10 - Information to Union Head Office 18
Article 11 - Bulletin boards 20
Article 12A - Union and continuous service 20
* Article 12B - Promotion, Bumping & Layoff 26
Article 13 - Supplementary Unemployment Benefits 34
Article 14 - Notices 39
Article 15 - Safety and health 39
Article 16 - Uninterrupted production 44
* Article 17 - Job evaluation 44
* Article 18 - Leaves of absence 46
Article 19 - Validity 56
Article 20 - Deduction of regular dues 57
Article 21 - Work performed by supervisors 58
Article 22 - Disciplinary action 58
* Article 23 - Hours of work 59
Article 24 - Overtime general provisions 67
Article 25 - Overtime 68
Article 26 - Sickness Day Credit 72
Article 27 - Offshift differential 73
Article 28 - Minimum compensation 73
Article 29 - Plant holidays 74
* Article 30 - Vacations 77
Article 31 - Pension plan and other benefits 82
Article 32 - Production standards 82
* Article 33 - Cost of living allowance 82
Article 34 - Wage administration plan - Levels 2-4 inclusively -
Montreal area 85
Article 35 - Production Technicians 86
Article 36 - Wage administration plan - Apprentices A1 and A2 -
Montreal area 86
Article 37 - Rate protection 88
* Article 38 - Skilled trades 89
* Article 39 - Rates of pay - Grades 23-30 inclusively -
Montreal area 96
Article 40 - Rates of pay - Trades classification -
Montreal area 97
Article 41 - Rates of pay - Level 1 - Montreal area 98
Article 42 - Rates of pay - Levels 2-4 - Montreal area 99
Article 43 - Protection for employees on workforce
restructuring 100
<PAGE>
Article 44 - Modification, renewal and termination 106
Appendix A Pension/Benefits 122
* See Letters of intent
<PAGE>
ALPHABETICAL INDEX
Article 9 - Access to personnel cards 17
Article 7 - Arbitration 15
Article 11 - Bulletin boards 20
Article 6 - Complaints and grievances 11
* Article 33 - Cost of living allowance 82
Article 20 - Deduction of regular dues 57
Article 22 - Disciplinary action 58
Article 2 - General purpose 7
* Article 23 - Hours of work 59
Article 10 - Information to Union Head Office 18
* Article 17 - Job evaluation 44
* Article 18 - Leaves of absence 46
Article 3 - Management rights 8
Article 28 - Minimum compensation 73
Article 44 - Modification, renewal and termination 106
Article 4 - Non-discrimination 9
Article 14 - Notices 39
Article 27 - Offshift differential 73
Article 24 - Overtime - general provisions 67
Article 25 - Overtime 68
Appendix A Pension/Benefits 122
Article 31 - Pension plan and other benefits 82
Article 29 - Plant holidays 74
Article 32 - Production standards 82
Article 35 - Production Technicians 86
* Article 12B - Promotion, Bumping & Layoff 26
Article 43 - Protection for employees on workforce restructuring 100
* Article 39 - Rates of pay - Grades 23-30 inclusively -
Montreal area 96
Article 41 - Rates of pay - Level 1 - Montreal area 98
Article 42 - Rates of pay - Levels 2-4 - Montreal area 99
Article 40 - Rates of pay - Trades classification - Montreal area 97
Article 37 - Rate protection 88
Article 1 - Recognition 7
* Article 5 - Representation 9
Article 15 - Safety and health 39
Article 26 - Sickness Day Credit 72
* Article 38 - Skilled trades 89
Article 13 - Supplementary Unemployment Benefits 34
Article 16 - Uninterrupted production 44
Article 8 - Union activities during working hours 17
Article 12A - Union and continuous service 20
* Article 30 - Vacations 77
Article 19 - Validity 56
Article 36 - Wage administration plan - Apprentices A1 and A2 -
Montreal area 86
<PAGE>
Article 34 - Wage administration plan - Levels 2-4 inclusively -
Montreal area 85
Article 21 - Work performed by supervisors 58
* See Letters of Intent
<PAGE>
INDEX - LETTERS
Letter 1 - Definition of "Level" 109
Letter 2 - Representation 110
Letter 3 - Funds 111
Letter 4 - Retirement Terms 111
Letter 5 - Gainsharing 112
Letter 6 - Students 113
Letter 7 - Pre-retirement program 113
Letter 8 - Movement In and Out of Various Shift Patterns 115
Letter 9 - Surplus machine operator 116
Letter 10 - Investment Guarantee 116
Letter 11 - New Facility 117
Letter 12 - Level 1 Employees 118
Letter 13 - Rate adjustment for employees on disability 118
Letter 14 - Definition of terms 119
Letter 15 - Vacation calculations 120
<PAGE>
COLLECTIVE AGREEMENT
MEMORANDUM OF AGREEMENT made
BETWEEN:
NORDX/CDT, INC.
a corporation organized and existing under the laws of Canada
Hereinafter called the "Company"
OF THE FIRST PART
AND:
CANADIAN UNION OF COMMUNICATION WORKERS,
a body corporate duly incorporated under the provisions of the
Professional
Syndicates Act of the Province of Quebec.
Hereinafter called the "Union"
OF THE SECOND PART
<PAGE>
ARTICLE 1 - RECOGNITION
1.01 Whereas the Canadian Union of Communication Workers was duly certified
under the Labour Relations Act by the Labour Relations Board of the
Province of Quebec on July l3th, l945, the Company recognizes the Union as
the exclusive bargaining agency for all shop clerks, production and
skilled trades hourly rated non-supervisory employees in the Province of
Quebec excluding Plant Security Staff and janitorial services. This
Agreement applies to Unit No.4 of the Union.
1.02 Under this Agreement, "employee" shall mean:
A person who is actively employed by NORDX/CDT in the capacity of a non-
supervisory hourly rated employee as described above.
Actively employed refers to a person on the active payroll and paid a wage
for work performed for the Company. A person on the active payroll
(except for layoff allowance) absent because of illness, injury or other
causes which do not interrupt accumulation of service with the Company is
considered an employee.
During the term of this collective agreement, should the Company establish
new plant facilities in Quebec to manufacture products currently being
produced in any of its present manufacturing location on the island of
Montreal, the Company will acknowledge the Canadian Union of Communication
Workers as the exclusive bargaining agency for employees described above.
ARTICLE 2 - GENERAL PURPOSE
2.01 The purpose of this Agreement is to maintain a harmonious relationship
between the Company and its employees and to provide an amicable method of
settling any differences or grievances which may arise with respect to
matters covered by this Agreement.
2.02 The Company and the Union are committed to meet upon request of one or
both parties to identify and discuss matters of mutual interest.
When both parties find it appropriate, working committees will be
implemented with a mandate to analyze certain problems and suggest
appropriate solutions.
These committees will be composed of both Union and Company
representatives and any other appropriate person convened by one of
the parties. The parties will be informed in advance, as far as it
is practicable, of the names of the people who will participate in
these committees.
Changes resulting from the working committees may form part of the
present collective labour agreement.
<PAGE>
ARTICLE 3 - MANAGEMENT RIGHTS
3.01 The Union acknowledges that it has been and still is the exclusive right
of the Management of the Company to: hire, lay-off, discharge, classify,
transfer, promote, demote or discipline employees, subject to the
provisions of this Agreement.
3.02 The Union acknowledges the exclusive right of the Company to operate and
manage its business in all respects in accordance with its obligations and
generally to manage the enterprise in which the Company is engaged, and
without restricting the generality of the foregoing to determine the
number and location of work areas, the methods to be used in operations,
schedules, kinds and location of machines and tools to be used, processes
of repairing, warehousing and installing and the control of material and
parts to be used.
3.03 The functions outlined above will be exercised in a manner not
inconsistent with the terms of this Agreement.
ARTICLE 4 - NON-DISCRIMINATION
4.01 The Company agrees that there shall be no discrimination or intimidation
by the Company or any of its agents against any employee or group of
employees because of membership or non-membership in the Union.
4.02 The Company also agrees that representatives of the Union shall be free to
discharge their duties in an independent manner without fear that their
individual relations with the Company may be affected in the least degree
by any action taken by them in good faith in their representative
capacity.
4.03 The Union agrees that neither its officers nor its members will
intimidate, discriminate against or coerce any employee or group of
employees for the reason that they are or are not members of the Union.
4.04 There shall be no discrimination against any employee because of sex,
race, religious creed, colour, national origin, sexual orientation,
marital status, civil status, handicap or age, except to the extent that
legislation so permits.
4.05 In this Collective Agreement, words using the masculine gender include the
feminine and the feminine masculine; the singular includes the plural, and
the plural singular, where the text so indicates.
* ARTICLE 5 - REPRESENTATION
5.01 The number of "District Representatives" necessary to carry out the
provisions of this agreement on the Company premises shall be as mutually
agreed upon from time to time between the Company and the Union.
<PAGE>
The number of Group Representatives shall be one (1) per approximately one
hundred (100) employees in the bargaining unit.
5.02 The Union agrees to furnish the Company with the names of its duly elected
officers and representatives appointed to perform any act in connection
with the carrying out of this Agreement, and undertakes to promptly notify
the Company of any change in the membership of officers or
representatives.
5.03 The Company agrees that Group Representatives will not be transferred from
their voting group, except for upgrading, promotional opportunities or for
effect of lack of work.
5.04 For the purpose of an effect of lack of work, a Group Representative will
not be downgraded or transferred laterally from his voting group while
there are junior service employees retained on the same grade or lower
graded jobs which the Group Representative can perform within his own
voting group.
5.05 For the purpose of an effect of lack of work, a Group Representative who
has served for four (4) or more years consecutively and has fifteen (15)
years continuous service shall be deemed to have the most seniority within
his voting group.
5.06 For the purpose of an effect of lack of work, a District Representative
who has served for four (4) or more years consecutively and has fifteen
(15) years continuous service shall be deemed to have the most seniority
within his voting district.
* See also letter of intent #2.
ARTICLE 6 - COMPLAINTS AND GRIEVANCES
6.01 For the purpose of this agreement, a grievance shall mean any dispute
involving the following paragraphs:
a) Wages, hours of work or other working conditions as contained in this
agreement.
b) Charges or allegations that an employee or group of employees has been
treated unfairly or discriminated against by the Company concerning
conditions contained in this agreement.
6.02 The Company agrees that any employee or Representative thereof may
approach Management through supervisory line organization concerning
matters which deserve consideration, modification or improvement.
6.03 It is the mutual desire of the parties hereto that complaints and
grievances of the employees be adjusted as quickly as possible.
<PAGE>
6.04 A grievance shall be presented as soon as practicable following the
circumstances which caused the grievance to become known to the grievor or
the Union.
6.05 Any differences, disputes or grievances that may arise with respect to the
interpretation, application or alleged violation of any provisions of this
agreement shall be dealt with in accordance with the grievance procedure
which follows:
6.05.01 - STEP 1
It is generally understood that an employee having a complaint
shall first give the first-level manager concerned an opportunity
of adjusting the condition causing the complaint. The employee
may request the assistance of a Union Representative when taking
up a complaint with the first-level manager. The first-level
manager concerned shall give a verbal answer within two (2)
working days.
If an employee or the Union desires to lodge a grievance, he must
inform the first-level manager concerned. The latter shall
convene a meeting within five (5) working days with the employee,
the Union Representative and the Employee Relations Specialist.
If the grievance has been submitted in writing, he shall give a
written answer to the Union within five (5) working days after the
meeting. The written answer must indicate the name of the
responsible person at the second step for this grievance.
6.05.02 - STEP 2
Failing satisfactory settlement at the first step, within five (5)
working days following the answer, the grievance shall be
submitted, in writing to the second-level manager with a copy to
the first-level manager concerned. The second-level manager shall
convene a meeting within ten (10) working days with the District
Representative and/or his delegate, the HR Director and/or his
delegate and any other appropriate person convened by one of the
parties; the parties shall be informed in advance of the names of
the people invited to this meeting. Following this meeting, the
management representative shall send a written answer within five
(5) working days after the meeting.
6.05.03 - Any period of time specified in the grievance procedure may be
extended by mutual agreement.
6.05.04 - GRIEVANCES CONCERNING EMPLOYEES LAID OFF
The Company and the Union agree that grievances arising from any
<PAGE>
layoff shall be submitted in writing at the second step by the
Union to the designated management representative of the business
unit within ten (10) working days after the Union is in receipt of
notification of layoff.
The designated management representative must submit his written
answer within five (5) working days.
6.05.05 - GRIEVANCES CONCERNING DISMISSALS AND SUSPENSIONS
Any grievance involving a dismissal shall commence at Step 2 of
the Grievance Procedure within ten (10) days after the Union has
been notified in writing of such disciplinary action.
Any grievance involving a suspension shall commence at Step 1 of
the Grievance Procedure within ten (10) days after the Union has
been notified in writing of such disciplinary action.
6.05.06 - GRIEVANCES RELATIVE TO JOB DESCRIPTIONS AND EVALUATIONS
In the event that an employee believes his job write-up does not
reflect his assignment, he must discuss and review his job
description with the first-level manager and if the problem is
not resolved within a delay of thirty (30) days, a grievance may
be processed in accordance with the grievance procedure
commencing at the second step.
Job Evaluation grievances shall be processed in accordance with
the grievance and arbitration provisions of this agreement. In
the event of arbitration proceedings of a job evaluation
grievance, the Union will, upon request, be allowed to have the
job reviewed by a Union Representative for a reasonable period
of time accompanied by a member of the Job Evaluation Committee.
6.05.07 - JOB POSTING GRIEVANCES
Any grievance related to a job posting must be submitted within
three (3) days of the posting of the employee's name selected for
the job, in accordance with the grievance procedure commencing at
the first step.
<PAGE>
In the event that the selection for a job vacancy is in dispute,
the grievor and the incumbent shall be the only ones considered
for the position in contention. The right to grieve shall be
restricted to employees who apply for the vacancy. Following a
grievance, the names of all applicants shall be made available to
the designated Union Representative, if requested.
6.05.08 - REFERRAL TO ARBITRATION
Any grievance concerning the interpretation or alleged violation
of this agreement which is not satisfactorily settled in
accordance with this Article may be referred to arbitration as
provided in Article 7. The request for arbitration shall be
forwarded to the designated management representative and must be
made within twenty-one (2l) days after the final decision of the
Company has been given at Step 2, or when the time limits mutually
agreed upon have expired.
6.06 DISPOSITION
6.06.01 - An employee, if he so desires, may take up a grievance as an
individual, through the regular line of organization without
recourse to the grievance procedure, up to and including the
designated second-level manager as the final step. The Company,
however, undertakes that it will not attempt to settle any
grievance directly with the employee involved if his grievance has
already been discussed with the Company by a Union Representative
pursuant to the grievance procedure.
6.06.02 - The Union Representative may intercede on behalf of his members
at any time on matters covered by the Agreement which, in his
opinion, may affect the employees, either as individuals or as a
group, regardless of whether his action is taken as a result of a
complaint by an individual or a group or as a result of personal
observation.
ARTICLE 7 - ARBITRATION
7.01 Should the Company and the Union fail to reach an agreement in regard to
any differences concerning the interpretation or alleged violation of this
Agreement, the matter may be submitted to a single Arbitrator.
7.02 The parties shall attempt to agree on the choice of an arbitrator within
twenty (20) working days following the serving of the notice, or within
the period of time agreed upon by both parties. Failing agreement by the
parties on an arbitrator, an arbitrator shall be appointed by the Minister
of Labour at the request of either of the parties.
7.03 The arbitrator, however, shall not have jurisdiction to alter or change
any of the provisions of this Agreement or to substitute any new
provisions in lieu thereof, nor
<PAGE>
to give any decisions inconsistent with the terms and provisions of this
Agreement.
7.04 A grievance submitted within fifteen days of the date on which the cause
of the action was initiated, cannot be rejected by the arbitrator for the
sole reason that the expected delay in this collective agreement has not
been respected.
7.05 A grievance claiming an employee has been unjustly discharged or suspended
may be settled by one of the following steps:
a) Confirming Management's action in discharging or suspending the
employee, or
b) Re-instating the employee with full compensation for time lost, less
earnings from other sources, or
c) Any other penalty which is just and equitable in the opinion of the
arbitrator.
7.06 a) The conferring parties may have the assistance of the employee or
employees concerned and any necessary witnesses and all reasonable
arrangements will be made to permit the conferring parties to have
access to work areas to view operations and to confer with the
necessary witnesses.
b) Both parties agree to disclose to each other documentation which may
be used in arbitration.
7.07 The Company shall not reimburse employees for pay lost in connection with
arbitration proceedings.
7.08 Both parties hereto will bear equally the expense of the arbitrator
appointed.
7.09 The arbitrator must render a decision within thirty (30) days after he has
heard the parties on the grievance.
ARTICLE 8 - UNION ACTIVITIES DURING WORKING HOURS
8.01 Representatives shall be permitted to leave their regular work for a
reasonable length of time to perform their duties in connection with this
Agreement subject to the approval of their immediate supervisor or manager
of the department where they are employed.
8.02 The Company agrees to pay employees at their hourly rate (except those on
leave of absence) who are Union Representatives for reasonable time spent
in the proper administration of this Agreement, during regular working
hours.
8.03 The Company reserves the right to prohibit soliciting of membership in the
Union during working hours or on Company premises.
<PAGE>
8.04 Newly hired employees will be introduced by their immediate manager to
their District Representative or Group Representative. The Representative
may meet with the new employee for 15 minutes.
ARTICLE 9 - ACCESS TO PERSONNEL CARDS
9.01 Any employee, upon request, shall have the right to review his own
personnel and/or attendance record card, either individually or jointly
with the District Representative in the presence of the employee's
immediate supervisor or a representative of the Human Resources
Department.
9.02 The personnel card and/or attendance record card of any employee in the
representative's constituency shall also be made available to the Union
District Representative for the purpose of review, if information is
required from such records as a result of a complaint or grievance.
9.03 In the case of a grievance, the employee's representative will have access
to documents concerning the employee which are pertinent to the issue.
Such documents will include, but will not be limited to, information
related to education, job performance, training and experience.
9.04 Review of such information will take place in the presence of the
employee's immediate supervisor or a representative of the Human Resources
Department.
9.05 The Company will provide, upon request, to the district representative a
copy of the employee's employment history and any other information needed
as far as the law permits.
ARTICLE 10 - INFORMATION TO UNION
(HEAD OFFICE AND DISTRICT REPRESENTATIVE)
10.01 The Company agrees to provide lists of hourly rated employees eligible
for membership in the Union entering the service of the Company, and
also to provide, within one week, lists of hourly rated employees
covered by this Agreement whose employment with the Company is
terminated.
10.02 The Company will provide the Union, through the Human Resources
organization, a weekly list of hourly rated employees covered by this
Agreement who are either hired, returning to work, transferred,
laid-off, terminated, placed on maternity and/or parental leave of
absence, on leave of absence, on long-term disability, pensioned or have
resigned.
10.03 The Company agrees to provide monthly to the Union lists by name and
employee number of all employees covered by this Agreement. The lists
shall be compiled by department in order of Union service date with the
Company together with the
<PAGE>
analysis number of the job and the job code to which the employee is
assigned. The Company shall also supply the Union service dates of
employees being laid off.
10.04 The Company agrees to provide to the Union semi-annually, in August and
February, a list of the names, employee numbers, department numbers and
addresses of all hourly rated employees coming under its jurisdiction.
10.05 The Company agrees to notify the Union in writing of those cases in
which an employee has been given a final review letter - L.A.R.C.
10.06 The Company agrees to provide to the Union, through the Human Resources
organization, a copy of published Organizational Notices/Lists. In
addition, the Company will inform the Union when an employee is assigned
to a temporary manager position as well as the anticipated duration.
10.07 The Company agrees to provide to the Union, monthly, a list showing
names and overtime hours paid during the preceding month.
10.08 For the purpose of this article, the word Union refers to the Union's
head office and District Representative.
10.09 Upon the Union's request, the Company agrees to provide, through the
Human Resources organization, a copy of the preferred hiring list.
10.10 The Company will provide the Union Representative with information in
any specific case where an employee has resigned and the Union
Representative feels the resignation was not totally voluntary, so
that the Union may investigate the matter before the employee
leaves the premises and, if deemed advisable, request the
appropriate manager concerned for a prompt review and, where
deemed appropriate, a modification of the case.
ARTICLE 11 - BULLETIN BOARDS
11.01 The Company will furnish, install and maintain a reasonable number of
glassed-in and locked bulletin boards as is mutually agreeable, and in
locations satisfactory to the Company and the Union.
11.02 The Bulletin Boards may be used for any and all of the following
purposes concerning the bargaining unit covered by this Agreement as may
be determined by the Union:
a) Notices of Union meetings and the reasons therefor.
b) Notices of nomination elections or referendums.
c) Results of elections or referendums.
d) Official records and reports relating to the operation of the Union.
<PAGE>
e) Copies of agreements between the Company and the Union.
f) Notices of recreational and social affairs.
11.02.01 All such notices shall be approved by the Director of the
location or his delegate and the District Representative
advised, before being posted.
11.03 When Company notices which refer to the Union are to be posted, the
Company agrees to advise the Union of the contents before such notices
are posted.
ARTICLE 12A - UNION AND
CONTINUOUS SERVICE
12.01 Continuous credited service and Union service shall be based on the date
established on the Company records. The continuous credited service and
the Union service in the Company shall accumulate from the employee's
date of hiring subject to the following conditions:
12.01.01 Continuous credited service and Union service shall terminate
for the following reasons:
a) Voluntary resignation.
b) Discharge for just cause if not reversed through the
grievance procedure.
c) Absence from work for three (3) or more consecutive working
days without the Company being notified. It is considered
in such circumstances that the employee has resigned
voluntarily unless exceptional conditions, recognized by
the Company as such, are involved.
After the second (2nd) consecutive working day of absence,
the Company will advise the District Representative.
d) Inability to return to work within two (2) years after sick
benefits (if any) have expired; except where an employee is
eligible for Company pension.
e) Inability to return to work within three (3) years from the
first full day of absence due to a work accident
disability, as recognized by the CSST. In cases where there
has been a return to work and a relapse, as recognized by
the CSST, from the same work accident occurs, the
aforementioned three (3) year period will be calculated as
if it were a new accident.
f) Failure to return to work from layoff within one (l) week
after having
<PAGE>
been notified to report; or within two (2) weeks after
having been notified and given satisfactory explanation for
not returning at the end of the first week.
It is agreed that laid off employees being recalled will be
permitted to give their present employer reasonable notice
of termination in order to accept recall.
g) Failure to return from layoff within the "Union and
Continuous service maintains" times, outlined in 12.01.03.
12.01.02 Deductions from continuous service shall be made for the
following reasons:
a) When an employee with less than three (3) full calendar
months of continuous service is absent without pay due to
sickness, that period of absence up to one (1) month only
in any consecutive twelve (12) month period, will be
granted upon return to work.
b) Any period of leave of absence in excess of one (1) month
in any consecutive twelve (12) months for which approval is
granted without credit for continuous service.
12.01.03 An employee shall maintain recall rights following layoff in
accordance with provisions set out below; his continuous
service and Union service shall be accumulated and/or
maintained as follows:
UNION SERVICE RECALL RIGHTS CONTINUOUS CONTINUOUS
AT DATE OF SERVICE SERVICE
LAYOFF ACCUMULATES MAINTAINS
UNION SERVICE
ACCUMULATES
AND MAINTAINS
Probation
completed and less
than 1 year 12 months * 12 months * 12 months
1 year but less
than 5 years 48 months * 18 months * 48 months
5 years or more 60 months * 24 months * 60 months
* NOTE: If employee returns from layoff within above periods.
12.01.04 Continuous service shall be bridged for the following reasons:
<PAGE>
An employee whose term of employment has been broken and who is
subsequently re-employed shall be credited with previous
continuous service in the following manner, provided that the
employee had six (6) months or more of previous continuous
credited service when the term of employment was broken.
PERIOD OF SERVICE BREAK PREVIOUS CONTINUOUS SERVICE CREDITED
1 month or less at time of re-employment
greater than 1 month but less after completing a period of continuous
than 1 year service equivalent to the period elapsed
since recall rights expired or since the event
causing the service break occurred
1 year or more after completing 1 year of continuous service
12.01.05 Union service shall be adjusted for the following reasons:
a) Employees returning to the bargaining unit, without continuous
service break, following an absence of less than three (3)
years shall have all their Union service immediately credited
on the basis of full Company service acquired.
b) Employees returning to the bargaining unit, without continuous
service break, following an absence of more than three (3)
years, shall be immediately credited with prior Union service
in the bargaining unit. After one (1) year in the bargaining
unit, the Union service of employees affected will be adjusted
on the basis of full Company service acquired.
c) Employees from C.O.E.U. shall be credited only with the Union
service they acquire while in the bargaining unit. After three
(3) years in the bargaining unit, the Union service of
employees so affected will be adjusted on the basis of full
Company service acquired.
d) Employees whose recall rights within the bargaining unit have
expired and who are subsequently rehired shall have their Union
service immediately credited less the period which exceeds the
time limit stipulated in paragraph 12.01.03 to maintain the
Union service.
e) Employees of the bargaining unit whose term of employment has
been broken, other than for expiry of recall rights, and are
subsequently rehired shall have their previous Union service
credited
<PAGE>
after one (1) year in the bargaining unit.
f) An employee's Union service will cease when the employee leaves
the bargaining unit.
12.02 A newly hired employee shall be considered as a probationary employee
and shall hold no rights as specified in article 12 of this agreement
for the first regular eighteen (18) weeks worked. The eighteen (18)
weeks worked probationary period shall be accumulated within not more
than one (1) year. After this date, his Union service rights will be
retroactive to the hiring date.
A probationary employee is eligible to become a member of the Union and
to be covered by all of the provisions of the agreement except when the
employee's service is terminated during the probationary period. Such
termination of employment shall be subject to the grievance procedure,
up to the second step.
In the event of lack of work, a probationary employee will be laid off
in reverse order of the number of regular days worked (Monday to Friday)
and shall have precedence over any other hiring from outside the
Company, if he submits an application for employment at the time of
leaving. A list of these probationary laid off employees who have
submitted an application of employment will be given to the Union.
* ARTICLE 12B
PROMOTION, BUMPING AND LAYOFF
12.03 PROMOTIONS
12.03.01 In making permanent promotions at level 3 and higher, the
Company shall take into consideration ability, skill,
experience (excluding experience acquired on temporary
assignments) and Union service. Where the first three factors
are relatively equal, Union service shall prevail. Job
vacancies at levels 1 and 2 shall be filled on the basis of
Union service from among those employees who apply.
i) Subject to the provisions of paragraph 12.03.01, selections
for filling vacancies will be made, amongst others, from
qualified employees in the same grade and qualified
employees in a higher grade than that of the vacancy.
12.03.02 (a) The Company will post notices of job vacancies,
excluding temporary assignments, in all levels for a period
of three (3) working days. Selections will be made in
accordance with paragraph 12.03.01.
i) Employees who are assigned to a 6 or 7-day work
schedule may apply up to three (3) days following the
posting period of
<PAGE>
paragraph 12.03.02_a) if their work schedule is such that
they are absent during the three (3) days of posting.
(b) A vacancy which is to be filled by the reinstatement of an
employee to his former job from which he was downgraded, need
not be posted.
(c) A vacancy in level 1 which is to be filled by an employee
returning to the bargaining unit within one (1) year will not
be posted, providing there is no employee with more Union
service on the recall list.
(d) Following a job posting, the selection will be made as early
as it is practical. If the selection is not made within
thirty (30) days following the end of the posting period, the
job posting will be cancelled. Within three (3) working days
after the selection, the name of the successful candidate
will be posted on the notice boards for a period of three (3)
working days and also forwarded to the Union head office and
district representative in writing.
12.04 For level 3 and higher jobs, the qualifications evaluation process for
applicants will be subject to consultations between the Company and the
district representative.
12.05 EFFECT OF LACK OF WORK
When a business faces a layoff, the Company and the Union will meet,
during the notice period, to discuss solutions that could reduce the
number of employees affected.
The parties have agreed to the following specific rules to facilitate
the handling of surplus employees:
. Surplus procedure
. Bumping procedure
. Layoff procedure
12.05.01 When lack of work necessitates decreasing the workforce,
employees having the least Union service shall be selected as
surplus from the analysis number in level 2 and higher or by
the least Union service in level 1 in the second level
manager's total organization affected. The Company reserves
the right to maintain an efficient staff and consequently
ability will also be considered.
12.05.02 Such surplus employees shall be transferred laterally by Union
service at level 1 and, if qualified at level 2 and higher, to
fill any existing vacancies.
<PAGE>
12.05.03 a) If there are no such vacancies, then level 4 surplus
employees shall be placed on jobs for which they are
qualified in the same level as that which was surplus or if
they are qualified down to level 2, displacing shorter
Union service employees.
b) If there are no such vacancies, then level 3 surplus
employees shall be placed on jobs for which they are
qualified in the same level as that which was surplus or if
they are qualified down to level 2, displacing shorter
Union service employees.
c) If there are no such vacancies, then level 2 surplus
employees shall be placed on jobs for which they are
qualified in the same level as that which was surplus, they
will displace shorter Union service employees.
d) Level 1 surplus employees will displace level 1 employees
with less Union service.
e) Surplus employees, as described in paragraphs a), b) and c)
who cannot be placed on a job for which they are qualified,
will displace level 1 employees with less Union service.
12.05.04 If surplus employees cannot be placed according to clause
12.05.03, such employees shall be laid off.
12.05.05 Should an employee be on the point of being laid off and there
exists employees with less Union service at level 2, the
following conditions apply:
a) The position of the most junior employee at level 2, will be
posted. Level 1 employees will be allowed to apply, with the
most senior Union service applicant being deemed to be the
successful candidate. The employee with the least Union
service at level 2 will be laid off and the surplus employee
will fill the position vacated by the selected candidate.
b) Subsequent to (a) above, should an employee with greater
than five (5) years of Union service still be on the point
of being laid off, the position of the employee, with the
least Union service at level 3, will be posted. All
employees will be allowed to apply, with the most senior
Union service applicant being deemed to be the successful
candidate. The employee with the least Union service at
level 3 will be laid off and the surplus employee will fill
the position vacated by the selected candidate.
<PAGE>
c) Only after an employee fails to find a position, through (a)
and (b) above, will he/she be laid off.
12.05.06 The Company will guarantee all employees, including
employees on probation, a minimum of one (1) week advance
notice prior to layoff.
12.05.07 Written notification of layoff will also be given to the
Union's district representative fifteen (15) days prior to the
date of layoff. Should this fifteen (15) day notice prove
impossible, the designated management representative will
consult with the Union. In addition, a copy of notification of
layoff, as mentioned in 12.05.06, will be given to the Union's
district representative at the same time it is given to the
employee.
12.05.08 The Company agrees to notify the Union head office and district
representative by letter when an employee refuses to exercise
his bumping rights.
12.05.09 An employee who is on Sickness and Accident or Long-Term
Disability benefits, on maternity or parental leave, at the time
that a notice of layoff would have applied to him had he been at
work, will be deemed to have received such notice at that time.
His records will be adjusted to reflect the period of time he
has been on the Sickness and Accident or Long-Term Disability
benefits, on maternity or parental leave, from the time the
layoff would have occurred until the employee is considered fit
to resume work.
12.05.10 When a lack of work of short duration necessitates a reduction
in manpower, the Company may offer a voluntary leave to all
employees having the same analysis number in the business
affected by the lack of work. This leave will be granted, based
on union service, to those so interested for a period not to
exceed three (3) months. The Company will inform the Union
prior to employees proceeding on this leave.
During this leave, the employee shall accumulate continuous
service and have the right to those benefits normally granted to
laid-off employees. He will not be entitled to neither a notice
period nor supplementary unemployment benefits.
Return to Work
--------------
The employee will be returned to work and will be assigned to
the position he held prior to his leave and/or will exercise his
bumping rights, in accordance with article_12.
<PAGE>
12.06 FORCE MAJEURE
The following conditions shall apply for a situation arising beyond the
control of the Company and necessitating the layoff, within any period of
one month, of more than 50% of any business work force, as defined in
article 43.
i) Employees affected by such lack of work will not be subject to the
bumping procedure, as per paragraph 12.05, for a period not
exceeding three (3) months.
ii) The Company will offer the most senior Union service qualified
employees the option of performing the remaining work available or
electing to be laid off for a maximum of three (3) months and
receive only the supplementary unemployment benefit.
iii) Employees laid off will be recalled as per the requirements of the
work available and in keeping with the provisions of the collective
agreement.
12.07 RECALLS
The Union recognizes the right of the Company normally to hire additional
people according to the needs of the business, subject to the provisions
of this article.
12.07.01 Before recalling at levels 1 and 2, rate protected employees
will be considered by reverse order of Union service.
When recalling at levels 1 and 2, the Company will give first
consideration to laid-off employees, in order of Union service.
Such consideration is subject to the following:
a) Employees laid off, refusing a recall, will waive their recall
rights.
b) A recalled employee who has failed to meet job requirements on
a specific function will return on the Recall List and shall
not be recalled for the said function.
12.07.02 When recalling at level 3 and higher, the Company shall give
first consideration to laid-off qualified employees, in order
of Union service.
12.07.03 The Company and the Union shall review the records of laid-off
employees to determine if they have the potential to be trained
to fill existing vacancies, prior to the hiring of new
employees.
12.07.04 Employees must keep the Company informed of any change of
address. The Company agrees that it shall send a registered
notice or telegram to the last recorded address.
<PAGE>
12.07.05 When the employment offered following recall is of a duration
of two (2) months or less and the employee is employed by
another company, the refusal of recall by said employee will
not result in the termination of his continuous service.
12.08 REHIRING
12.08.01 A laid-off employee shall be given preferred hiring
consideration for a period of time equivalent to his recall
period from the date such period ceases (maximum six [6] years,
including layoff period) if he makes application in writing to
the Company and presents himself for employment. Failure to
accept an offer of employment shall terminate this preference.
12.08.02 The Company agrees to advise a laid-off individual whose recall
rights are about to expire, of his preferred hiring
consideration as described in 12.08.01.
12.09 TRANSFERS
Before making transfers to locations outside of the Island of Montreal,
the Company will give due consideration to the wishes of the employees
involved.
* See also letters of intent # 9 and 14.
ARTICLE 13 - SUPPLEMENTARY UNEMPLOYMENT BENEFITS
13.01 For purposes of application of this article, a layoff can mean a
temporary layoff, including one on account of market fluctuations or
caused by a phase-out in a manufacturing location or business unit.
13.02 SCHEDULE OF SUPPLEMENTARY UNEMPLOYMENT BENEFITS (SUB)
An employee who is laid off for a period in excess of two (2) weeks solely
due to lack of work shall be granted SUB based on his continuous service
at the date of layoff in accordance with the following schedule except as
provided for in paragraphs 13.13 and 13.14:
CONTINUOUS SERVICE AT DATE OF LAYOFF
SUPPLEMENTARY
UNEMPLOYMENT
BENEFITS
<PAGE>
<TABLE>
<CAPTION>
PERIOD BUT NO. OF
COMPLETED LESS THAN WEEKS'
PAY
<S> <C> <C> <C>
0 year 1 year 0 week
1 2 years 5 weeks
2 years 3 6
3 4 7
4 5 8
5 6 11
6 7 12
7 8 13
8 9 14
9 10 15
10 11 18
11 12 20
12 13 22
13 14 24
14 15 26
</TABLE>
Three (3) weeks additional pay for each full year of continuous service
thereafter.
13.03 CALCULATION OF SUPPLEMENTARY UNEMPLOYMENT BENEFITS
SUB payments shall be based on the employee's regular work week hours
(excluding overtime) in effect as of the date of layoff.
The rate of pay used in such computations shall be the employee's
equivalent weekly rate, including COLA, in effect at the date of layoff.
13.04 Each week, the employee shall receive SUB equivalent to 90% of his
weekly pay, less Unemployment Insurance Benefit entitlement, provided he
has requested and obtained the Unemployment Insurance Benefits.
After Unemployment Insurance Benefits have been exhausted, a laid-off
employee shall be entitled to a payment of 60% of his regular weekly pay
until total SUB entitlement, under 13.02, is exhausted.
13.05 For purposes of application of paragraph 13.04, the total combination of
Unemployment Insurance Benefits entitlement, SUB and other compensation
shall not exceed, in any event, 90% of the employee's weekly pay.
13.06 SUB cease when :
a) the employee resigns,
b) SUB expire,
<PAGE>
c) the employee refuses to report to work after recall (in accordance
with article 12.01.01 f).
In view of this article, the employee has no acquired right to SUB, except
during periods of unemployment which are mentioned in paragraphs 13.04 and
13.09.
13.07 a) An employee who has been re-employed following a period of layoff
and is again laid off shall be granted SUB based on his overall
continuous service after deducting the amount he received from his
previous layoff.
b) An employee who has been re-employed following a period of layoff and
who, after being back at work for a period of one (1) or more years,
is again laid off, shall be granted SUB based on his overall
continuous service.
13.08 a) The Company shall provide the following benefits for six (6) months
following the month of layoff as long as laid off employees continue
to contribute to those plans to which they are required to make
contributions:
- Supplementary Hospital Plan
- Extended Health Care Plan
- Vision Care Plan
- Dental Plan
- Group Insurance Plan - Part I
- Group Insurance Plan - Part II
- Dependent Life Plan
- Survivor Transition Benefit Plan
b) Laid off employees with ten (10) or more years of continuous service
shall continue to receive the following benefits for the remaining SUB
payment periods:
- Extended Health Care Plan
- Group Life Part I
The cost of this extended coverage shall be deducted from SUB entitlement.
13.09 Employees eligible to SUB shall not receive SUB during the UIC stoppage
period. However, if the layoff persists for more than two weeks,
employees shall receive two (2) weeks SUB, upon their return to work,
provided they have not exceeded the total amount of SUB in that time. In
such event, the SUB payment shall be considered as being made during the
UIC stoppage period of two weeks.
13.10 In the case of an employee who, within ten (10) working days, is recalled
from a layoff from where he was laid off, he shall be reimbursed for the
layoff period as if he had been actively employed.
<PAGE>
13.11 In the case of a laid-off employee's death, the provisions of paragraph
43.07 of this agreement shall apply to the estate.
13.12 Employees must apply and receive layoff allowance before any SUB payments
become effective.
13.13 LAYOFF ALLOWANCE AND LUMP SUM PAYMENT
a) An employee with fifteen (15) or more years of continuous service may
elect to receive a layoff allowance in a single payment. This option
is not subject to qualification for UIC. The entitlement for this
single payment will be as follows:
<TABLE>
<CAPTION>
CONTINUOUS SERVICE AT DATE OF LAYOFF LAYOFF
ALLOWANCE
PERIOD BUT NO. OF
COMPLETED LESS THAN WEEKS'
PAY
<S> <C> <C>
15 years 16 years 22 weeks
</TABLE>
Three (3) weeks additional allowance for each full year of continuous
service thereafter.
b) The payment will be based on the employee's regular work week hours
(excluding overtime) and on his equivalent weekly rate of pay at the
date of layoff excluding COLA.
c) The layoff allowance shall be based on the employee's overall
continuous service after deducting the amount received as a result of
previous layoff excluding the layoff allowance received prior to 1988.
d) Should this individual be later recalled within a time interval
shorter than that covered by the number of weeks of layoff allowance
granted, the amount of layoff allowance paid to the employee for the
excess number of weeks shall be considered as an advance in pay by the
Company and repayable through payroll deductions at the rate of 10% of
such employee's wages per pay period.
e) In subsequent layoffs, the layoff allowance of an employee who
previously elected a lump sum payment shall be based on his overall
continuous service after deducting the amount received as a result of
previous layoffs. Furthermore, his layoff allowance entitlement at
any future date shall not be restored.
<PAGE>
f) An employee electing to receive Supplementary Unemployment Benefits
forfeits selection of a single payment on any subsequent layoff.
g) Should a situation arise, beyond the control of the Company, which
necessitates the layoff of more than 50% of the workforce, employees
affected may elect only the SUB plan.
13.14 An employee having at least five (5) years of continuous service can
forfeit his recall rights and receive a layoff allowance in a lump sum.
The layoff allowance shall be one (1) week of salary for each full year
of continuous service.
13.15 LAYOFF ALLOWANCE AND SUPPLEMENTARY UNEMPLOYMENT BENEFITS
It is agreed that in the event of major changes to the Unemployment
Insurance regulations negatively impacting the payment under the
Supplementary Unemployment Benefit Plan, the Company agrees to revert to
the former layoff allowance plan, with the schedule of the 1988-91 Nortel
collective labour agreement, if so requested by the Union.
ARTICLE 14 - NOTICES
14.01 The Company agrees that before any non-supervisory office vacancies,
either for clerks or technicians (including time study, manufacturing
process layout and skill training), are filled by transfer of an hourly
employee or by outside hiring, the Company shall consider only those
employees who have applied to a notice of vacancy. Notices shall be
posted on bulletin boards visible to all hourly employees.
When qualifications are equal, employees having the greater union service
will be given preference, when the selection is made from the applicants.
14.02 The Company agrees, when an opening in management occurs, to consider
employees who have expressed their desire to become part of management.
ARTICLE 15 - SAFETY AND HEALTH
15.01 The Company and the Union recognize that they must endeavour jointly to
maintain high standards of safety and health in the workplace. The
Company shall take the necessary measures to ensure the safety and health
of the employees and will provide information and training, when
necessary.
15.02 The Company shall maintain adequate health facilities in the work areas
and will provide adequate safety devices.
15.03 No employee shall be required to operate or use any machinery, tool, die
or other piece of equipment in defective order.
<PAGE>
15.04 In case of equipment considered dangerous, the Union may
immediately meet with the Health & Safety Committee in order to check
the equipment.
15.05 In the case where an employee sustains an injury at work or incurs an
occupational sickness during his period of employment, and as a result
is permanently unable to perform work similar to that performed prior
to his employment injury, he may fill a job vacancy or exercise his
bumping rights, as per article 12, on a job corresponding to his
physical restriction.
An employee, after completing his probation period, downgraded in
accordance with article 15.05, will have his rate of pay frozen until
the rate of his new grade reaches this rate of pay.
An employee with five (5) years or more of continuous service,
downgraded in accordance with article 15.05 from a grade to which he
has been assigned, will maintain the rate of pay in effect at time of
downgrade during the life of this agreement.
15.06 An employee who is permanently unable to perform work similar to that
performed prior to his sickness, shall be transferred to fill existing
vacancies at the same grade level, corresponding to his physical
restriction and for which he possesses the qualifications, within the
bargaining unit.
15.07 An employee with fifteen (15) years or more of union service, who cannot
be placed in accordance with 15.05 and 15.06, shall be placed on a job
corresponding to his physical restriction at the same grade level or
lower, by displacing shorter union service employees within the
business unit. The employee shall receive a one (1) week
familiarization period.
If unable to place the employee, he will be given appropriate work until
he is placed on the next suitable opening, taking into account his
qualifications, union service and physical restriction.
15.08 An employee with twenty-five (25) years or more of continuous service,
downgraded in accordance with article 15.07 from a grade to which he has
been assigned, will maintain the rate of pay in effect at time of
downgrade during the life of this agreement.
15.09 Should suitable employment not be available, as indicated in paragraphs
15.05, 15.06 or 15.07 or should the employee be unable to meet the
requirement of such employment, the designated third-level manager, as
identified in paragraph 6.06.03, and the District Representative shall
meet to discuss the pertinent data related to the problem, with an aim
to attempt to retain and gainfully employ the individual concerned,
before any action is taken by the Company.
15.10 The Company and the Union agree to establish a Health and Safety
Committee
<PAGE>
structured to conform with existing legislation.
15.11 For reasons of safety, when an employee is assigned to perform work in
an isolated area and where it may not be possible for him to request
assistance, the Company agrees to set up proper surveillance in order to
provide help and/or assistance as may be necessary.
15.12 The Company will provide to the district representative a copy of the
Employer's accident reports and, if necessary, a copy of the temporary
assignments.
15.13 EMPLOYEE REHABILITATION
The Company and the Union acknowledge their joint responsibility to
ensure that employees who are disabled as a result of illness or injury
are given every available opportunity to participate in rehabilitation
programs, including rehabilitative employment.
In order to facilitate access to such programs, members of the Joint
Rehabilitation Committee and appropriate resources shall meet to
identify rehabilitation opportunities.
The Committee shall determine the possibilities for rehabilitation and
provide assistance to employees to ensure a successful integration into
the work environment. The Company will make every effort to facilitate
access to rehabilitation which could involve modifications to the work
schedule, the tools and/or the organization of work. However, such
modifications must not be damaging for the health and safety of other
workers. No privilege granted in this article can have the effect of
giving an employee recall and layoff rights which he would not have had
if he had been at work in regular conditions.
It is agreed that when opportunities for rehabilitation become apparent,
the employee and/or his personal physician shall be advised of these
opportunities. The employee and his physician shall then assess whether
the employee should benefit from the opportunity.
If the employee and his physician decide to take advantage of the
opportunity, the treating physician and/or the employee must consult the
Health Centre to discuss a rehabilitation program. The Health Centre
representative shall meet with the members of the Joint Comittee to
identify rehabilitation opportunities and design a personalized
progressive program.
If a rehabilitation program does not involve rehabilitative employment,
the current conditions for continued S & A or LTD shall be applicable.
If a rehabilitation program involves rehabilitative employment, the
employee will continue to draw Sickness and Accident (S&A) or Long Term
Disability (LTD) Benefits, as the case may be. Earnings from such
employment will be paid in addition to S&A or LTD
<PAGE>
benefits up to a level equal to 100% of the base rate plus COLA which
the employee would have earned had he been at work on a full-time basis.
If income from all sources exceed such levels, then S&A or LTD benefits
will be reduced by the amount of income that exceed such 100% level.
When an employee on rehabilitation is at work, he will retain the rights
and privileges that he would normally have as if he would be on his
regular job. It is understood that these rights and privileges must not
be contradictory to the objective and provisions of his personalized
rehabilitation program.
An employee on rehabilitation will have the right to a plant holiday, in
accordance with article 29, so long as the plant holiday falls on a day
when the employee would normally have been at work as per his
personalized rehabilitation program.
In the event that an employee on rehabilitation takes his vacations,
these vacations will be treated as if this employee was normally at
work.
Those employees receiving LTD benefits and participating in a
Rehabilitation Program which entails receipt of rehabilitation earnings
from rehabilitative employment will accrue vacation in connection with
their continuous service and rehabilitation earnings on the following
basis:
Less than three years service 4% of earnings from hours worked
Three (3) to ten (10) years service 6% of earnings from hours worked
Ten (10) to nineteen (19) years service 8% of earnings from hours
worked
Nineteen (19) to twenty-nine (29) years service 10% of earnings from
hours worked
Twenty-nine (29) years service and above 12% of earnings from hours
worked
ARTICLE 16 - UNINTERRUPTED PRODUCTION
16.01 During the term of this Agreement and during the period when
negotiations for a further Agreement are in progress, the Company agrees
that there shall be no lockouts, and the Union agrees that there shall
be no slowdown, strike or any other stoppage or interference with work
which would cause any interruption in production.
* ARTICLE 17 - JOB EVALUATION
17.01 The Union agrees that the classification of employees within the
established grades for the various occupations will be in accordance
with the Job
<PAGE>
Evaluation Plan presently in use in the Company.
(a) A copy of the Hourly Evaluation Plan and all modifications will
be supplied to the Union.
(b) The employee involved and the District Representative will review the
job write-up with the immediate manager to ensure that all important
duties are included, before submission to the Grading Committee for
evaluation.
(c) The Company will supply the Union with the same job write-up data
which is submitted by supervision to the Grading Committee, prior to
the evaluation.
(d) The evaluation will be completed within thirty (30) working days
following completion of the job description.
(e) Substantiation data of evaluated jobs will be supplied to the
Union.
(f) When a job is re-evaluated, existing job rates shall continue in
effect until the evaluation is completed. Any rate increase
resulting from the evaluation shall be retroactive to the date of
submission of the revised write-up to the Grading Committee or from
the date of the submission of a grievance, whichever is earlier.
(g) The Company agrees to advise the Union in writing, thirty (30)
days in advance of any reduction in the grade level of an existing
job resulting from evaluation.
(h) The Company agrees to meet with the Union to discuss any
modifications to the Evaluation Plan prior to their introduction.
* See also article 6.
* ARTICLE 18 - LEAVES OF ABSENCE
18.01 MATERNITY
Maternity leave of absence shall be granted to employees subject to the
following conditions:
PRIOR NOTICE
a) The employee must notify the Company of her intention to proceed on
maternity leave, in writing, at least three (3) weeks prior to the
commencement
<PAGE>
of such leave.
This notice must be accompanied by a medical certificate attesting to
the state of the pregnancy and the expected date of birth. The period
of notice may be less than three (3) weeks in cases of emergency
substantiated by a medical certificate.
TERM OF LEAVE
b) As of the sixth (6th) week preceding the expected date of birth, the
Company may request the pregnant employee who is still at work to
produce a medical certificate attesting to the fact that she is fit to
work.
c) If the employee refuses or fails to supply the Company with the said
certificate within eight (8) days, the Company may oblige her to take
her maternity leave immediately by giving her a written notice to this
effect.
d) Maternity leave shall be granted for a period of eighteen (18) weeks
or any other period provided by law.
e) Extension of the leave of absence as covered in (d) may be granted for
an additional period of up to thirteen (13) weeks on the advice of the
Company Medical Department.
MATERNITY LEAVE ALLOWANCE
f) Maternity leave allowance will only be paid to those employees who
have continuous service of thirteen (13) weeks or more.
g) The employee who provides proof that she is receiving unemployment
insurance benefits shall be paid for up to fifteen (15) weeks
maternity leave allowance equivalent to 75% of the employee's weekly
base rate less unemployment insurance benefits received by the
employee. Payment of this allowance will cease after the employee
ceases to qualify for unemployment insurance benefits.
h) The employee who is not entitled to receive unemployment insurance
benefits for all or a portion of the fifteen (15) weeks of maternity
benefits, due to having been previously laid off by the Company shall
be paid maternity leave allowance during Maternity Leave for up to
fifteen (15) weeks at a rate equivalent to 75% of the employee's
weekly base rate, less any unemployment insurance benefits received.
i) The employee who, while employed by the Company, has received
unemployment insurance benefits in connection with maternity leave and
who is subsequently laid off by the Company without having worked
sufficient time
<PAGE>
to permit maximum entitlement to unemployment insurance benefits,
shall be paid an amount equivalent to the difference between the
remaining amount of unemployment insurance benefit payable in the 52
week unemployment insurance entitlement period, and the maximum amount
of unemployment insurance benefit entitlement had the employee not
collected unemployment insurance benefits while on maternity leave,
plus layoff allowance top up.
RETURN TO WORK
j) The employee must be cleared by the Company Medical Department before
starting work.
k) When an employee is ready to return from a maternity leave of absence,
reinstatement will be in accordance with the appropriate following
procedures:
(i) Employee with a planned maternity leave of absence of up to
eighteen (18) full weeks, or any other period provided by law,
will be reinstated in her former position with all rights to which
she would have been entitled if she had continued to work.
(ii) If the employee's former position no longer exists upon her
return to work, she shall exercise her bumping rights as if she
had been at work.
l) After re-employment, the employee will be credited with her maternity
leave of absence service, prescribed by legislation as mentioned
in_d).
m) An employee who fails to return to work at the end of her leave shall
be considered as having resigned from the Company, effective her last
day of work.
18.02 PARENTAL LEAVE
a) PARENTAL LEAVE FOR CHILDBIRTH
Parental leave of absence shall be granted subject to the following
conditions:
i) Applicable to parents of a newborn child. Leave shall not exceed
thirty-four (34) weeks.
ii) It will commence no earlier than the date of birth. Such leave
shall terminate no later than one (1) year after the date of
birth.
b) PARENTAL LEAVE FOR ADOPTION
Parental leave of absence shall be granted subject to the following
conditions:
<PAGE>
i) Applicable to parents of an adopted child who is not of
school age. Leave will not exceed thirty-four (34) weeks.
ii) It is understood that the employee will furnish evidence of
adoption. The parental leave is not available for the adoption
of a child of the spouse.
iii) It will commence no earlier than the date that the child comes
into custody, care and control of the employee for the first time
and must not terminate later than one (1) year from such date.
However, in the event that the employee must be away from work,
to travel outside of Quebec, in order to gain custody of the
child, his adoption leave may commence at that time.
c) PRIOR NOTICE
The employee must notify the Company of his intention and duration of
parental leave in writing at least three (3) weeks prior to the
commencement of such leave.
d) PARENTAL LEAVE ALLOWANCE FOR CHILDBIRTH
i) The following provisions apply to parental leaves, pursuant to
article 18.02_a), for the period of such leave.
ii) Parental leave allowance will only be paid to those employees who
have continuous service of nine (9) months or more.
iii) The employee who provides proof that he is receiving
unemployment insurance benefits shall be paid for up to ten (10)
weeks parental leave allowance equivalent to 75% of the
employee's weekly base rate less unemployment insurance benefits
received by the employee. Payment of this allowance will cease
after the employee ceases to qualify for unemployment insurance
benefits.
iv) The employee who is not entitled to receive unemployment
insurance benefits for all or a portion of the ten (10) weeks of
parental benefits, due to having been previously laid off by the
Company, shall be paid parental leave allowance during Parental
Leave for up to ten (10) weeks at a rate equivalent to 75% of the
employee's weekly base rate, less any unemployment insurance
benefits received.
v) The employee who, while employed by the Company, has received
unemployment insurance benefits in connection with parental
leaves and who is subsequently laid off by the Company without
having worked sufficient time to permit maximum entitlement to
unemployment insurance benefits, shall be paid an amount
equivalent to the difference
<PAGE>
between the remaining amount of unemployment insurance benefit
payable in the 52 week unemployment insurance entitlement period,
and the maximum amount of unemployment insurance benefit
entitlement had the employee not collected unemployment insurance
benefits while on maternity and/or parental leave, plus layoff
allowance top up.
e) PARENTAL LEAVE ALLOWANCE FOR ADOPTION
i) Parental leave allowance will only be paid to those employees who
have continuous service of nine (9) months or more.
ii) The employee who provides proof that he is receiving unemployment
insurance benefits shall be paid for up to ten (10) weeks
parental leave allowance equivalent to 75% of the employee's
weekly base rate less unemployment insurance benefits received by
the employee. Payment of this allowance will cease after the
employee ceases to qualify for unemployment insurance benefits.
iii) The employee who is not entitled to receive unemployment
insurance benefits for all or a portion of the ten (10) weeks of
parental benefits, due to having been previously laid off by the
Company, shall be paid parental leave allowance during Parental
Leave for up to ten (10) weeks at a rate equivalent to 75% of the
employee's weekly base rate, less any unemployment insurance
benefits received.
iv) The employee who, while employed by the Company, has received
unemployment insurance benefits in connection with parental
leaves and who is subsequently laid off by the Company without
having worked sufficient time to permit maximum entitlement to
unemployment insurance benefits, shall be paid an amount
equivalent to the difference between the remaining amount of
unemployment insurance benefit payable in the 52 week
unemployment insurance entitlement period, and the maximum amount
of unemployment insurance benefit entitlement had the employee
not collected unemployment insurance benefits while on maternity
and/or parental leave, plus layoff allowance top up.
v) In the instances described in ii) and iii) above, the Company
shall pay during the adoption leave exceeding ten (10) weeks when
no unemployment benefits are being paid, up to five (5)
additional weeks at 75% of the employee's weekly base rate.
f) RETURN TO WORK
i) If the parental leave is for a duration of eighteen (18) weeks or
less, the employee will be reinstated in his former position with
all rights to which
<PAGE>
he would have been entitled if he had continued to work,
including credit for service.
ii) If the leave is for more than eighteen (18) weeks, upon return,
the employee will be assigned to a similar position or if the
position does not exist, he will exercise his bumping rights in
accordance with article 12. For the purpose of service
accumulation, the employee will be credited with his parental
leave of absence.
iii) The employee who does not return to work at the end of his
parental leave is presumed to have resigned effective his last
day at work.
18.03 JURY DUTY OR COURT ATTENDANCE
Leave of absence with pay shall be granted by the Company to employees
summoned for jury or court attendance (not as plaintiffs, defendants or
voluntary witnesses). Employees shall report for regular duties while
temporarily excused from attendance at court.
18.04 BEREAVEMENT
(i) When a death occurs in the immediate family of an employee and the
employee attends the funeral, such employee shall, on request, be
granted a leave of absence not to exceed five (5) consecutive
regular working days during his standard Monday to Friday work
schedule. An employee's immediate family shall be considered as
husband, wife, spouse, son, daughter, mother, father, mother-in-law,
father-in-law, sister, brother, brother-in-law, sister-in-law, son-
in-law, daughter-in-law, grandparents, grandchildren, foster
parents, step-brother, step-sister, step-child, step-parents, child
of current spouse and legal guardian. Other relatives residing with
the employee shall also be considered as immediate family.
The Company will grant, in accordance with the above, a bereavement
pay allowance, of up to a maximum of three (3) days during the
employee's regular Monday to Friday working schedule and restricted
to the period from the date of death to the day immediately
following the funeral inclusively.
(ii) In the event the employee is unable to attend the funeral of a member
of his immediate family, as described in 18.04 i, and a memorial
service is held, he shall be granted, on request, a one (1) day
leave of absence with pay to attend the memorial service.
(iii) Extension to the leave of absence may be granted when an employee
has difficult travel arrangements, long distances to travel, or all
of the responsibility for funeral arrangements.
<PAGE>
(iv) Where interment of a deceased member of an employee's immediate
family is delayed, the employee may elect to take up to one (1)
working day from his five (5) day bereavement leave entitlement to
attend the interment.
18.05 QUARANTINE
An employee required to be absent due to quarantine imposed by duly
constituted health authorities shall be paid for such absence which shall
be treated as absence due to personal sickness.
18.06 SPECIAL LEAVE
An employee who must serve a period of incarceration as a result of being
found guilty of an offence under the "Code de la Route" will be granted a
leave of absence without pay of up to ninety (90) calendar days in order
to serve the period of incarceration. An extension may be granted by the
Company. Only one (1) such leave may be granted during the life of the
agreement.
18.07 EDUCATIONAL LEAVE OF ABSENCE
1. This paragraph allows an employee to take an authorized educational
leave of absence without pay to further their knowledge of
telecommunications or related technology, particularly as it applies
to the Company's operations.
2. Such leave shall be granted as deemed appropriate by the Company and
taking into account production requirements.
3. To be eligible, an employee must have a minimum of two (2) years of
continuous service and shall apply in writing, no later than August
1st of each year, stating the reasons for such a request.
4. Normally only one (1) application per twelve-month period shall be
granted.
5. The Company reserves the right to determine the number of leaves
granted to each employee.
6. The duration of each leave of absence granted shall be to a maximum of
twelve (12) months.
7. Employees who successfully complete their courses will be eligible
under the Company's Tuition Refund, with the following exceptions:
o Maximum of $3000 per year.
o Employees will be reimbursed upon successful completion of courses.
<PAGE>
8. BENEFITS
o Employees who take an authorized educational leave of absence
without pay will have access to the benefits available under the
existing plan applicable to the authorized leave of absence without
pay.
9. RETURN TO WORK
o Upon return to work, the Union service shall be credited
immediately for the period of the educational leave of absence.
o Upon return, the employee shall be assigned to a similar position
or if the position does not exist, he shall exercise his bumping
rights in accordance with article 12 or 38.
* Refer to articles # 12 and 30.
ARTICLE 19 - VALIDITY
19.01 If for any reason any portion of this Agreement shall be held to be void
and unlawful, it shall not affect the validity of the rest of the
Agreement.
19.02 The Company agrees that existing general privileges not included in this
Agreement will not be withdrawn during the life of this Agreement without
due and sufficient cause and the Company undertakes to advise the Union
of any contemplated changes.
ARTICLE 20 - DEDUCTION OF REGULAR DUES
20.01 During the term of this Agreement, the Company will deduct the regular
Union dues from the wages of all employees covered by this Agreement in
installments.
20.02 When sufficient pay is not available for all other deductions during the
period when deductions are made, no deductions shall be made for Union
dues.
20.03 The Union agrees to keep the Company harmless from any claims against it
by an employee, which arise out of deduction under this Article.
20.04 Dues deduction shall be suspended during the period of an employee's
leave of absence without pay. When the employee is returned to the
payroll, deduction of Union dues shall be automatically resumed.
20.05 Amounts deducted for dues shall be remitted to the Secretary Treasurer
of the Canadian Union of Communication Workers as soon as possible after
the end of each fiscal month. Each remittance shall be accompanied by a
statement showing the amounts of the deductions for each employee.
<PAGE>
20.06 Any change in the amount of monthly Union dues will be certified to the
Company by the Secretary-Treasurer of the Canadian Union of Communication
Workers. A certification in a form acceptable to the Company which
changes the dues shall become effective thirty (30) days following the
date the Company receives such certification.
20.07 Deduction of dues from the employee's paycheque shall commence upon
completion of the first full week of employment with the Company.
ARTICLE 21 - WORK PERFORMED BY SUPERVISORS
21.01 The Company agrees that supervisors and salaried employees will not
normally perform work ordinarily assigned to hourly employees, except for
instructional or experimental purposes, or when competent non-supervisory
employees are not available, or in cases when abnormal conditions arise.
ARTICLE 22 - DISCIPLINARY ACTION
22.01 No employee covered by this Agreement shall be disciplined in any
manner, demoted, suspended or discharged except for just cause.
22.02 An employee who is being disciplined, suspended or discharged may, if he
so requests, have his Union Representative present as an observer, during
the disciplinary interview. The Union Representative may ask for
clarification of Company statements and facts related to the discipline.
22.03 A formal warning is in effect for a period of fifteen (15) months.
A final warning expires after twelve (12) months of acceptable
performance.
22.04 (a) The Company agrees to submit to the Union a copy of the formal or
final warning within three (3) days following the issuing of the
warning. Specific reasons for the warning will be included, e.g.
frequency and dates of tardiness, etc.
(b) With prevention as our objective, the Company agrees to furnish the
Union with a copy of the counselling.
22.05 The Company agrees to notify the Union by telephone, to be confirmed by
letter, of those cases in which an employee is being suspended or
separated from the Company. Specific reasons for the suspension or
separation will be included in identifiable brief details as shown
under paragraph 22.04_(a).
<PAGE>
* ARTICLE 23 - HOURS OF WORK
23.01 The regular hours of work for all operating locations shall be forty
(40) hours per week.
23.01.01 The standard hours of work shall be as follows:
REGULAR SHIFT OPERATIONS
8 hours - 1/2 hour lunch
TWO SHIFT OPERATIONS
Day Shift: 8 hours - 1/2 hour lunch
Swing Shift: 7 1/2 hours - 1/2 hour lunch
MULTIPLE SHIFT OPERATIONS
1st shift - 8 hours - 1/2 hour lunch
2nd shift - 7 1/2 hours - 1/2 hour lunch
3rd shift - 7 1/2 hours - 1/2 hour lunch
CONTINUOUS PROCESSES
1st shift - 8 hours - no lunch hour
2nd shift - 8 hours - no lunch hour
3rd shift - 8 hours - no lunch hour
NIGHT SHIFT
8 hours - 1/2 hour lunch
23.01.02 The Company reserves the right to change from time to time the
starting and stopping time of any regular shift; it is however
agreed to consult with the Union before putting any such
changes into effect.
23.01.03 When extensive workforce reductions would otherwise be
required, it may be found desirable to reduce the scheduled
hours of work below the standard weekly work schedule to
minimize such workforce reductions. Any action taken in this
respect shall be the subject of negotiations between the
Company and the Union. Negotiations thereon shall take place
when requested by either party to this Agreement and in the
event of such negotiations, the new schedule proposed by the
Company may be placed in effect pending Agreement between the
parties.
23.01.04 a) Except in the case of emergency, the Company will give its
employees a forty-eight (48) hour notice for all shift
changes.
b) Overtime hours leading to a shift change will be governed
by article 24.02.
<PAGE>
23.02 SEVEN-DAY CONTINUOUS SHIFT CONFIGURATION
The conditions under which the parties agree to implement a schedule of
working hours, designated as twelve (12) hour shifts.
23.02.01 HOURS OF WORK
i) The term "working day" as used in this Collective Agreement
means a regularly scheduled work day of twelve (12) hours.
ii) The standard schedule for employees on a twelve (12) hour
seven (7) day shift schedule is comprised of twelve (12)
hours of work in a twenty-four (24) hour period. The standard
weekly schedule for employees on this shift is comprised of
days of twelve (12) hours on a three (3) or four (4) day work
week depending on the employee's work schedule.
iii) The regular payroll week for employees on a twelve (12) hour
shift schedule will commence at 7:00 p.m. on Sunday and
terminate at 7:00 p.m. on the following Sunday.
23.02.02 RATES OF PAY
Regular hours scheduled and worked, in accordance with the twelve
(12) hour shift schedule, will be paid at straight time rates.
The weekly average standard schedule is forty-two (42) regular
hours worked.
A premium of $3.50 per hour will be paid for all scheduled hours
worked during the regular shift on Saturdays, provided that such
hours are not paid on an overtime basis.
A premium of $5.00 per hour will be paid for all scheduled hours
worked during the regular shift on Sundays, provided that such
hours are not paid on an overtime basis.
23.02.03 OFF-SHIFT DIFFERENTIAL
Off-shift differential will be paid for all the hours worked
between 3:00 p.m. and 7:00 a.m.
23.02.04 COLA PREMIUM
COLA premium is paid based on forty-two (42) hours.
23.02.05 OVERTIME PAYMENT
<PAGE>
a) A rate of 1 1/2 times the hourly rate shall be paid:
i) for the first eight (8) hours worked if an employee is
notified that he is required to work on his designated day
of rest, double time will be paid for the following hours
worked. This provision shall not apply in the case where an
employee's schedule is changed to another shift or to a new
working schedule which provides alternative day(s) of rest.
b) A rate of double time will be paid:
i) for the first four (4) hours worked in excess of twelve
(12) regular hours during the twenty-four (24) hour
interval from the beginning of an employee's schedule
shift.
ii) for all hours worked on a plant holiday, as described
in Article 29.
23.02.06 BEREAVEMENT
In accordance with article 18.04.
PLANT HOLIDAYS (AS DEFINED IN ARTICLE 29).
Employees on a twelve (12) hour work schedule will be paid twelve
(12) hours for each statutory holiday, as per Article 29. Between
Christmas and New Year however, employees will be paid an
equivalent of eight (8) hours for each of the five (5) plant
holidays during this period.
23.02.07 VACATION
Vacation will be calculated on the basis of twelve (12) hours:
2 weeks = _7_days of 12 hours
3 weeks = 10_days of 12 hours
4 weeks = 14_days of 12 hours
5 weeks = 17_days of 12 hours
6 weeks = 20_days of 12 hours
23.02.08 SICKNESS AND ACCIDENT PLAN
Those employees with less than ten (10) years service will be
treated according to the 8-8 rule. For the first day of sickness,
all shall receive the equivalent of four (4) hours paid.
<PAGE>
If an employee works more than six (6) hours, he/she shall be paid
for those hours worked and that day will not be treated as a day
of absence. If an employee works less than six (6) hours and must
leave due to sickness and/or accident, he/she will be paid for
those hours worked and that day will be treated as a day of
absence. If an employee works less than four (4) hours and must
leave due to accident and/or sickness, he/she shall be paid the
equivalent of four (4) hours worked.
23.03 SIX-DAY CONTINUOUS SHIFT CONFIGURATION
The conditions under which the parties agree to implement a schedule of
working hours, designated as twelve (12) hour shifts.
23.03.01 HOURS OF WORK
i) The term "working day" as used in this Collective Agreement
means a regularly scheduled work day of twelve (12) hours.
ii) The standard schedule for employees on a twelve (12) hour
shift schedule is comprised of twelve (12) hours of work in a
twenty-four (24) hour period. The standard weekly schedule
for employees on this shift is comprised of three (3) days of
twelve (12) hours: (Monday, Tuesday, Wednesday) and
(Thursday, Friday, Saturday).
iii) The regular payroll week for employees on a twelve (12) hour
shift schedule will commence at 7:00 p.m. on Sunday and
terminate at 7:00 p.m. on Saturday.
23.03.02 RATES OF PAY
Regular hours scheduled and worked, in accordance with the twelve
(12) hour shift schedule, will be paid at straight time rates.
The weekly standard schedule is thirty-six (36) regular hours
worked.
A premium of $3.50 per hour will be paid for all scheduled hours
worked during the regular shift on Saturdays, provided that such
hours are not paid on an overtime basis.
23.03.03 OFF-SHIFT DIFFERENTIAL
Off-shift differential will be paid for all the hours worked
between 3:00 p.m. and 7:00 a.m.
23.03.04 COLA PREMIUM
COLA premium is paid based on thirty-six (36) hours.
<PAGE>
23.03.05 OVERTIME PAYMENT
a) A rate of 1 1/2 times the hourly rate shall be paid:
i) for the first eight (8) hours worked if an employee is
notified that he is required to work on his designated day
of rest, double time will be paid for the following hours
worked. This provision shall not apply in the case where an
employee's schedule is changed to another shift or to a new
working schedule which provides alternative day(s) of rest.
b) A rate of double time will be paid:
i) for the first four (4) hours worked in excess of twelve
(12) regular hours during the twenty-four (24) hour
interval from the beginning of an employee's schedule
shift.
ii) for all hours worked on Sunday (outside the standard
schedule), that is from Saturday 7:00 p.m. to Sunday 7:00
p.m.
iii) for all hours worked on a plant holiday, as described in
Article 29.
23.03.06 BEREAVEMENT
In accordance with article 18.04.
PLANT HOLIDAYS (AS DEFINED IN ARTICLE 29).
Employees on a twelve (12) hour work schedule will be paid twelve
(12) hours for each statutory holiday, as per Article 29. Between
Christmas and New Year however, employees will be paid an
equivalent of eight (8) hours for each of the five (5) plant
holidays during this period.
23.03.07 VACATION
The vacation entitlement will be calculated in terms of twelve
(12) hours, i.e.:
2 weeks = 2 x 3 days of 12 hours
3 weeks = 3 x 3 days of 12 hours
4 weeks = 4 x 3 days of 12 hours
5 weeks = 5 x 3 days of 12 hours
6 weeks = 6 x 3 days of 12 hours
For the purpose of vacation entitlement, thirty-six (36) hours is
<PAGE>
equivalent to thirty-eight (38) hours paid.
23.03.08 SICKNESS AND ACCIDENT PLAN
Those employees with less than ten (10) years service will be
treated according to the 8-8 rule. For the first day of sickness,
all shall receive the equivalent of four (4) hours paid. If an
employee works more than six (6) hours, he/she shall be paid for
those hours worked and that day will not be treated as a day of
absence. If an employee works less than six (6) hours and must
leave due to sickness and/or accident, he/she will be paid for
those hours worked and that day will be treated as a day of
absence. If an employee works less than four (4) hours and must
leave due to accident and/or sickness, he/she shall be paid the
equivalent of four (4) hours worked.
See also letter of intent #8.
ARTICLE 24 - OVERTIME GENERAL PROVISIONS
24.01 Employees shall receive regular holiday pay in addition to double time
for all hours worked on a plant holiday.
24.02 Except in the case of emergency, employees may request to be excused
from working overtime providing such employees have a legitimate reason
for being excused. Such legitimate reasons shall not be unreasonably
denied and the Company agrees that, except in the case of emergency,
employees who are required to work overtime, shall be so advised at
least twenty-four (24) hours prior to the start of the overtime to be
worked.
When possible, the Company will schedule overtime on a voluntary basis.
Overtime in excess of eight (8) hours per week is voluntary. Saturday
overtime in any one week is voluntary for any employee who has already
worked six (6) hours or more overtime in that week; this is not to be
construed as circumventing the employee's right to request consideration
to be excused from working overtime.
24.03 Every effort will be made to avoid the necessity for working overtime on
Plant Holidays and employees will not be obligated to work on such days.
When it is considered necessary to schedule holiday work, the Union will
be notified as soon as possible. This does not apply to employees whose
normal schedule requires them to work on a holiday.
24.04 The opportunity for overtime work shall be offered equally to those
employees normally engaged on the work involved insofar as it is
practical.
24.05 In the case of a grievance, the Union Representative shall have access
to the records in respect of overtime hours.
<PAGE>
In the event that an inequity is discovered, the grieving employee will
be given the opportunity to work the lost overtime hours within a period
of six (6) weeks. This six (6) week period will commence upon receipt of
a written grievance at the second step. In a case where this is not
possible, the employee will be compensated for hours lost at the
applicable rate.
Should it be that because the employee is normally required to work
overtime during that same period of time, and as a consequence, the
make-up overtime cannot be offered to the individual, then the overtime
lost will be paid to the individual.
If a similar oversight occurs again, with any employee, within a period
of three (3) months, within the same first-level managers' organization,
the employee shall be compensated for hours lost at the applicable rate
as soon as the inequity is discovered.
24.06 When by mutual agreement, working conditions are changed so that there
shall be an extended shutdown of operations in conjunction with a plant
holiday or for some other special reason, it is understood and agreed
that all time worked to provide for loss of production, as a result of
such shutdown, shall be at straight time rates and that no overtime
shall be paid irrespective of any agreement made as contained in all
other paragraphs of this Article. The signature of one of the officers
of the Union and the designated management representative on the Company
notice announcing such change, shall constitute agreement in accordance
with the above.
ARTICLE 25 - OVERTIME
25.01 This article applies to all employees except for employees on a twelve
(12) hour schedule.
25.01.01 The number of straight time hours in any one shift shall not
exceed eight (8) hours.
25.01.02 Overtime shall be paid for all time worked in excess of the
standard hours of the assigned shift (not including overtime
hours) in any twenty-four (24) hours, Monday to Saturday
inclusive.
Overtime will be paid for all hours worked in excess of the
standard hours of the assigned shift during the interval of
time from 7:00 a.m., 7:30 a.m. or 8:00 a.m. depending on the
start of the shift of any one day to the end of the third
shift of the same day. An employee who is required to report
to work prior to the start of his regular shift, will be given
the opportunity to work the full hours of his regular shift.
25.01.03 Employees shall be paid for overtime.
<PAGE>
a) One and one-half times their hourly rate for hours worked in
excess of the standard hours of their assigned shift but not in
excess of twelve (12) hours on any one shift.
b) Twice their hourly rate for hours worked in excess of twelve
(12) hours on any one shift.
c) One and one-half times their hourly rate for all time worked
(double (2) time after 8 hours) in the twenty-four (24) hours
of Saturday.
i) For first and second shift employees, Saturday will be
from midnight Friday to midnight Saturday.
ii) For third shift employees whose work-week commences Monday
night, Saturday will be from 7:00 a.m., 7:30 a.m. or 8:00
a.m. Saturday to 7:00 a.m., 7:30 a.m. or 8:00 a.m. Sunday
depending on the shift start time.
iii) For third shift employees whose work-week commences on
Sunday night, Saturday will be from 11:00 p.m., 11:30
p.m. or midnight Friday to 11:00 p.m., 11:30 p.m. or
midnight Saturday, depending on the shift start time.
d) Twice their hourly rate for all time worked in the twenty-four
(24) hours of Sunday.
i) For first and second shift employees, Sunday will be from
midnight Saturday to midnight Sunday.
ii) For third shift employees, whose work-week commences
Monday night, Sunday will be from 7:00 a.m., 7:30 a.m. or
8:00 a.m. Sunday to 7:00 a.m., 7:30 a.m., or 8:00 a.m.
Monday depending on the shift start time.
iii) For third shift employees whose work-week commences on
Sunday night, Sunday will be from 11:00 p.m., 11:30 p.m.
or midnight Saturday to 11:00 p.m., 11:30 p.m. or midnight
Sunday, depending on the shift start time.
25.01.04 An employee who commences work on an assignment during the hours
of his regular shift and continues to work without interruption
into the hours of his regular shift of the following day shall
continue to be paid on an overtime basis.
Periods of less than four (4) hours will not be considered as an
interruption.
<PAGE>
25.01.05 ADMINISTRATION
It is understood and agreed by both parties that the Company
intends administering the provisions of the second paragraph of
this article as follows:
a) Reference to voluntary overtime in excess of eight (8) hours
per week applies to work performed on Saturdays only.
b) Overtime worked during the regular work week is understood to
be limited to six (6) hours per week, i.e., three (3) overtime
hours on any two (2) regular work days.
c) In the case of overtime required on continuous process
operations, the number of overtime hours on any shift will be
four (4) hours.
25.01.06 BREAK PERIODS
The Company agrees that employees will not be required to take a
lunch break prior to commencement of overtime following completion
of their regular shift.
This agreement is dependent on the requirements that uniformity of
application must exist in order to enable the Company to maintain
an efficient operation. Should for any reasons, employees demand
a lunch break in a specific department, then it will be necessary
to terminate this agreement as it applies to such department.
25.01.07 CANCELLED OVERTIME
In the case where scheduled overtime is cancelled, and
subsequently another employee, who does not normally work on the
specific job, is requested to carry out the overtime work, then
the lost overtime shall be paid to the employee who normally would
have performed the work. Such payment shall be made within the
pay period following the discovery of the inequity.
ARTICLE 26 - SICKNESS DAY CREDIT
26.01 Effective December 1st of each year, employees will be allowed two (2)
days to use as a reimbursement for the penalty days following the
Sickness and Accident Plan. Days not used for this purpose will be paid
to the employee on or right after
<PAGE>
December 20 of the next year. For the first year of this Agreement, the
two (2) days will be available for use, beginning at the collective
agreement's signature and will be paid, if not used, on or right after
December 20, 1996.
26.02 For employees who are not active employees on December 1st, the payment
will be calculated as per the weeks worked after December 1st of each
year.
ARTICLE 27 - OFFSHIFT DIFFERENTIAL
27.01 The offshift differential will be $0.88 per hour from date of
ratification. Employees working on second or third shift operations
shall receive offshift differential for hours worked.
ARTICLE 28 - MINIMUM COMPENSATION
28.01 When an employee is called during his offtime to report for a work
assignment outside his standard daily or weekly work schedule, it shall
be considered a "called-in" emergency. However, when an employee is
requested to remain late on a day on which he has reported for work or,
when prior to leaving work, an employee is requested to report for work
on a subsequent day at either his standard or non-standard starting
time, it shall not be considered a "called-in" emergency.
28.02 When an employee is required to make extra trips from his residence to
place of work and returns as a result of a "called-in" emergency, he
shall be paid for two (2) hours' travelling time at straight time rates
and shall receive overtime for any time worked.
When an employee reports to work on a "called-in" emergency, he shall
receive overtime for any time worked, or a minimum of four (4) hours'
pay at the employee's base rate whichever is greater.
28.03 When the "called-in" emergency does not require extra trips but does
involve reporting earlier than the starting time of his standard daily
work schedule, one (1) hour's travelling time shall be paid and the
employee shall receive overtime for time worked prior to his standard
starting time.
28.04 Any employee who reports to work as usual and is sent home because no
work is available shall be paid the equivalent of four (4) hours' work
at his daywork rate provided such lack of work is not caused by power
failure or any other event beyond the control of the Company.
28.05 Any employee required to work overtime on annual inventory will be
guaranteed four (4) continuous hours of overtime work.
28.06 An employee loaned out on a job assignment outside of the Montreal area
and vicinity, and travelling with the Company's authorization will:
<PAGE>
a) Travel during regular working hours.
b) When job requirements demand that the employee travels out of
regular working hours, he will be paid at straight time rates for
all travel time between 6:00 a.m. and midnight.
c) Authorized trips home while on assignment should be planned to give
the employee maximum time at home, (i.e. arrive at home 6:00 p.m.
Friday - leave home 6:00 a.m. Monday).
28.07 Whenever a major snowstorm occurs and the Company is unable to operate
in a normal manner because a limited number of employees have reported
for work and there is no power failure, employees who report for their
scheduled shift will be assigned, at the discretion of the Company, to
any available work at their regular rate of pay for the balance of their
shift. If the Company does not assign them to work but sends them home,
they shall be paid four (4) hours of their regular rate of pay.
ARTICLE 29 - PLANT HOLIDAYS
29.01 Employees who are not required to work on the undernoted Plant Holidays
will be paid for eight (8) hours at their hourly rate, provided that
these holidays are officially observed on a day on which an employee
would normally work, and provided that the employee receives pay for the
working day preceding or the working day following a holiday. This shall
not apply where an employee receives pay from the Company for such day
for any other reason. Different provisions for plant holidays are in
Article 23.
29.01.01 - In l996, the Plant Holidays will be fourteen (14) days
as follows:
Good Friday April 05
Victoria Day May 20
National Holiday June 24
Canada Day July 01
<PAGE>
Labour Day September 02
Thanksgiving October 14
December 24, 25, 26, 27, 30, 31, January 1 and 2, 1997.
29.01.02 - In l997, the Plant Holidays will be as follows:
Good Friday March 28
Victoria Day May 19
National Holiday June 24
Canada Day July 01
Labour Day September 01
Thanksgiving October 13
December 24, 25, 26, 29, 30, 31, January 1 and 2, 1998.
29.01.03 - In l998, the Plant Holidays will be as follows:
Good Friday April 10
Victoria Day May 18
National Holiday June 24
Canada Day July 01
Labour Day September 07
Thanksgiving October 12
December 24, 25, 28, 29, 30, 31, Jan.1, 1999 and Feb.8*,
1999.
29.01.04 - In l999, the Plant Holidays will be as follows:
Good Friday April 02
Victoria Day May 17
National Holiday June 24
Canada Day July 01
Labour Day September 06
Thanksgiving October 11
December 24, 27, 28, 29, 30, 31, Jan. 3, 2000 and Feb.14*,
2000.
29.01.05 - In 2000, the Plant Holidays will be as follows:
Good Friday April 21
Victoria Day May 15
National Holiday June 24
Canada Day July 01
Labour Day September 04
Thanksgiving October 09
December 22, 25, 26, 27, 28, 29, January 1 and 2, 2001.
*_If Federal/Provincial Governments proclaim any new legal holiday (e.g.
Heritage Day), such day will supplant the fourteenth day.
29.02 When any of the above plant holidays falls on a Saturday or a Sunday, a
compensating day off will be granted on the first succeeding work day.
29.03 When a plant holiday falls on an employee's day off on any day Monday to
Friday inclusive, such employee shall either receive an extra day off
with pay or pay in lieu
<PAGE>
thereof at the discretion of the Company. Plant Holidays falling on
Saturday shall be treated as ordinary days for pay purposes.
29.04 When a plant holiday occurs on a regular working day during an
employee's vacation, the employee shall be entitled to one extra day as
vacation with pay.
29.05 In order to determine plant holiday pay treatment, the day on which a
shift starts shall govern all the hours of that shift.
29.06 The conditions for the six (6) and seven (7) day schedules are covered
in Article 23.
* ARTICLE 30 - VACATIONS
30.01 Employees will become eligible for vacation with pay each year based on
their continuous service with the Company as of June 30th of the current
year, as follows:
One (1) full working month but less than two (2) full working months 1
day
Two (2) months three (3) 2 days
Three (3) four (4) 3
Four (4) five (5) 4
Five (5) six (6) 5
Six (6) seven (7) 6
Seven (7) eight (8) 7
Eight (8) nine (9) 8
Nine (9) ten (10) 9
Ten (10) twelve (12) 10
30.02 Vacation pay, under this section, for employees with less than one (1)
year of continuous service, shall be computed on the basis of eight (8)
hours at the employee's rate for each day of vacation.
30.03 Employee's rate in effect on the eighth (8th) Friday prior to the
Standard Vacation Period (May 31 in 1996, May 30 in 1997, May 29 in 1998,
May 28 in 1999 and May 26 in 2000) shall be used when employees with less
than one (1) year of continuous service take their vacation on or after
July_1st or their rate in effect four (4) weeks prior to the actual
vacation period where employees take their vacation prior to July_1st.
30.04 After 3 years of continuous service
but less than 10 years service - three (3) wks
After 10 years of continuous service
<PAGE>
but less than 19 - four_(4) wks
After 19 years of continuous service
but less than 29 - five_(5) wks
After 29 years of continuous service - six (6) weeks.
30.04.01 Employees who complete service of: three (3) years, ten (10)
years, nineteen (19) years, twenty-nine (29) years, after June
30th in the calendar year shall be entitled to vacations in
accordance with paragraph 30.04.
30.05 When an employee has been absent without pay for an accumulated period
in excess of sixty (60) days, his vacation shall be reduced in
accordance with the following table for each thirty (30) days of absence
in excess of sixty (60) days:
REDUCTION IN
CONTINUOUS SERVICE VACATION CREDIT
Twelve (12) months but less than three ( 3) years 1 day
Three ( 3) years but less than ten (10) 1-1/2 days
Ten (10) years but less than nineteen (19) 2 days
Nineteen (19) years but less than twenty-nine (29) 2-1/2
days
Twenty-nine (29) years and over 3 days
30.06 Former employees who are laid off and recalled during the vacation year
shall have their vacation entitlement calculated, as per letter of
understanding # 15.
However, if the accumulated vacation credits from their return to work are
less than those which the employees would be entitled to, according to
continuous service as at June 30th of the reference year, such employees
will be given the opportunity to take the difference as time off without
pay.
30.07 When a weekly or monthly rated employee is transferred to an hourly
rate, the vacation period shall be based on his status as of June 30th in
the current year.
30.08 The weekly rate of pay for vacation for employees shall be computed as
follows:
30.08.01 For employees taking their vacation on or after July lst, pay
shall be based on the employee's average weekly earnings for
the thirteen (13) weeks ending May 31 in 1996, May 30 in 1997,
May 29 in 1998, May 28 in 1999 and May 26 in 2000.
30.08.02 For employees taking their vacation prior to July 1st, the pay
shall be based on the employee's average weekly earnings for
the thirteen (13) weeks ending on the fourth Friday prior to
their vacation period.
<PAGE>
30.09 The last two weeks that fall completely in July shall be considered
as the Standard Vacation Period during which the plant will be shut down
insofar as possible, but wherever practical, the Company will provide work
for those employees who are not eligible for vacation under this plan.
30.09.01 Wherever practical, vacations will be given during the last two
(2) weeks in July and the first two (2) weeks in August. The
Company reserves the right to select employees from_those
eligible for vacation to work during this period, such_employees
will take their vacation at such other time as may_be arranged.
In circumstances other than emergency, when an_employee is
required to take his vacation outside the Standard Vacation
Period, he shall be notified at least ninety (90) days prior to
the commencement of the Standard Vacation Period.
30.09.02 Employees entitled to more than two (2) weeks of vacation in the
current year may be permitted to take such additional weeks of
vacation in the succeeding year, provided such action does not
interfere with the Company's operations. Any such delayed
vacation must be completed not later than May 31st of such
succeeding year.
30.10 VACATION ALLOWANCE TO EMPLOYEES ON TERMINATION OF SERVICE
Employees whose service is terminated, except in the case of discharged
employees, will receive their accrued vacation pay with C.O.L.A. under the
Company's plan at time of termination of service.
However, when an employee proceeds on vacation immediately prior to
pension, but after the following dates, pay shall be based on the
employee's average weekly earnings for the thirteen (13) weeks ending May
31 in 1996, May 30 in 1997, May 29 in 1998, May 28 in 1999 and May 26 in
2000.
30.11 The following rules relating to vacation shall apply:
A) RESCHEDULING OF VACATION AT THE COMPANY'S REQUEST
When vacation has been scheduled and then rescheduled at Company's
request and where an employee has been unable to take the
rescheduled vacation because of sickness or accident disability, the
Company may buy back the unused rescheduled vacation at straight
time rates, or grant such vacation after May 31st of the succeeding
year, provided such delayed vacation is completed not later than
June 30th of such succeeding year.
B) RESCHEDULING OF VACATION DUE TO DISABILITY
If, while on vacation, an employee is hospitalized for a period of
over 3 vacation days (Monday to Friday) or suffers a major
disability which
<PAGE>
incapacitates him for over 3 vacation days (Monday to Friday), the
employee may request a re-scheduling of vacation days lost.
Upon submission of satisfactory proof by the employee, such as a
written hospital report or a written medical report by the treating
physician, the Company Health Centre may approve the request based
on the review of circumstances of the case. If approved, the
Company Health Centre will advise the employee's supervisor who will
arrange the new vacation schedule dates.
C) ACCRUED VACATION - EMPLOYEE RECALLED
In the case where an employee is laid-off and recalled to work
before receiving a pay cheque for accrued vacations, the Company
shall take the necessary steps to cancel the said cheque, unless the
employee expresses the desire to accept it.
30.12 For purposes of application of Article 30.08, the Company agrees to
maintain the existing practice, as described in the following
Administrative Procedure 802.04, paragraph 4.1:
"If the 13 weeks used for average earnings include Company sickness
and accident disability benefits at the rate of 66-2/3%, such
benefits are built up to the equivalent of 8_hours times base rate
for each day of such benefits before computing average weekly
earnings."
Moreover, the Company agrees that for the application of paragraph 4.1
of this administrative practice, the same treatment will be applied for
short-term disability employees at the rate of 90%.
Any other more advantageous modification brought to this administrative
practice will have precedence over the preceding practice.
* See also letter of understanding # 15.
ARTICLE 31 - PENSION PLAN AND OTHER BENEFITS
31.01 The Company will provide a Pension Plan and Other Benefits as fully
described in the Pension/Benefits Appendix to this Agreement.
31.02 The Company agrees that, during the life of the current Agreement, there
will be no reduction in the benefits provided by certain Company-wide
programs.
<PAGE>
ARTICLE 32 - PRODUCTION STANDARDS
32.01 When an employee fails to meet the output rates established in new or
revised production standards, the Company practice of adjusting staff
and re-examining lay-out, methods, materials and other related factors
will be followed in an attempt to correct the problem. Should the
employee continue to be unable to meet the required output, the Company
will arrange a meeting with the Union Representative to discuss the
pertinent data related to the problem before any further action is taken
by the Company.
* ARTICLE 33 - COST OF LIVING ALLOWANCE
33.01 The Statistics Canada February 1994 Consumer Price Index (1986 base)
published in March 1994 (130.3) will be the base for all calculations of
the cost of living allowance.
33.02 The amount of the Cost of Living Allowance will be calculated on
changes, upward or downward, in the Consumer Price Index (1986). This
calculation will be in accordance with the following schedule:
PUBLISHED IN (AND
PAYABLE IN THE
CP INDEX FOR FIRST PAY PERIOD
THE MONTH OF THEREAFTER) COLA FORMULA
1996 May June $0.01 for each 0.087
August September change in the CPI
November December (1986 base)
1997 February March
1997 May June $0.01 for each 0.087
August September change in the CPI
November December (1986 base)
1998 February March
1998 May June $0.01 for each 0.087
August September change in the CPI
November December (1986 base)
1999 February March
1999 May June $0.01 for each 0.087
August September change in the CPI
November December (1986 base)
2000 February March
2000 May June $0.01 for each 0.087
<PAGE>
August September change in the CPI
November December (1986 base)
2001 February March
May June
The adjusted Cost of Living Allowance will be paid from the beginning of
the pay period following publication of the index.
In no event will a decline in the Consumer Price Index (1986) below the
base figure published in March 1994 (130.3) result in a reduction in the
negotiated wage scales.
Furthermore, no change, retroactive or otherwise, will be made due to any
revision in any published Statistics Canada Consumer Price Index figures.
33.03 The cost of living allowance payable under the prior agreement has been
folded into all wage schedules as follows:
a) Effective date of ratification, $0.20 of the $0.39 (May 1996) has been
folded into all schedule rates and the remaining $0.19 per hour shall
continue to be paid in addition to wage rates.
b) Effective June 9, 1997, an additional $0.19 of the $0.39 has been
folded into all schedule rates.
33.04 Continuation of the allowance is dependent upon the availability of the
official monthly Statistics Canada Consumer Price Index (1986 base)
calculated on the same basis and in the same form as that published in
March 1994.
33.05 Employees shall receive Cost of Living Allowance for all hours worked.
The following are considered as worked hours:
- Straight time hours worked
- Overtime hours actually worked (excluding overtime allowance hours)
- Plant Holidays
- Vacation Hours paid for
- Bereavement time paid for
- Jury Duty or Court Attendance time paid for.
33.06 a) The "average weekly earnings" referred to in Article 30 "Vacations",
clause 30.08 of the Collective Agreement will not include cost of
living allowance.
b) Employees will receive vacation pay based on their "average weekly
earnings" as defined in clauses 30.08.01 and 30.08.02 plus, for each
week of vacation, forty (40) hours times the cost of living allowance
in effect at the time they take their vacation.
<PAGE>
* See also article 30.
ARTICLE 34 - WAGE ADMINISTRATION PLAN
LEVELS 2-4 INCLUSIVELY
MONTREAL AREA
34.01 HIRING RATE
34.01.01 A newly hired employee will be started at the minimum rate for
the assigned level and will follow the progression schedule of
the level as per Article 41.
34.02 RERATING AFTER UPGRADING
34.02.01 An employee who is upgraded will be placed on the level or
grade rate of the new job effective at the beginning of the
payroll period immediately subsequent to the date of the
upgrade.
34.02.02 An employee upgraded to fill a temporary vacancy, caused
through vacation, emergency requirements, or temporary
fluctuations in workload, will be rerated to the level or grade
rate of the new job effective at the beginning of the payroll
period immediately subsequent to the date of such temporary
assignment to the higher level or grade. (When the temporary
assignment is completed, the employee will be downgraded and
derated in accordance with paragraph 34.03.02).
34.02.03 An employee reinstated or upgraded to a former level or grade
will be rerated to the level or grade rate, effective at the
beginning of the payroll period immediately subsequent to the
date of reinstatement.
34.03 RERATING AFTER DOWNGRADING
34.03.01 When an employee is downgraded, he will be derated to the level
or grade rate of the lower level or grade at the beginning of
the payroll period one month after the date of downgrading.
34.03.02 An employee downgraded following a temporary assignment will be
derated to the level or grade rate of his former level or grade
at the beginning of the payroll period immediately subsequent
to the date of downgrading.
ARTICLE 35 - PRODUCTION TECHNICIANS
<PAGE>
If during the life of the collective labour agreement the Company hires
production technicians, the Company and the Union shall negotiate the
working conditions and salaries for this group of employees.
ARTICLE 36 - WAGE ADMINISTRATION PLAN
APPRENTICES A1 AND A2 - MONTREAL AREA
36.01 Apprentices A1 and A2 will commence at the rate to be determined by
means of entrance qualifying exams administered by an independent source
and will advance on a progression schedule, (defined in article 40).
Progression through the grades will take place by means of qualifying
exams (practical and theoretical).
36.02 A new employee who passes the qualifying exams for a grade A3 level job
for which he applies, will start at grade A1. After 2,000 hours, he will
be reclassified at A2 and after 4000 hours, he will be reclassified at
grade A3, if he possesses the licences, or when he possesses them.
36.03 Apprentices A1 and A2 who have reached a progression step shall remain
at their current grade level until they have passed the qualifying exams
for the next grade level as outlined in the job description for their
trade.
36.04 Apprentices A1 and A2 who have passed their qualifying exams as in
paragraph 36.03 above, will be rerated to the appropriate trades
classification retroactively to the date of their reaching the
progression step providing such qualifying exams are passed under
normal circumstances within three (3) months of said date.
36.05 Apprentices A1 and A2 who have been at a progression step rate for three
(3) months and have failed the qualifying exams, as outlined in
paragraph 36.03 above, shall be granted a three (3) month extension in
order to pass the qualifying exams.
An extension could be given to an employee who, for reasons out of his
control, cannot meet the delays prescribed.
Apprentices A1 and A2 who pass the qualifying exams during the extension
period shall be rerated to the appropriate trades classification
retroactive to the start of their extension period.
Failure to pass the qualifying exams during the extension period_could
result in removal of these employees from the apprentice A1 or A2
category and these employees could either be relieved or transferred to
a_non-trade assignment if vacancies are available. The Company will
arrange a meeting with the Union representative to discuss the pertinent
data related to the problem before any action is taken by the Company.
ARTICLE 37 - RATE PROTECTION
<PAGE>
37.01 RATE PROTECTION DUE TO THE EFFECT OF LACK OF WORK OR JOB RE-EVALUATION
Employees with five (5) years or more of continuous service
downgraded through no fault of their own, from a level or grade to which
they were assigned, will maintain the rate of pay in effect at time of
downgrade during the life of this agreement.
During the protection period, employees will be granted rate adjustments
resulting from contract negotiations based on the level or grade held
prior to the downgrade.
37.02 RATE PROTECTION WILL ONLY CEASE UNDER THE FOLLOWING CONDITIONS:
a) Downgrade to any level or grade level at employee's own request.
b) Refusal to take a higher graded similar job up to the protected
level or grade where the incumbent possesses the qualifications
for that job.
c) Failure to meet job requirements, if assigned to a similar job and
given a period of orientation.
d) Refusal to accept his former job(s) or failure to meet the job
requirements of his former job(s) up to the protected grade level.
37.03 Prior to the removal of rate protection from an employee under sub-
sections (b), (c) or (d), the Company will arrange a meeting with the
Union Representative to discuss the pertinent data related to the
problem before any further action is taken by the Company.
37.04 RATE PROTECTION - RECALL
Employees with ten (10) years or less of continuous service who return
from a lay-off in excess of one (1) year shall return to the rate of pay
for the assigned level or grade.
Employees with more than ten (10) years of continuous service who return
from a lay-off in excess of two (2) years shall return to the rate of
pay for the assigned level or grade.
Employees returning from elected lay-off shall return to the rate of pay
for the assigned level or grade.
<PAGE>
* ARTICLE 38 - SKILLED TRADES
38.00 This article is aimed to complete and clarify the work conditions
related to skilled
trades group but not to restrict or reduce the impact of the rest of the
collective agreement for this group.
38.01 When found necessary, the Company will establish in consultation with
the Union an evaluation and training program, in any of the following
skilled trade competency fields:
Toolmaking-Machining
Electro-Electrical
Mechanical
Plumbing, HVAC
38.02 For purposes of filling a skilled trades vacancy, a trades employee who
transfers back to the bargaining unit, after an absence of less than
three (3) years, shall have his service with the Company credited as
Union service immediately. If the trades employee returns to the
bargaining unit, after an absence of more than three (3) years, he will
be credited immediately with prior Union service in the bargaining unit.
After one (1) year in the bargaining unit, the Union service of the
trades employee affected will be adjusted on the basis of full Company
continuous service.
38.03 When lack of work necessitates decreasing the skilled trades work force,
A3 trades employees will be retained first in preference to apprentices,
A1 and A2 employees in that sequence.
38.04 The Company will provide opportunities, when the need arises, to all
available trades employees to keep abreast of technological advances in
their trades. The opportunity for such training will be given to those
employees provided they are willing and have the prerequisite academic
qualifications or the relevant experience to be so trained.
Trades employees who require specialized training will be chosen at the
Company's discretion. Other employees of the same trade group will
receive the same training within a reasonable amount of time not
exceeding six (6) months. If necessary, a six (6) month extension
period will be granted to complete such training following prior
discussion between the Company and the Union.
A letter will be sent to the Union listing the names of the candidates
selected prior to them proceeding on course; such a list will also
include the names of those employees who refused offered training.
38.05 The Company shall limit the use of outside contractors and will advise
weekly (on Thursday) for the next week, in writing, the district
representative. Such notice will describe the nature of work and the
number of outside contractors by trade.
<PAGE>
Outside contractors will not perform work normally performed by trades
employees while any such trades employees immediately available to do
the work are surplus, about to be laid off or are on layoff. This
restriction will not apply to work assignments of limited duration (5
days).
No contractor (journeyman) will get a job in the bargaining unit before
it is offered to employees laid off or about to be laid off.
* See also article 24 re: overtime.
38.05.01 Whenever possible, the Company will endeavour to have skilled
trades work performed by Company skilled tradesmen.
Consequently, work requests initiated by technology or
engineering of manufacturing groups will be channeled through a
designated trades department manager, prior to such work being
contracted to outside suppliers. The Union must be advised
prior to such work being sent outside.
38.06 EMERGENCY "CALL-IN"
In reference to articles 28.02 and 28.03:
i) When a trades employee reports to work on a "called-in" emergency,
he shall receive overtime for any time worked, or a minimum of four
(4) hours pay at the employee's base rate whichever is greater.
ii) A trades employee who is called in, due to emergency, to work
outside his regular shift and continues to work into his regular
shift shall continue to be paid at his overtime rate until the
completion of the work on the emergency assignment and will then
revert back to his standard hourly rate for the balance of his
regular shift.
38.07 The Company will repair or replace tools which the trades employee can
show were broken, damaged or worn during the proper use of such tools in
the performance of Company duties. In addition, the Company will replace
stolen tools provided that the tradesman has taken reasonable
precautions to prevent such losses.
38.07.01 The Company will continue to provide annually appropriate
wearing apparel to tradesmen. Damaged wearing apparel will be
repaired or replaced by the Company provided that trades
employees can show that it was damaged during proper use in
the performance of their duties.
38.08 a) Company employees, other than skilled trades personnel, shall not
perform work normally assigned to trades employees.
b) The Company agrees to consult with the Union, wherever any changes
to
<PAGE>
skilled trades work is contemplated.
38.09 An apprentice A1, A2 or A3 who is obligated to pass an examination to
qualify as a trades employee or a trades employee who is obligated by
law to renew his licence or applies for an additional specialization
may do so, on Company time, without loss of pay. Payment shall be
made after submission of proof by the employee indicating that he has
passed the examination.
38.10 When an employee returns to a production grade from a trades
classification as a result of lack of work, his salary rate will be
adjusted according to the provisions of article 34.03.01 or 37.
38.11 EFFECT OF LACK OF WORK
38.11.01 - SELECTION OF SURPLUS
When lack of work necessitates decreasing the work force, the
employee with the least acquired service in his actual trade group
shall be selected from the declared surplus job; ability also
being considered and provided that the Company shall have the
right to maintain an efficient work force.
It is understood that the term acquired service in this article is
defined as the number of years worked in a specific trade within
the skilled trades group.
It is also understood that an employee who changes trade will see
the acquired service in his former trade added for bumping
purposes.
38.11.02 - BUMPING/LAYOFF PROCEDURE
a) A surplus employee shall bump in the same trade the employee
with the less acquired service.
b) If the surplus employee is about to be laid off and was
originally transferred to the trades classification from
production grades, he shall have the right to fill any
production vacancy subject to the provisions of article 12.
c) If unable to fill a vacancy under (b) above, and if such
surplus employee was transferred from production, he shall have
the right to displace the employee having the less seniority
within production, as per the provisions of article 12.
d) The employee placed under (b) and (c) above will be paid
according to the provisions of article 34.03.01 or 37.
<PAGE>
e) If the surplus employee about to be laid off has had no prior
production experience in the Company, but has the
qualifications to fill a production vacancy, he shall have
the right to fill such a vacancy subject to the provisions of
article 12 and shall be paid as in (d) above.
38.11.03 In the event that an employee of the trades group faces a
layoff, after having exercised all bumping rights according to
the collective labour agreement, the latter will be able to bump
within the trades group by Union service in a trade he has
already occupied.
38.12 WAGE ADMINISTRATION TRADES EMPLOYEES, APPRENTICES A1, A2 AND A3
38.12.01 The Wage Administration Plan covering Levels 1, 2, 3, 4 and
grades 23-30 also applies to trades employees, apprentices A1,
A2 and A3.
38.12.02 The Company will post notices of job vacancies for trades
employees (A3 Grade), apprentices A1 and A2. The Company agrees
that written applications outlining their qualifications for the
job received from employees within three (3) working days will
be considered before any hirings are made.
38.12.03 a) A vacant position that is filled by the reinstatement of
an employee in the prior position he had been demoted from,
because of a lack of work, will not be posted.
b) An employee who takes a vacant position posted for a trade
for which he does not have the appropriate analysis number
will be considered as a new employee, as defined in
article_36. In the event that there are surplus employees in
the trades group, the selection of the employee will be at
first within the skilled trades group. Failure to qualify in
the new trade, the employee shall exercise his bumping
rights in accordance with article 38.11 for the trades job
in which the employee is qualified.
c) The selection of an employee to fill a vacant position for
which he possesses the analysis number will be done by
acquired service.
38.13 The Company agrees to post an overtime list of all trades employees.
This list will be updated weekly and will include refusals.
Such list shall also be forwarded weekly to the Union head office.
<PAGE>
* See also letter of intent # 14 .
<PAGE>
* ARTICLE 39 - RATES OF PAY
GRADES 23-30 INCLUSIVELY - MONTREAL AREA
- --------------------------------------------------------------------------------
EFFECTIVE EFFECTIVE EFFECTIVE EFFECTIVE EFFECTIVE
GRADE RATIFICATION JUNE 9 JUNE 8 JUNE 7 JUNE 5
DATE 1997 1998 1999 2000
- --------------------------------------------------------------------------------
01W23 19.88 20.07 20.47 20.78 21.09
01W24 20.33 20.52 20.93 21.24 21.56
01W25 20.53 20.72 21.13 21.45 21.77
01W26 20.96 21.15 21.57 21.89 22.22
01W27 21.55 21.74 22.17 22.50 22.84
01W28 21.91 22.10 22.54 22.88 23.22
01W29 22.13 22.32 22.77 23.11 23.46
01W30 22.36 22.55 23.00 23.35 23.70
- --------------------------------------------------------------------------------
* See also letter of intent # 13.
<PAGE>
ARTICLE 40 - RATES OF PAY
TRADES CLASSIFICATION - MONTREAL AREA
- -----------------------------------------------------------------
PROGRESSION SCHEDULE IN HOURS WORKED
GRADE 2000 4000 6000 8000
- -----------------------------------------------------------------
EFFECTIVE DATE OF RATIFICATION
Apprentice 18.94
A1 20.21
A2 24.56
A3 25.78
EFFECTIVE JUNE 9, 1997
Apprentice 19.13
A1 20.40
A2 24.75
A3 25.97
EFFECTIVE JUNE 8, 1998
Apprentice 19.51
A1 20.81
A2 25.25
A3 26.49
EFFECTIVE JUNE 7, 1999
Apprentice 19.80
A1 21.12
A2 25.63
A3 26.89
EFFECTIVE JUNE 5, 2000
Apprentice 20.10
A1 21.43
A2 26.01
A3 27.29
<PAGE>
ARTICLE 41 - RATES OF PAY
-------------------------
LEVEL 1
MONTREAL AREA
- --------------------------------------------------------------------------------
EFFECTIVE EFFECTIVE EFFECTIVE EFFECTIVE EFFECTIVE
RATIFICATION JUNE 9 JUNE 8 JUNE 7 JUNE 5
DATE 1997 1998 1999 2000
- --------------------------------------------------------------------------------
LEVEL 1 15.20 15.39 15.70 15.94 16.18
- --------------------------------------------------------------------------------
<PAGE>
ARTICLE 42 - RATES OF PAY
LEVELS 2-4
MONTREAL AREA
EFFECTIVE EFFECTIVE EFFECTIVE EFFECTIVE EFFECTIVE
RATIFICATION JUNE 9 JUNE 8 JUNE 7 JUNE 5
DATE 1997 1998 1999 2000
- -----------------------------------------------------------------------
LEVEL 2 16.20 19.08 21.57 21.89 22.22
LEVEL 3 17.20 19.68 22.17 22.50 22.84
LEVEL 4 18.20 20.48 22.54 22.88 23.22
- -----------------------------------------------------------------------
<PAGE>
ARTICLE 43 - PROTECTION FOR EMPLOYEES ON
WORKFORCE RESTRUCTURING
43.01 In the event the Company decides to:
a) fully close its plant facility or,
b) do any or all of the following:
i) transfer work out of the bargaining unit to another Company
location,
ii) transfer work out of the bargaining unit
iii) purchase components or parts, currently being produced by
employees in the bargaining unit, from sources outside
NORDX/CDT,
iv) permanently eliminate jobs for reasons other than market
fluctuations,
and as a direct result either:
. 10% or more of employees in the bargaining unit (including
those on S&A benefits and Workers Compensation but excluding
employees laid off and on L.T.D. benefits), or
. 10% or more of all bargaining unit employees within an
individual skill group, as set out in the "NOTE" below.
are given, during any period of ninety (90) days, Workforce
Restructuring notices, the provisions set out below will apply, as
specified.
c) do what is set out in Article 15.1 of the COEU salaried agreement
and, as a direct result, employees in the hourly bargaining unit
at the same facility or business are to be given layoff notices
within the same ninety (90) day period.
For the purposes of determining whether the percentages in paragraph
43.01_b) have been reached, all notices, as described, which have not
been cancelled during the operative ninety (90) day period will be
counted.
Notices which have been counted in the determination that the
<PAGE>
percentages in paragraph 43.01_b) have been reached cannot be counted
again.
43.02 The Company will meet with the Union thirty-five (35) weeks in
advance of the date of the plant facility closure, or eighteen (18)
weeks in advance of layoff occuring as a result of business closure
or circumstances set out in paragraph 43.01_b) above. Following this
meeting, the parties will meet again to discuss opportunities to
retain or replace work with the aim of minimizing the reduction of
employees, including using attrition to manage the extent of such
reductions.
It is understood that such discussions are to be conducted on a
confidential basis and the Union undertakes to guard the
confidentiality of them.
43.03 The Company will advise the Union and the employees at least sixteen
(16) weeks in advance of layoffs or as legislation dictates whichever
is greater. This obligation will not apply retroactively to the
layoffs which did not, at the time notices were given, meet the
percentages set out in paragraph 43.01_b) but together with
subsequent layoffs, resulted in these percentages being met within
the ninety (90) day period. This obligation will not apply to
employees given notice of layoff due to the circumstances set out in
paragraph 43.01_b) which occur in another skill group within the same
ninety (90) day period but do not meet the percentage set out in
paragraph 43.01_b).
43.04 In the circumstances set out in paragraph 43.01b) above and during the
first thirty (30) days of the notice period under paragraph 43.03
above, employees within each affected skill group will be offered the
opportunity to retire early with a lump sum calculated in accordance
with the VOLUNTARY RETIREMENT OPTION set out in paragraph 43.08 below
and in accordance with the following:
a) Employees who are eligible for an early retirement with a Class A or B
pension will be offered, in descending order of Union service, the
first opportunity and, if the number set out in 43.04_b) below has not
been exceeded, employees eligible for an early retirement with a Class
C pension will be offered in the same way the remaining opportunity,
if any. After this, employees who qualify for bridging, in accordance
with Company practice (for a maximum of 104 weeks) to any of the above
Classes, will be offered in the same order of Class and in the same
way any opportunity which was not taken.
b) The total number of those retiring under 43.04_a) shall not exceed
100% of the number of employees within each affected skill group:
<PAGE>
i) who have been given notice(s), pursuant to paragraph 43.03,
ii) who have contributed to the percentages in paragraph 43.01b)
being reached,
iii) who have received notices of Restructuring in the circumstances
set out in paragraph 43.01_b) within the prior portion of the
particular ninety (90) day period and are within the same
business or skill group.
c) Pension dates shall be no later than the end of the notice period,
except in the circumstances set out in paragraph 43.01_a) when unused
vacation credits may be used to reach a pension date.
d) The affected skill groups will be those included for the purposes of
paragraph 43.01_b).
43.05 In the circumstances described in paragraph 43.01, the affected
employees who have received notice pursuant to paragraph 43.03 may
request a transfer to a job vacancy within the bargaining unit and
selection shall be made as per Article 12.
The Company shall provide the appropriate training where required for
the employee to perform the job in a satisfactory manner.
43.06 In the event that the Company moves an operation pursuant to 43.01 or a
job to another Company location outside of the bargaining unit, the
following procedure will apply:
a) An employee on an affected job will exercise his bumping rights in
accordance with the Collective Agreement.
b) If the employee is unable to maintain his grade under (a) above,
he may request to be transferred at the same or another Company
location, if a vacancy is available and local collective agreements
permit. The Company will provide job training where required for the
transferred employee to perform the job in a satisfactory manner.
c) In the event the Company moves a plant facility to any other
location in Quebec during the life of this Agreement, the Company
agrees that employees will have a preferred right to be transferred
with their job to the new location.
d) If, as a result of such a move of operation or job, the
employee is required to move to a location greater than eighty (80)
<PAGE>
kilometers from his present location, the Company will pay reasonable
moving costs.
e) The Company will give sixty (60) days notice, whenever possible,
to employees who are to be transferred to a new location.
43.07 All employees, laid off pursuant to notices given under paragraph 43.03
or pursuant to notices within the same skill group(s) as a result of
the circumstances set out in paragraph 43.01_b) within the particular
ninety (90) day notice period, will be entitled to choose to take the
Supplementary Unemployment Benefits (SUB) to which they are entitled
under Article 13 or to elect to be terminated and forfeit their
recall rights by receiving severance pay allowance in accordance with
the following table:
CONTINUOUS SERVICE SEVERANCE PAY
------------------ -------------
- -----------------------------------------------------------------
1 year but less than 2 years 1 week
2 years but less than 3 years 2 weeks
3 years but less than 4 years 3 weeks
4 years but less than 5 years 4 weeks
5 years but less than 6 years 7 weeks
6 years but less than 7 years 8 weeks
7 years but less than 8 years 9 weeks
8 years but less than 9 years 10 weeks
9 years but less than 10 years 11 weeks
10 years but less
<PAGE>
than 11 years 14 weeks
11 years but less than 12 years 17 weeks
Three weeks additional pay for each full year of continuous service
thereafter.
In the event the Company decides to fully close the plant facility, the
above Severance table will be modified to reflect the entitlements
contained in the Layoff Allowance table in Article 13.02.
An employee who elects to be terminated and forfeit recall rights after
the end of the notice period and who is in receipt of the
Supplementary Unemployment Benefits (SUB) will be subject to the
following penalty:
PENALTY TABLE
WEEK AFTER EXPIRATION BENEFIT GROUPS
OF NOTICE PERIOD COMPLETED 1 2 3
1 0 0 0
2 0 0 0
3 270 310 390
4 540 620 780
5 810 930 1170
Thereafter, each subsequent
week's penalty will increase by: 270 310 390
--- --- ----
until 52 weeks 470 490 540
NOTE_: The above listed table will be adjusted by the Company each
quarter to reflect changes in COLA and base rates.
In the circumstances described in paragraph 43.01_a), employees may, if
eligible and upon Company approval, proceed on pension prior to the
commencement of layoff. They will be entitled to receive a lump sum
payment in accordance with the formula set out in paragraph
43.08.
<PAGE>
43.08 VOLUNTARY RETIREMENT OPTION
The lump sum paid in connection with the exercise of the Voluntary
Retirement Option will be as follows:
a) Employees eligible for an early retirement with a Class A, B or
C pension will be paid twenty-six (26) weeks of regular weekly
wages, except those employees having thirty (30) years of
pensionable service prior to the end of the notice period who
shall be paid $27,000 or twenty-six (26) weeks of regular
wages, whichever is greater.
b) Employees who qualify for bridging to the above Classes will be
entitled to sixteen (16) weeks of regular weekly salary.
NOTE:
Skill groups shall be defined as follows:
- Production
- Skilled trades
<PAGE>
ARTICLE 44 - MODIFICATION, RENEWAL
AND TERMINATION
44.01 This Agreement shall become effective on June 10, 1996 and shall remain
in full force and effect up to and inclusive of June 9, 2001. The terms
of this agreement, may be changed or amended by mutual consent of the
parties hereto, such changes or amendments shall take the form of
Appendices to the original agreement.
44.02 Either party may give to the other party a written notice of its desire
to amend, modify or terminate the Agreement, said notice to be sent not
more than ninety (90) days prior to the date of termination. Within ten
(10) days after such notice is given, a conference shall be held for
negotiations.
44.03 After written notice of modification or termination has been given by
either party within ninety (90) days preceding the date of termination
indicating the parties' desire to negotiate for a new agreement or for
the revision of the present agreement, all the conditions contained in
the present agreement shall be considered as remaining in force during
such time as may elapse before it is found that the parties are unable
to reach agreement and the right to strike or lock-out has been
acquired or until a new or modified agreement is completed.
44.04 Collective bargaining concerning the modification and/or renewal of this
Agreement shall be conducted by the duly authorized bargaining
representatives of the Company and the duly authorized bargaining
representatives of the Union. The parties to such bargaining shall
notify each other of the names of such representatives and of any
subsequent changes which may occur.
<PAGE>
IN WITNESS thereof the parties thereto have executed this Agreement on June 21,
1996 in the City of Montreal, County of Hochelaga.
FOR THE COMPANY FOR THE UNION
------------------------ --------------------------
Normand Durocher Giuseppe Giarrusso
------------------------ --------------------------
Denis Lecompte George Pilafidis
------------------------ --------------------------
Sylvie Destroismaisons Gary Carter
--------------------------
Daniel Berardelli
--------------------------
Jean-Pierre Bombardier
<PAGE>
# 1 - LETTER OF INTENT
DEFINITION OF "LEVEL"
For the purpose of the application of the Collective Labour Agreement, the
"Level" applies for all employees hired after February 2, 1996. The level
structure will never apply for the employees who were part of the
transaction between Nortel and NORDEX. Also, for those employees, the old
grade structure including the working conditions and salary scale of the
grades will apply.
For clarification of this letter, the following will reflect the
equivalence between levels and grades:
JOB DESCRIPTION ANALYSIS # GRADE LEVEL
Assembly Operator 26149 23 1
Jacketing Line Helper 03852 24 1
Utility forklift truck 10380 24 1
Twister-Rewinder 29935 24 1
Trucker 29937 24 1
Strander-Operator 03801 25 1
Lead hands/Twister 10561 25 1
PVC Blending Helper 11966 25 1
No.1 Locate 11968 25 1
Reel Repair Operator 12311 25 1
Twister-Rewinder Insulating &
Jacketing lines floor man 29923 25 1
Coiler/Spooler Reelex & Steel server Oper. 29936 25 1
Braider Operator 29953 25 1
Wire/Drawing Bekaert 10005 26 2
Wire/Drawing Heavies 10045 26 2
No.6 Tinning & Bekaert 10042 26 2
Insulating Line Operator 10378 26 2
No.26 Strander Operator 12456 26 2
Team Leader 26013 26 2
Bix DVO Machine Setter Operator 26124 26 2
Selector - Shipping/Receiving 26159 26 2
Fiber Optic Connectors Assy. Operator 26165 26 2
Shipping/Receiving 29159 26 2
Bruderer/Stamping Setter 29667 26 2
Dry Test 12034 27 2
Jacketing line Operator 10457 26 3
Shipping Coordinator 11576 27 3
PVC Blending Operator 11967 27 3
Auditing 12038 27 3
Quality Assurance Auditor 12725 27 3
Setter & Operator Teladapt line 26131 27 3
<PAGE>
Plastic Molding Operator 29533 27 3
Jacketing line Operator 29917 27 3
Skunk R&D 29927 27 3
Tool Gauge Inspector New 27 3
Jacketing & Tandem Packaging Operator New 27 3
Blue Room 29885 28 3
Leadhand Jacketing & Insulation New 28 3
Oiler and toll cleaning New
# 2 - LETTER OF INTENT
REPRESENTATION
The Company agrees that any elected District Representative shall be
assigned to no less than grade 27 (maximum rate) provided however,
should he cease to be a District Representative, he shall revert to
the job and grade (or its equivalent) which he held prior to his
election.
Reference: article 5.
# 3 - LETTER OF AGREEMENT
FUNDS
ONE CENT PER HOUR PAID
The Company and the Union will meet to discuss and mutually agree on the
use of the one cent ($0.01) per hour, per employee, for all hours paid
from February_2, 1996 onward.
CHARITABLE FUND
Effective on the date of ratification, the Company shall make quarterly
contributions to the Charitable Fund equal to $0.02/hour for each straight
time hour worked. All contributions shall be forwarded to registered
Canadian charitable organizations, such as St. Justine Hospital and
Montreal Children's Hospital.
# 4 - LETTER OF INTENT
RETIREMENT TERMS
For purposes of the application of Article 43 and Letter # 7, the Company
agrees to interpret the following retirement terms as follows:
MALE FEMALE
Class A Age 60 + Service 20 Age 60 + Service 20
Age 55 + Service 20 if employed
by Nortel in May 1973
<PAGE>
Class B Age 55 + Service 30 Age 55 + Service 25
Class C Service 30 Service 30
<PAGE>
# 5 - LETTER OF INTENT
GAINSHARING
1996 06 10
Mr. G. Giarrusso
President
Canadian Union of Communication Workers
502 - 90e avenue
LaSalle (Quebec) H8R 2Z7
Dear Mr. Giarrusso,
In order to improve the performance of the plant, both the Company and the
Union agree to introduce a Gainsharing Incentive Program based on factors
which impact the profitability and/or proper functioning of the plant.
The elements and payout schedules will be determined by the Company on an
annual basis.
The Company agrees to communicate the cumulative results of the program on
a periodic basis. Information required for the proper understanding of
the program will be shared with the Union and a joint committee will be
formed to monitor and communicate the results of the program.
The Company will annually revise the contents of the program and will
communicate it to the Union by August 15 of the current year.
Yours truly,
Normand Durocher
Director, Human Resources
# 6 - LETTER OF INTENT
STUDENTS
Summer students' hiring will be allowed between May 15 and August 15 of
each
<PAGE>
year. Those students will not accumulate continuous service nor
Union service.
No students' hiring will be allowed when there are employees of any level
on layoff.
The summer students' salary will be $10.00 per hour for the duration of
the Collective Labour Agreement.
# 7 - LETTER OF INTENT
PRE-RETIREMENT PROGRAM
1. DEFINITION
An employee who is eligible for pension (class A or B) or will be eligible
within the next twelve (12) months may request to participate on a
voluntary basis in the pre-retirement program. After a period of twelve
(12) months maximum, he shall proceed on pension. The Company will not
refuse such requests without valid reason and will inform the Union when
employees proceed on this program.
2. CONDITIONS
a) The employee will be requested to work three (3) or more regular work
days per week and will have such work days scheduled two (2) weeks in
advance.
b) For the duration of the program, continuous service will be
accumulated as if the employee was working regular hours.
c) For the duration of the program, the employee will be requested to
work on a job at the same grade level, or lower to that which he held
prior to his participation in the program and for which he is
qualified or possesses the qualifications. The employee will maintain
the rate of pay in effect at the time of his participation.
d) An employee who participates in the pre-retirement program will be
entitled to all Company benefits including sickness and accident. For
the purpose of calculating sickness and accident benefits, the first
day of absence will be the employee's first scheduled work day.
e) Vacation pay will be calculated as if the employee was normally at
work.
f) An employee who is selected for a job vacancy must terminate his
participation in the pre-retirement program.
g) If mutually agreed to, this program may be extended only once for an
additional twelve (12) months.
<PAGE>
3. RE-INSTATEMENT
a) The employee must notify his immediate manager if he wishes to
terminate his participation in the pre-retirement program. He will be
reinstated within three (3) weeks of such request to his former job or
exercise his bumping rights in accordance with article 12.
b) An employee who terminates his participation in the pre-retirement
program may not re-apply.
<PAGE>
# 8 - LETTER OF INTENT
MOVEMENT IN AND OUT OF VARIOUS SHIFT PATTERNS
1996 06 10
Mr. G. Giarrusso
President
Canadian Union of Communication Workers
502 - 90e avenue
LaSalle (Quebec) H8R 2Z7
Dear Sir,
The following describes the understanding between the Company and the
Union with reference to shift pattern changes.
The Company may implement a five (5), six (6) or seven (7) day shift
pattern whenever it effectively addresses the Company's
business/customers' needs. Should business needs require more than a 15
shift operation, the Company will normally first move to a 6-day pattern
prior to a 7-day pattern. Should production schedules warrant a 7-day
pattern immediately, the Company will meet with the Union to verify if the
demands of the operation are being met. The expected duration of shift
pattern changes will be for a minimum of three (3) calendar months.
The Company will give thirty (30) days advance notice to the Union before
implementing such changes. The Union will be given the opportunity for
full discussions and will have the opportunity to suggest alternatives.
The Company will consider these alternatives prior to making the changes.
Yours truly,
Normand Durocher
Director, Human Resources
# 9 - LETTER OF INTENT
SURPLUS MACHINE OPERATOR
As a clarification of the application of clauses 12.05.02 and 12.05.03, in
the case of a surplus machine operator level 2 and above, before filling a
vacancy:
a) The most junior machine operator on the job analysis in the department
affected will displace a shorter Union service employee, on a job for
which he
<PAGE>
is qualified, down to level 2.
b) When the operator is unable to displace at level 2, he will be allowed
to displace a shorter Union service helper at level 1 within his
department before displacing a shorter Union service helper at level 1
in the business unit.
Reference: article 12B.
# 10 - LETTER OF INTENT
INVESTMENT GUARANTEE
PREAMBLE
--------
Following an agreement between the Company and the Union (CUCW Unit # 4) on a
new labor contract and the decision to build a new facility in the Montreal
area, both parties agree to the following:
1) Should the Company thereafter decide not to purchase or lease the land upon
which to build the new facility by June 30 1997, the Company agrees to
revert to all the terms and conditions of the current collective labour
agreement expiring February 28, 1997; however, if the said agreement
expires, these terms and conditions will remain in force until such time as
the subsequent negotiated collective labour agreement comes into force. As
a result, the Company is prepared to repay the members of CUCW Unit #4 for
the economic benefit it enjoyed under the new collective labour agreement.
2) An amount will be reimbursed to the members of CUCW Unit #4; these payments
will be made based on the amounts that were paid under the new contract
versus what would have been paid under the current CLA agreement expiring
February 28, 1997. The following items are impacted:
a) Savings of the new wage and benefits scale of Levels 1-4
b) New six (6) day premium/seven (7) day premium
c) Salary freeze.
3) The Company and Union (members of CUCW Unit #4) agree to review together
the manner in which the monies owing to each employee will be calculated.
The Company will not be responsible for any disputes arising out of the
method of payout so determined.
4) This letter of agreement will become null and void in the event the new
collective agreement would be denounced and rejected by the Union.
# 11 - LETTER OF INTENT
NEW FACILITY
<PAGE>
As a result of the recent contract between the Company and the Union CUCW Unit
#4 and its members, in the event of a complete plant closure, the Company
agrees to the following:
1) Should, after June 30th, 1997, and after the Company has moved into its new
facility in the Montreal area, the Company subsequently closes its Montreal
operations to move into another facility outside of the province of Quebec:
a) The Company agrees to offer re-employment to certain employees, to the
extent permitted by law, at its new facility outside of the Province of
Quebec, based on their job qualifications and seniority.
If, as a result of such a move of operations, the employee is required
to move to a location outside the Province of Quebec, the Company will
pay reasonable moving costs.
b) In addition to the Severance Pay Allowance, as defined in Article
43.07, the Company agrees to the following:
CONTINUOUS SERVICE ADDITIONAL AMOUNT
------------------ -----------------
0 - 5 years $ 1,000
6 - 10 years $ 5,000
11 years and above $12,000
The amounts may, if an employee so desires, be used by the Company to
provide for new job training.
2) The Company and the Union agree to establish a "reclassification committee"
as per Article 45 of "La loi de la formation professionnelle".
This agreement becomes null and void no later than December 31st, 2000.
# 12 - LETTER OF UNDERSTANDING
LEVEL 1 EMPLOYEES
The total number of Level 1 employees shall not exceed 35% of the total
employees.
# 13 - LETTER OF INTENT - RATE
ADJUSTMENT FOR EMPLOYEES ON DISABILITY
Rate adjustments resulting from contract negotiations will also be applied
to employees who are receiving disability benefits in accordance with the
Company's Plan, at the time these rate adjustments become effective.
Reference: article 39.
<PAGE>
# 14 - LETTER OF INTENT
DEFINITION OF TERMS
In order to ensure the correct understanding of this Collective Agreement,
the following definitions shall prevail:
a) SIMILAR
A similar job means a job in which 50% or more of the content
corresponds to the content of a job for which the incumbent is
qualified.
b) ORIENTATION
Orientation refers to training of the type given on a promotion in
order to complete the qualifications required for a job similar to the
one previously held.
c) POSSESSES THE QUALIFICATIONS
Possesses the qualifications refers to an employee having the skills,
ability and experience to do a job.
d) QUALIFIED
Qualified refers to an employee having satisfactorily performed the
job previously, excluding temporary assignments.
e) CONSULT
It is understood that in application of this Collective Agreement the
wording "Agreed to consult with the Union" is defined as: "Agreement
to inform, discuss with and consider the opinion of the Union and/or
the District Representative".
f) FAMILIARIZATION
The following clarification applies to all references to
familiarization periods contained in this collective agreement:
It is understood that by the end of the familiarization period, the
employee should have achieved, or through continuous and progressive
improvement must have demonstrated the potential to achieve, the rates
as defined in the production standards.
g) TEMPORARY ASSIGNMENTS
A "temporary assignment" means an assignment due to a workload
increase for a period of less than a month or an assignment to replace
an employee on a leave of absence.
Reference: articles 12B and 38.
# 15 - LETTER OF UNDERSTANDING
VACATION CALCULATIONS
<PAGE>
It is understood that, in the application of article 30.06, employees who
are laid off and recalled during the period of July lst to June 30th of
the following year shall have their vacation entitlement calculated as
follows.
The actual number of days on layoff will be calculated and sixty (60) days
will be subtracted from this total. The difference will be divided by
thirty (30) and each such complete thirty (30) day period will reduce the
employees' vacation entitlement by the appropriate amount, as outlined in
the article 30.05 vacation reduction table.
Examples of the above application are as follows:
EXAMPLE A
LAYOFF DATE RECALL DATE DAYS ABSENT
Jan. 15 Feb.27 Jan. = 16
Feb. = 26
--
Total = 42
April 26 May 16 April = 04
May = 15
--
Total = 19
Total days absent = 61
Subtract 60 days = - 60
--
Difference = 1 day
Thirty (30) day periods = 0, therefore, no reduction in vacation
entitlement.
EXAMPLE B
Employee with eleven (11) years of continuous service.
LAYOFF DATE RECALL DATE DAYS ABSENT
Jan. 14 Mar. 28 Jan. = 17
Feb. = 28
March = 27
--
Total = 72
April 22 June 20 April = 08
May = 31
June = 19
--
Total = 58
<PAGE>
Total days absent = 130
Subtract 60 days = -60
-------
Difference = 70 days
Thirty (30) day periods = 2, therefore, vacation entitlement reduction would be:
Two 30-day periods x 2 days each = 4 days reduction.
Therefore, in this example, the employee would
have a potential vacation of 20 days
Vacation paid on layoff (July 1-Jan.14) would have been -12
-------
Difference 8
Reduction as per above - 4
-------
Remaining paid vacation entitlement 4 days
Reference: article 30.
<PAGE>
APPENDIX "A" - PENSION BENEFITS
FOR EMPLOYEES LEVELS 1, 2, 3, 4, GRADES 23-30 AND TRADES
1. PREAMBLE
1.1 This appendix, which shall form part of the Collective Labour Agreement
(hereinafter called the "Agreement"), describes amendments to those plans
which shall be in effect for active employees during the term of the
Agreement, information relating to cost sharing, and reference to
preservation of those Company plans which are not contractually covered.
1.2 The effective dates of amendments of these plans, where applicable, are
noted in the relevant paragraphs hereafter.
1.3 The term applicable shall be as defined for the Agreement, except with
respect to the Pension Plan which shall be for the term from February 3,
1996 to the end of the collective agreement.
1.4 Agreements with respect to the plans described in this appendix may be
changed or amended by mutual consent of the parties hereto, with such
changes or amendments to be in the form of appendices to the Agreement.
The benefits payable under these Company plans will remain unchanged in
the event of changes in Government plans. If legislation is introduced to
increase the level of coverage to be provided, benefit design may be
changed to maintain the current cost sharing level. Any changes to these
plans must be cost neutral to the employer. The duration of the Agreement
cannot be affected by such changes or amendments.
1.5 The plans, hereinafter called the "Plan(s)" covered by this appendix shall
be continued automatically at the expiry of the Agreement until a new
agreement is ratified or until the Union is entitled by law to commence
legal strike or the Company is permitted to lockout.
1.6 For the purposes of this appendix, the following definitions shall
prevail:
1.6.1 Benefit Group shall mean the categories of job classifications
or grades determined as follows:
BENEFIT GROUP LEVEL GRADE
1 1 23 to 24
2 2,3 25 to 28
3 4 29, 30 & Trades
1.6.2 "Eligible dependents" shall mean, for purposes of paragraphs 2,
3, 4, 5, 9 and 10 of this appendix:
(i) "Spouse" means the individual of the opposite sex or same
sex who is
<PAGE>
legally married to the employee and not living separate and
apart from the employee or, if the employee so elects, who
is not living with the employee at the time of the
employee's death; or if neither of these is applicable a
person of opposite sex or same sex who is not married to the
employee, but is an individual with whom the employee has
been cohabiting for a period of one year immediately
preceding the employee's death and who had been publicly
represented as the domestic partner of the employee.
(ii) Unmarried natural or legally adopted, dependent children of
the employee or spouse who are:
1) living or deemed to be living with the employee including
those where support for benefit coverage has been
dictated by a court order; and
2) (a) under age 21, or
(b) over age 21, but not over age 25, and are full-time
students at an accredited college or university; and,
3) (a) Canadian citizens, or
(b) landed immigrants;
(iii) physically or mentally handicapped financially dependent
children, regardless of age, provided:
a) they were handicapped and dependent prior to age 21, or
b) they were handicapped and dependent between age 21 and
age 25 and were full-time students at an accredited
college or university at the time they became
handicapped and dependent.
(c) (i) Canadian citizens, or
(ii) landed immigrants;
(iv) Dependent parents.
The above eligible dependents shall be ranked in descending
order of priority.
1.7 "Spouse" shall mean, for the purpose of paragraph 11 of this appendix:
a) the person of the opposite sex who is legally married to the employee
or, if the employee so elects, is not living with the employee at the
time of the employee's death; or
<PAGE>
b) the individual of the opposite sex who is not married to the employee,
but is an individual with whom the employee has been cohabiting for a
period of one year immediately preceding the employee's death and who
had been publicly represented as the domestic partner of the employee;
or
c) such other individual who is required to be recognized as the spouse
of the employee pursuant to the Quebec Supplemental Pension Plans Act,
for the application of particular provisions of the Plan.
1.8 All employees hired after February 2, 1996 shall become eligible for
coverage under the Plans referred to in paragraphs 2, 3, 4, 5, 8 and 9 on
the first day of the month following the month in which the employee
completes 12 months' continuous service.
2. QUEBEC BLUE CROSS SUPPLEMENTARY HOSPITAL PLAN
The Company will continue to provide the Quebec Blue Cross Supplementary
Hospital Plan as in effect immediately prior to the term of the Agreement.
The cost of this Plan will be paid by the employees, including any
increases in premiums during the term of the Agreement.
3. QUEBEC BLUE CROSS EXTENDED HEALTH CARE PLAN
The Company will continue to provide the Quebec Blue Cross Extended Health
Care Plan as in effect immediately prior to the term of the Agreement. The
cost of this Plan will be paid by the Company, including any increases
during the term of the Agreement relating to the services covered by the
Plan.
4. QUEBEC BLUE CROSS VISION CARE PLAN
The Company will continue to provide the Quebec Blue Cross Vision Care
Plan as in effect immediately prior to the term of the Agreement. The cost
of this Plan will be paid by the Company.
5. QUEBEC BLUE CROSS DENTAL PLAN
5.1 The Company will continue to provide a Dental Plan as in effect
immediately prior to the term of the Agreement, with coverage for expenses
incurred up to December 31, 1996, on the basis of the 1995 Quebec Dental
Association Schedule for General Practitioners for the services covered by
such Plan. The cost of this Plan, including any increases during the term
of the Agreement, will be paid by the Company.
5.2 Effective January 1, 1997, the 1996 Quebec Dental Association Schedule for
General Practitioners will apply.
5.3 Effective January 1, 1998, the 1997 Quebec Dental Association Schedule for
General
<PAGE>
Practitioners will apply.
5.4 Effective January 1, 1999, the 1998 Quebec Dental Association Schedule for
General Practitioners will apply.
5.5 Effective January 1, 2000, the 1999 Quebec Dental Association Schedule for
General Practitioners will apply.
5.6 Effective January 1, 2001, the 2000 Quebec Dental Association Schedule for
General Practitioners will apply.
6. SICKNESS AND ACCIDENT PLAN
6.1 The Company will continue to provide a Sickness and Accident (S&A) Plan as
in effect immediately prior to the term of the Agreement.
6.2 For the purpose of determining eligibility for payment under this Plan,
hospitalization shall mean treatment as an in-patient or on admission to a
Day Surgery Unit for procedures conducted under a general anesthetic or
either under intravenous anesthetic or local anesthetic where such
procedures had been formerly required to be done under general anesthetic.
7. LONG TERM DISABILITY PLAN
7.1 The Company will continue to provide the Long Term Disability (LTD) Plan
as in effect immediately prior to the term of the Agreement.
7.2 Effective June 10, 1996, this Plan will provide monthly income benefits in
accordance with the following schedule for those eligible employees whose
S&A Plan benefits expire after May 31, 1996.
BENEFIT GROUP MONTHLY INCOME
1 $1650
2 $1775
3 $2050
7.3 During the period for which an employee is eligible to receive LTD Plan
benefits, participation will continue in the following Plans:
. Supplementary Hospital
. Health Care
. Dependent Life
. Retiring Allowance Plan
. Pension
. Group Life Insurance - Parts I and II
. Survivor Transition Benefit
<PAGE>
Coverage for Group Life Insurance - Parts I & II and the Survivor
Transition Benefit in effect at the date of disability will prevail during
the period for which an employee is eligible to receive LTD Plan benefits.
7.4 For those eligible employees whose S&A Plan benefits expire after date of
ratification, for the purposes of determining eligibility for the first
twelve (12) month period under the LTD Plan, disability shall mean that an
employee is unable to perform the duties of any job in the bargaining unit
on a full-time basis. Following expiry of such period, disability shall
mean that an employee is disabled to an extent preventing performance of
any job for which the employee is reasonably suited by education, training
and experience.
Notwithstanding the above definition, if it is confirmed that an employee
is eligible for primary disability benefits under the Canada/Quebec
Pension Plan, this employee will then be also eligible for benefits under
the LTD Plan.
7.5 LTD Plan benefits shall not be terminated without at least one (1) month's
notice to the recipient unless the employee returns to work.
8. GROUP LIFE INSURANCE PLAN
8.1 The Company will continue to provide, on an optional basis to employees,
life insurance through Group Life Insurance Plan - Part I, hereinafter
called "Part I", as in effect immediately prior to the term of the
Agreement except as indicated in 8.1.1 and 8.1.2 below.
8.1.1 The entire cost of the Plan will be paid by the Company.
8.1.2 The Plan will provide insurance coverage under Part I in accordance with
the following schedule for those eligible employees whose insurance
coverage is in effect on the date of ratification.
BENEFIT GROUP INSURANCE COVERAGE
1 $29,500
2 $31,000
3 $33,500
8.1.3 Employees retiring with a pension date on or after the date of
ratification, will continue to have insurance coverage under Part
1 in accordance with the following schedule:
BENEFIT GROUP INSURANCE COVERAGE
1 $24,500
2 $26,000
3 $28,500
<PAGE>
and will continue to have the reduction formula in effect as of the
date of ratification.
8.2 The Company will continue to provide, on an optional basis to employees,
life insurance through Group Life Insurance Plan - Part II, hereinafter
called "Part II", as in effect immediately prior to the term of the
Agreement, except as indicated herein below.
The premium rates for Part II for each $1000 of coverage will be as
follows:
MONTHLY COST
MALE FEMALE
AGE SMOKER NON-SMOKER SMOKER NON-SMOKER
to 35 $0.16 $0.08 $0.07 $0.04
36-45 $0.32 $0.16 $0.15 $0.09
46-55 $0.76 $0.42 $0.36 $0.23
56-60 $1.45 $0.84 $0.69 $0.47
61-64 $2.20 $1.29 $1.02 $0.71
The smoker rates apply to anyone who has smoked a cigarette or used any
tobacco product one time in the past year.
These rates will be adjusted as per renewal arrangements made with the
carrier.
8.3 The Company will continue to provide, on an optional basis to employees,
life insurance through the Dependent Life Plan as in effect immediately
prior to the term of the Agreement, except as indicated herein below.
The premium rates for Dependent Life will continue to be:
SPOUSE CHILD MONTHLY RATE
$ 5,000 $ 2,500 $1.65
$10,000 $ 5,000 $3.30
$25,000 $10,000 $7.65
These rates will be adjusted as per renewal arrangements made with the
carrier.
8.4 The other terms and conditions of this Plan will remain in full force and
effect as reflected in the applicable insurance contract.
9. SURVIVOR TRANSITION BENEFIT PLAN
9.1 The Company will continue to provide a Survivor Transition Benefit Plan as
in effect immediately prior to the term of the Agreement subject to
paragraph 1.6.2.
<PAGE>
9.2 During the period which an eligible dependent is in receipt of STB,
participation will continue in the following Plans but the cost will be
paid by the Company:
. Extended Health Care Plan
. Dental Plan
. Vision Care Plan
10. RETIREMENT ALLOWANCE PLAN
10.1 The Company will continue to provide a Retirement Allowance Plan as in
effect immediately prior to the term of the Agreement subject to paragraph
1.6.2. The Retirement Allowance Schedules and formulae will be based on
the following:
10.1.1 The amounts set out in the schedules in effect immediately prior to
this agreement will be increased by 3% on the 1996 schedule on June
10 of each of the years 1998, 1999 and 2000.
10.1.2 The scheduled amounts in effect immediately prior to this agreement
will be prorated so that the retirement allowance will be based on
completed calendar years and months of service and age.
10.2 Employees will be entitled to payment under the Plan if, as of their
pension date, they have at least ten (10) years of continuous service. The
amounts set out in the Schedules will be payable monthly commencing with
the month in which the pension date falls and continuing until the month
age 65 is reached, except that for retirement at age 65 there will be only
one payment.
10.3 An employee entitled to the Retirement Allowance Plan may elect to
receive, either as a lump sum or as monthly payments during any period up
to age 71, the present value of the scheduled amount discounted at the
rate prescribed for the first fifteen (15) years for non-indexed pensions,
for the month in which the payment of the benefits commences under the
Canadian Institute of Actuaries Recommendations for the computation of
transfer values from registered pension plans effective June 1, 1996.
10.4 If a retired employee who is entitled to a retirement allowance dies prior
to all payments being made, the remaining payments will be paid monthly on
the same basis to eligible dependents.
10.5 Where employees retire with a class E pension and are entitled to a
retirement allowance, the amount as set out in the Schedule will be
reduced actuarially for each month by which the employee's age is less
than 65.
11. PENSION PLAN
<PAGE>
11.1 Effective February 3, 1996, the Company will replace the Northern
Telecom Negotiated Pension Plan by a defined contribution pension
plan. The defined contribution pension plan will include, subject to
the approval of the supervisory pension authorities, the provisions
specified below during the applicable term stated in paragraph 1.3
above.
11.2 All employees will be eligible to participate to the defined contribution
pension plan.
11.3 Service under the defined contribution pension plan will be defined as
continuous service with the Company, including the continuous service
with Northern Telecom up to February 2, 1996.
11.4 Base earnings under the defined contribution pension plan will be defined
as the basic remuneration, exclusive of such items as overtime pay,
special bonus, Company contributions to any benefit plan, or other
extra earnings.
Basic remuneration will mean the employee's standard hourly wages
determined by multiplying his hourly base rate of pay by the number
of regularly scheduled hours assigned to his job classification.
Base earnings in respect of any period of absence from work will mean the
rate in effect immediately prior to such absence.
11.5 Employees participating to the defined contribution pension plan will be
able to contribute through payroll deduction and/or make lump sum
contributions subject to the limitations of the Income Tax Act and
Regulations.
Such employee contributions will be voluntary.
11.6 The Company contributions to the defined contribution pension plan will be
determined as follows:
i) Basic Contributions
-------------------
The Company will contribute a percentage of the employee's base
earnings. For a given calendar year, such percentage will be
determined in accordance with the following schedule which is based
on the sum of the employee's age and service on January 1st of the
said calendar year.
Sum of Age and Service Basic Company
<PAGE>
Contributions
__(in completed years)
____(% of base earnings)
less than 40 2.5%
40 to 49 3.0%
50 to 59 3.5%
60 to 69 4.0%
70 to 79 4.5%
80 to 89 5.5%
90 and more 6.5%
ii) Matching Contributions
----------------------
The Company will also contribute an amount equal to one half (50%) of
the employee's contributions, up to a maximum of 1% of his base
earnings.
iii) Grandfathering Employees
------------------------
Instead of the contributions provided for in i) and ii) above, for 59
employees, to be called "grandfathered" employees, the Company will
contribute a fixed percentage of their base earnings during the
applicable term stated in paragraph 1.3 above. Therefore, the
Company will not match the contributions made by the "grandfathered"
employees, if any.
Such percentage will be determined individually so as to replicate
------------
the benefits that would have been provided by the Northern Telecom
Negotiated Pension Plan if the grandfathered employee had continued
participation in that plan until retirement. It will be determined
as of February 2, 1996 and will not thereafter be re-adjusted.
More specifically, such percentage will be determined on the basis of
the following:
a) Provisions of the Northern Telecom Negotiated Pension Plan
----------------------------------------------------------
Those in effect as of February 2, 1996, except for the benefit
rates which are deemed to increase over the next five (5) years
by 5% the first year, 3% the second and third years and 2.5%
the fourth and fifth years,
<PAGE>
resulting in a cumulative increase which is a function of the
number of years until retirement as follows:
Years until Retirement Increase
__(in completed years)
1 or less 5.00%
2 8.15%
3 11.39%
4 14.18%
5 or more 17.03%
The automatic post-retirement indexation provisions and the
joint and survivor form of payment of the Northern Telecom
Negotiated Pension Plan will therefore be taken in account in
determining the Company contribution intended to replicate its
benefits.
b) Assumptions
-----------
Earnings' increases None
Investment return 8.00% per year
Annuity purchase rates 8.00% per year
CPI increases 3.75% per year
Assumed retirement age Earliest age the
employee would have qualified for an unreduced
pension under conditions A, B or C or, if
later, attained age as of Feb.2/96 plus one
year
iv) Period of Absence
-----------------
The Company will contribute in accordance with the above during any
period of absence with pay or any period of absence without pay
resulting from a disability, parental leave or maternity leave,
subject to the limitations of the Income Tax Act and Regulations.
However, the Company will not contribute during any other period of
absence without pay.
<PAGE>
11.7 The normal retirement age under the defined contribution pension plan
will be 65 whereas the earliest retirement age will be 50.
11.8 The Company contributions to the defined contribution pension plan will
be fully vested after two years of service.
11.9 On retirement, termination of employment or death of the employee, the
benefits provided by the defined contribution pension plan will be
equal to the accumulated value of the employee's and vested Company
contributions. Such value will be subject to the locking-in
requirements of the applicable provincial pension legislation.
11.10 The defined contribution pension plan will be a separate pension plan
registered with the Regie des rentes du Quebec. It will therefore be
administered by a pension committee.
11.11 The pension committee of the defined contribution pension plan will be
made up of the following seven (7) members:
a) four (4) representatives of the Company;
b) two (2) representatives of the employees;
c) a third party to be designated by the Company.
11.12 The administration expenses of the defined contribution pension plan
will be paid by the Company whereas the custody and investment
expenses will be assumed by the employees.
11.13 Any remaining details regarding the operation of the defined
contribution pension plan, e.g. the selection of the custodian,
administrator and investment manager(s), the allowed number of
changes in investment directions per calendar year, the frequency of
employee statements, etc. will be decided by the pension committee.
12. OTHER COMPANY PLANS
12.1 The Company proposes to continue the following during the term of the
Agreement.
. Travel Accident Insurance
. Registered Retirement Savings Plan
12.2 While the Company will not reduce the level of benefits of the Plans
referred to in 12.1 above during the term of the Agreement, it
reserves the right to amend the terms and conditions of such Plans in
order to conform to existing or future legislation, to ensure that
they may best
<PAGE>
meet the objectives for which they were established, and to enable
their administration to be carried out with prudence and economy in
the interest of all participants therein.
13. GENERAL
13.1 The Company shall furnish the Plan text(s), as soon as practicable, after
signing the Agreement, for review and comment by the Union. The other
documents referred to below will be furnished at appropriate times for
review and comment by the Union.
13.2 The Company will furnish the Union with copies of the administrative
procedures, benefits description and approved authorized texts covering
the employee benefit Plans referred to in paragraphs 2 to 12 of this
appendix.
13.3 As soon as it is practicable hereafter, the Company will provide each
employee with a benefits description referred to in this appendix.
13.4 The Company will ensure that all the Plans covered by this appendix are
adjusted to reflect legislation precluding discrimination with respect to
age, sex, and marital status, except to the extent that such legislation
so permits.
13.5 The Company confirms its intention to maintain its present practices with
respect to the handling of statutory and Company benefits as these apply
to retirees. In the event a change appears desirable, the Company will
discuss such changes in advance with the Union.
13.6 Procedures shall be determined on a basis which is mutually acceptable to
the Union and the Company. Items for discussion shall in general be
limited to those matters pertaining to the benefits covered by this
appendix and may include application thereof to future retirees.
13.7 The Company will furnish the Union with such information with respect to
the operations of applicable benefit plans as shall be mutually acceptable
to the parties or required by legislation, including:
. Copy of the annual information return to the province of registration
for the Pension Plan.
13.8 The Union consents to the application by the Company, through partial
funding of the latter's costs in providing improved employee benefits in
accordance with the Agreement and with prior Collective Labour Agreements
between the Union and the Company, of the reductions equal to at least
5/12th that have been or may be granted to the Company as to employer's
premiums under the Unemployment
Insurance Act.
<PAGE>
13.9 The Company shall have the exclusive right to determine and change the
method and terms of financing the Company Health Care Plans, Group Life
Insurance -Parts I and II and the Dependent Life Plan provided under the
Agreement, subject to the following conditions:
a) no change will take place without at least 3 months prior notice to
the Union,
b) no change will have the effect of reducing the value of any benefit,
c) no change will affect the method of claims settlement except as shall
be mutually agreed between the parties, and
d) the Company shall furnish the Union with a full accounting as to the
disposition of any surplus or deficit attributable to employee
contributions.
<PAGE>
EXHIBIT 10.20
- --------------------------------------------------------------------------------
LEASE
- --------------------------------------------------------------------------------
LANDLORD: NORTHERN TELECOM LIMITED
TENANT: NORDX/CDT, INC.
(FORMERLY CABLE DESIGN TECHNOLOGIES (CDT) CANADA INC.)
PREMISES: 150 Montreal-Toronto Blvd.
Lachine, Quebec
<PAGE>
AGREEMENT OF LEASE made as of the 2nd day of February, 1996
Between: NORTHERN TELECOM LIMITED, a Canadian corporation
(hereinafter called the "Landlord")
And: NORDX/CDT, INC., a Canadian corporation
(formerly Cable Design Technologies (CDT) Canada Inc.)
(hereinafter called the "Tenant")
SECTION I
DEFINITIONS
-----------
In this Lease,
"APPLICABLE LAWS" means all statutes, laws, by-laws, regulations, ordinances and
requirements of governmental or other public authorities having jurisdiction and
any applicable regulation or order of the Canadian Fire Underwriters'
Association or any body having similar functions, or of any fire insurance
company by which the Landlord or the Tenant may be insured, and all amendments
thereto at any time and from time to time in force which are applicable in the
circumstances;
"ARCHITECT" means a third party architect or engineer named by the Landlord from
time to time and acceptable to the Tenant;
"ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement by and among the
parties and Cable Design Technologies Corporation, made as of December 19, 1995;
"RENT" means the rent payable by the Tenant pursuant to section 4. 1;
"BUILDING" means the building and all improvements, facilities and appurtenances
situated on the Lands, municipally known as 150 Montreal-Toronto Blvd., Lachine,
Quebec, HBS IB6, and having a gross rentable area of approximately nine hundred
and ninety-eight thousand, nine hundred and sixty (998,960) square feet;
"BUSINESS" shall have the same meaning as in the Asset Purchase Agreement but
restricted to the Business carried on or about the Property;
"CLOSING DATE" shall have the same meaning as in the Asset Purchase Agreement;
"COMMENCEMENT DATE" shall have the meaning ascribed thereto in section 3. 1;
"COMMON AREAS AND FACILITIES" means those common areas and facilities which
serve the Building including, without limitation, the landscaped areas, parking
areas, yard, common corridors, halls, stairways and passageways, common
lavatories, cafeteria area and such other areas and facilities which are
designated from time to time by the Landlord (but in a way not to
obstruct Tenant's use of the Leased Premises) for the common use and enjoyment
or benefit of the Tenant
2
<PAGE>
and the Landlord, their employees, agents and invitees;
"ENVIRONMENTAL LAWS" means all applicable foreign, federal, provincial,
municipal or local statutes, regulations or by-laws, common law, civil law and
orders of any Government Entity, to the extent relating to the Environment but
in each case solely to the extent having the force of law;
"INITIAL TERM" means the period specified in section 3. 1;
"LANDS" means the lands owned by the Landlord on which the Building is situated,
being Part of Lots 914, 915 and 1025, Parish of Lachine;
"LEASE" means this lease as it may be amended from time in accordance with the
provisions hereof;
"LEASED PREMISES" means the premises leased to the Tenant under this Lease;
"PROPERTY" means the Lands and Building;
"RENEWAL PERIOD" shall have the meaning ascribed thereto in section 3.2;
"RENT" means basic rent;
"REPORTS" shall have the meaning ascribed thereto in section 2.2;
"TERM" means the Initial Term as it may be extended or renewed by the Tenant or
earlier terminated in accordance with the provisions hereof;
Capitalized terms used herein which are not defined in this Lease but which
are defined in the Asset Purchase Agreement shall have the same meaning as in
the Asset Purchase Agreement.
SECTION 2
LEASED PREMISES
---------------
2.1 AREA OF LEASED PREMISES
-----------------------
The Landlord hereby leases to the Tenant hereby accepting, upon the terms
and conditions herein contained, that portion of the Building shown cross-
hatched on the floor plans attached as Schedule A attached hereto having a gross
rentable area of approximately four hundred and seventy thousand (470,000)
square feet, it being acknowledged that such rentable area includes the Tenant's
proportionate share of the Common Areas and Facilities. The floor plans are
subject to review and modification by the Landlord and the Tenant, if necessary,
to reflect the Business carried on in the Building at the Closing Date.
2.2 SEPARATION OF LEASED PREMISES, CONDITION
----------------------------------------
The Tenant acknowledges having examined the Building and the Leased Premises
and accepts same in their actual "as is" condition, it being understood that
their present environmental condition, including without limitation as described
more specifically in the ADS-Golder environmental assessment report (1994) and
SNC-Lavalin Environment Inc. environmental assessment report (1995) (the
"Reports") remains entirely the responsibility of the Landlord, as well as any
environmental condition caused by, arising or
3
<PAGE>
resulting from the said condition. The Landlord acknowledges being fully aware
of the contents of the Reports.
The Landlord shall construct demising partitions as soon as practicable and
in any event no later than three (3) months after the Closing Date, as required,
to separate the Leased Premises from the Landlord's premises and premises of
other tenants in the Building, by erecting partitions and fencing as
appropriate. Both parties shall agree on such demising partitions and shall not
unreasonably withhold their consent thereto. Landlord and Tenant shall each pay
one half of the cost of such demising partitions, with such cost to the Tenant
not to exceed Two Hundred Thousand Dollars ($200,000).
2.3 COMMON AREAS AND FACILITIES
---------------------------
Subject to the Landlord's security procedures with respect to the Property,
the Landlord hereby grants to the Tenant, its employees, agents, visitors and
other persons transacting business with it, in common with the Landlord, the
right to use the Common Areas and Facilities including the parking lot,
washrooms, cafeteria and shipping area, for their intended purpose.
SECTION 3
TERM
----
3.1 INITIAL TERM
------------
The initial term of this Lease shall be a period of two (2) years,
commencing on the Closing Date ("Commencement Date").
3.2 RENEWAL PERIOD
--------------
The Tenant shall have the option to renew the Lease for two (2) successive
periods of One (1) year (the "Renewal Period") each upon the same terms and
conditions as contained herein, except that the Rent payable during the Renewal
Periods shall be as set forth in section 4. 1. The Tenant may exercise each
renewal option by giving written notice to the Landlord at least six (6) months
prior to the end of the Term, failing which the option to renew shall be null
and void.
3.3 THE TENANT'S RIGHT OF TERMINATION
---------------------------------
The Tenant shall have the right to terminate the Lease effective any time
on or after eighteen (18) months after the Closing Date on at least twelve (12)
months prior written notice.
SECTION 4
RENT
----
4.1 RENT
----
The Tenant covenants to pay to the Landlord as Rent for the Leased Premises
during the Initial Term, Two Million, Five Hundred Thousand Dollars ($2,500,000)
in equal monthly installments of Two Hundred and Eight Thousand, Three Hundred
and Thirty Three Dollars and Thirty Three Cents ($208,333.33), payable in
advance on the first day of each month.
4
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The Rent for each Renewal Period shall be negotiated and agreed upon by
Landlord and Tenant at the latest seven (7) months before the expiration of the
Term; failing agreement, the Rent for each Renewal Period shall be equal to Five
Million Dollars ($5,000,000) payable in equal monthly installments of Four
Hundred and Sixteen Thousand, Six Hundred and Sixty Six Dollars and Sixty Six
Cents ($416,666.66) payable in advance on the first day of each month during
each Renewal Period.
4.2 PAYMENT OF RENT
---------------
All payments by the Tenant to the Landlord, of whatsoever nature, required
or contemplated by this Lease, shall be made when due hereunder, without prior
demand therefor and without any abatement, compensation or deduction whatsoever
(except for any abatement under section 11 of this Lease), at the office of the
Landlord as set out in section 15.2 or at such other address as the Landlord may
designate, in writing, from time to time to the Tenant.
SECTION 5
USE OF PREMISES
---------------
5.1 PERMITTED USE
-------------
The Tenant covenants to use the Leased Premises only for the purposes of
offices, warehousing, manufacturing, and related uses to carry on business
substantially the same as that carried on by the Landlord immediately prior to
the Closing Date, comprising the manufacturing, sale and service of structured
wire and copper wire and cable products.
5.2 COMPLIANCE WITH LAWS
--------------------
Subject to the construction work, repairs, conditions and services for
which the Landlord is responsible, as provided hereunder, including without
limitation the construction work, repairs, conditions and services mentioned in
sections 2.2, 6, 7 and 14, the Tenant shall promptly comply with and conform to
all Applicable Laws including Environmental Laws affecting the Leased Premises
and the business carried on therein (it being understood that Tenant shall have
no obligation with respect to any environmental condition contained in the
Reports).
5.3 RULES AND REGULATIONS
---------------------
The Landlord shall have the right to make (after prior consultation with
the Tenant) such reasonable rules and regulations as it considers necessary or
desirable related to the operation, maintenance, security or safety in respect
of the Property. Such rules and regulations shall not be amended without the
consent of the Tenant, such consent not to be unreasonably withheld. The Tenant
shall comply, and cause every person over whom it has control to comply, with
such rules and regulations.
SECTION 6
UTILITIES AND SERVICES
----------------------
The Landlord shall, subject to interruption beyond its control, provide and
permit the Tenant to use the electricity, domestic water, sewage disposal and
other utility services serving the Building at no additional cost and provided
that the Tenant uses said services for the purpose for which they are intended.
5
<PAGE>
The Landlord shall heat and air condition the Leased Premises to a reasonable
temperature at the appropriate times of the year.
The Landlord shall consult with and cooperate with the Tenant in respect of
all services provided to the Leased Premises.
Any special services required by the Tenant from the Landlord, such as office
rearrangement and moving of equipment, shall be at Tenant's sole expense.
SECTION 7
MAINTENANCE AND REPAIR
----------------------
7.1 LANDLORD'S OBLIGATIONS
----------------------
Except to the extent the Tenant is responsible therefor as provided in the
Lease, the Landlord shall, at its expense, maintain the Property in a good state
of repair and in compliance with applicable Laws, including Environmental Laws.
Without limiting the generality of the foregoing, the Landlord shall effect all
necessary structural repairs and repairs and maintenance to the roof, the
heating, air conditioning, electrical, plumbing, lighting and sprinkler and
other building systems.
7.2 TENANT'S OBLIGATIONS
--------------------
The Tenant shall, at its expense, maintain all leasehold improvements added
by the Tenant during the Term in the Leased Premises in a good state of repair,
reasonable wear and tear excepted; provided that the Tenant shall be responsible
for any maintenance or repairs caused as a result of the negligence of the
Tenant, its employees, agents or invitees, and provided further that Tenant
shall be responsible for the cost of all interior decorations, fixtures,
carpeting and any improvements in the Leased Premises as may be required by the
Tenant.
SECTION 8
ALTERATIONS
-----------
The Tenant may, at its expense, and with the prior written consent of the
Landlord, not to be unreasonably withheld or delayed, make such changes,
alterations and additions in the Leased Premises which it may reasonably require
from time to time for the conduct of its business. At the expiry of the Term,
the Tenant may remove all such changes, additions and leasehold improvements
from the Leased Premises, provided that the Tenant shall repair any damage to
the Leased Premises or Building caused by such removal. At the expiry of the
Term, the Landlord shall also have the right (other than with respect to initial
installations and in the event that the Lease is terminated by Landlord pursuant
to a sale of the Building) to require the Tenant to remove from the Leased
Premises any leasehold improvements and, in such event, the Tenant shall be
obligated, at its expense, to restore the Leased Premises to their condition at
the Commencement Date, reasonable wear and tear, any repairs arising from the
removal on departure of assets purchased from the Landlord that are in some
manner attached or affixed to the Leased Premises (except to the extent repairs
are necessary because of negligence of the Tenant, its employees or agents
effecting such removal), damage by fire and other insured perils excepted.
6
<PAGE>
SECTION 9
SUBLET AND ASSIGNMENT
---------------------
The Tenant shall not have any right to assign the Lease or sublet all or any
part of the Leased Premises without the Landlord's consent, such consent not to
be unreasonably withheld. However, the Tenant shall have the right to
hypothecate its right in the Lease as security for the fulfillment of its
obligations.
SECTION 10
INSURANCE, LIABILITY
--------------------
10.1 LANDLORD'S INSURANCE
--------------------
The Landlord shall maintain throughout the Term:
(a) "all risks" property insurance upon the Building and all property owned
therein by the Landlord (other than leasehold improvements effected in
respect of the Leased Premises);
(b) comprehensive general liability insurance with a limit of not less than
Five Million Dollars ($5,000,000) per occurrence with respect to injuries
to or death of persons and damage to tangible property; and
(c) broad form boiler and machinery insurance.
The Landlord waives any right of recovery against the Tenant, its employees
and agents for any loss or damage caused by or resulting from the perils to
be insured against under paragraph (a) above and covenants to have its
insurers waive all rights of recovery against the Tenant for any such loss.
The insurance described in paragraph (b) above shall name the Tenant as an
additional insured.
The Landlord shall, on request, provide to the Tenant certificates evidencing
the insurance described above.
10.2 TENANT'S INSURANCE
------------------
The Tenant shall maintain throughout the Term:
(a) "all risks" property insurance in respect of all property of the Tenant in
or about the Leased Premises;
(b) comprehensive general liability insurance with a limit of not less than
Five Million Dollars ($5,000,000) per occurrence for its operations with
respect to injuries to or death of persons and damage to tangible property;
and
7
<PAGE>
The Tenant waives any right of recovery against the Landlord, its employees
and agents for any loss or damage caused by or resulting from the perils to be
insured against under paragraph (a) above and covenants to have its insurers
waive all rights of recovery against the Landlord for any such loss.
10.3 LIMITATION OF LIABILITY
-----------------------
Unless caused by the negligence of a party, its employees or agents, or the
inexecution of its obligations hereunder, such party shall not be liable for
(a) any damage to or destruction or loss of the other party, its employees or
agents or any property in the Building or the Leased Premises; or
(b) any bodily injury (including death), personal injury, damages for personal
discomfort sustained by either party, its employees or agents.
In no circumstances (including the negligence of a party, its employees or
agents) shall such party be liable for any indirect or consequential damages
sustained by the other party, its employees, agents or visitors.
SECTION 11
DAMAGE OR DESTRUCTION
---------------------
If during the Term, the Building or the Leased Premises shall be damaged by
fire, lightning, tempest, impact of aircraft, acts of God or the Queen's
enemies, riots, insurrections or explosion or other similar cause, the following
provisions shall have effect:
(a) if, in the opinion of the Architect, the Leased Premises are fit for
tenancy in whole, the Lease shall continue in full force and effect without
abatement or diminution of any Rent;
(b) if, in the opinion of the Architect, the Leased Premises are rendered
partly unfit for tenancy, this Lease shall continue in full force and
effect, except that the Rent will abate to the extent the Architect
determines that the Leased Premises cannot reasonably be used for their
intended purposes;
(c) if the Architect determines that the Leased Premises are rendered wholly
unfit for tenancy, this Lease shall continue in full force and effect,
except that the Rent will fully abate to zero;
(d) all abatements will occur from the date of the damage or destruction until
the date that the Leased Premises are delivered to the Tenant fit for the
Tenant's occupancy and the conduct of its business; .
(e) the Landlord will commence and proceed diligently to reconstruct, rebuild
or repair any damage to the Building and Leased Premises to meet the
Landlord's base building criteria for the Building which the Landlord may
modify to be consistent with the plans, specifications and design criteria
for the rebuilding of the Building and/or the Leased Premises, chosen by
the Landlord acting reasonably, provided same are at least as high quality
as the original construction;
(f) whether or not the damage to the Leased Premises may have been caused by
the Tenant's negligence or fault, the Tenant shall commence to repair,
rebuild or reconstruct, at its own cost, all
8
<PAGE>
Leasehold improvements, fixtures and equipment in the Leased Premises
within fifteen (15) days from the Landlord's notice that the Landlord has
completed its work and the Tenant shall complete said work with all due
diligence;
(g) the Tenant shall not be entitled to any allowance, inducement, payment or
other consideration from the Landlord in connection with the Tenant's work
described in subparagraph (f);
(h) notwithstanding any provision herein to the contrary, if the Building is
totally or partially damaged or destroyed (whether the Leased Premises are
affected or not), and in the Architect's opinion, the damaged or destroyed
portions cannot reasonably be repaired, restored or rebuilt within one
hundred and eighty (180) days following the occurrence, the Landlord or the
Tenant may, at its option, to be exercised by written notice to the other
party within ninety (90) days following any such occurrence elect to
terminate this Lease, in which case the following will apply:
(i) if the Leased Premises have been rendered wholly unfit for tenancy,
the termination will take effect from the date of damage or
destruction and all Rent will only apply through to that date;
(ii) if the Leased Premises have been rendered only partly unfit for
tenancy and the Tenant has occupied any part of the Leased Premises
from the date of the damage or destruction, the Lease will terminate
at least sixty (60) days from the Landlord's notice. All unabated
Rent will be adjusted to the date of termination. Rent will abate
from the date of the damage and destruction until the date of
termination to the extent the Leased Premises cannot reasonably be
used for their intended purposes;
(iii) if the Building is totally or partially damaged or destroyed and
neither the Landlord nor the Tenant elects to terminate this Lease,
the Landlord, at its sole cost, shall commence and proceed
diligently to reconstruct, rebuild or repair, as necessary, those
portions of the Building which have been so damaged or destroyed in
accordance with the Landlord's base building criteria for the
Building, substantially to the same standard as prior to the
destruction.
SECTION 12
RIGHT OF INSPECTION AND REPAIR
------------------------------
The Tenant agrees to permit the Landlord, its employees or agents, upon prior
notice (except in case of emergency), to enter upon the Leased Premises at any
time and from time to time, for the purposes of (i) inspecting and making
necessary repairs, alterations or improvements to the Leased Premises or to the
Building; (ii) access to monitoring wells and pumps located in the Leased
Premises; and (iii) showing the Leased Premises to prospective purchasers or
lessees. The Landlord covenants to act in a reasonable manner and to use all
due diligence in the exercise of its rights hereunder. The Tenant shall not be
entitled to any compensation for any inconvenience, nuisance or discomfort
occasioned thereby unless the Tenant is prevented or materially hindered from
carrying on its business in the Leased Premises.
9
<PAGE>
SECTION 13
DEFAULT
-------
If the Tenant shall be in default of any of its covenants hereunder, the
Landlord shall give to the Tenant notice in writing stating that the said
default is to be remedied and that if such default is not remedied by the Tenant
within thirty (30) days after the receipt of such notice, or such longer period
as may be reasonably necessary in view of the nature of the default, the
Landlord may, at its option, enter either into and upon the said Leased Premises
or any part thereof in the name of the whole, and this Lease shall be
terminated, or the Landlord itself may take such steps and do or cause to be
done such things as may be necessary to remedy and correct such defaults and
may thereupon charge its total reasonable costs and expenses incurred in respect
thereof to the Tenant who hereby covenants and agrees to pay the same forthwith,
and the Tenant hereby covenants that any and all such costs and expenses
incurred by the Landlord and unpaid by the Tenant shall be recoverable by the
Landlord as if the same were and in the same manner as rental reserved and in
arrears under the ten-ns of this Lease.
SECTION 14
SPECIAL PROVISIONS
------------------
14.1 PARKING
-------
The Tenant shall have access to and use of, in common with other occupants of
the Building, the parking areas associated with the Building.
The Landlord shall cooperate with the-Tenant to provide an appropriate number
of reserved and visitor parking spaces, taking into account the number of
reserved parking spaces used by the Business at the Closing Date.
14.2 SECURITY
--------
The Tenant shall comply with security measures in place for the Building.
The Landlord shall consult with Tenant in the establishment or changes to such
requirements for the Building including the Leased Premises, provided that any
special requirements of the Landlord or the Tenant shall be at such party's
costs.
14.3 SIGNAGE
-------
The Tenant shall have the right to install, at its expense, its signage at
the entrance of the Building, subject to the Landlord's reasonable approval, it
being acknowledged that Landlord's signage at the main entrance shall remain as
at the Closing Date.
14.4 CAFETERIA
---------
The Tenant's employees and visitors shall have the right to use the cafeteria
during its normal business hours.
10
<PAGE>
14.5 JANITORIAL SERVICES
-------------------
The Landlord, at its sole cost, shall provide janitorial services to the
Building and the Leased Premises. Such services shall be provided irrespective
of whether the Landlord shall vacate the Building, provided that Landlord shall
discuss with the Tenant in a timely manner and before it vacates the Building,
the provision of such services prior to vacating the Building. The Landlord and
the Tenant shall cooperate with a view to agreeing on a common supplier for
janitorial services, provided that any special requirements of the Landlord or
the Tenant shall be at such party's costs.
14.6 GARBAGE REMOVAL
---------------
The Tenant shall ensure that materials subject to Environmental Laws, in
particular hazardous waste regulations, are disposed of by Tenant as required by
such Environmental Laws and where so prohibited, not as part of the regular
garbage.
14.7 MAIL, COURIER SERVICE
---------------------
The Landlord shall provide, at its sole cost, receiving and delivery services
for incoming mail and courier to the Building and the Leased Premises. Such
services shall be provided irrespective of whether the Landlord shall vacate the
Leased Premises, provided that the Landlord shall discuss with the Tenant in a
timely manner and before it vacates the Building, the provision of such services
prior to vacating the Building. The Tenant shall provide for itself as required
outgoing mail and courier service.
14.8 HVAC. ELECTRICAL EQUIPMENT
--------------------------
The Landlord shall be responsible, at its sole expense, for the operation,
maintenance and repair of all HVAC, mechanical and electrical equipment in or
serving the Building. Any such equipment installed by the Tenant after initial
occupancy and solely for the Tenant's use shall be the Tenant's responsibility.
Such services shall be provided irrespective of whether the Landlord shall
vacate the Building, provided that the Landlord shall discuss with the Tenant in
a timely manner, the provision of such services prior to vacating the Building.
14.9 OTHER SERVICES
--------------
The Landlord shall provide, at its sole cost, building and land maintenance
and repair services, as well as main lobby reception, 24 hour security and
adequate elevator services and access thereto in respect of the Building and the
Leased Premises. Such services shall be provided irrespective of whether the
Landlord shall vacate the Building, provided that the Landlord shall discuss
with the Tenant in a timely manner and before it vacates the Building, the
provision of such services prior to vacating the Building.
14.10 LEVEL AND QUALITY OF SERVICES
-----------------------------
The level and quality of services to be provided by Landlord hereunder shall
be substantially the same as existing immediately prior to the Closing Date.
14.11 ENVIRONMENT
-----------
The Tenant shall be responsible for the remediation of any environmental
contamination (beyond the contamination contained in the Reports or otherwise
existing on the Closing Date or caused by, arising
11
<PAGE>
or resulting thereafter from the said contamination) caused by the Tenant's
negligence, misconduct or carrying on of its business outside of the ordinary
course as conducted prior to the Closing Date, provided that the Tenant shall
take all due care in the carrying on of its business in the ordinary course to
minimize any such contamination, it being understood that this shall not entail
any capital expenditures by the Tenant in excess of Twenty Five Thousand Dollars
($25,000) for the duration of the Initial Term, except for such equipment as may
be voluntarily purchased by the Tenant or required by the Tenant as a result of
any changes to Tenant's processes or operations from that carried on at the
Closing Date. The Landlord shall have the right to have capital expenditures
related to such contamination in excess of Twenty-Five Thousand Dollars
($25,000) effected by. the Tenant at the Landlord's sole cost.
The Landlord shall lease to Tenant, at no additional cost, two compartments
and adjacent areas of the existing hazardous waste storage area (North Yard) as
agreed between Landlord and Tenant, and permit access to such compartments and
adjacent areas, subject to arrangements reasonably acceptable to both parties,
it being acknowledged the hazardous waste storage area is surrounded by a locked
fence. The Landlord shall remove all wastes in the said compartments as soon as
reasonably practicable and in any event no later than five (5) business days
after the Closing Date. Both parties shall conduct all their operations within
the hazardous waste storage area in accordance with applicable Environmental Law
and good industrial practices. The Tenant shall, prior to the expiry of the
Lease, remove all wastes generated by the Tenant from the said two compartments
of the hazardous waste storage area and adjacent areas and return it in the same
condition as at the commencement of the Lease, reasonable wear and tear
excepted. Upon noticing any Discharge of a Substance in the said hazardous
waste storage area, the party having noticed the Discharge shall inform
forthwith the other party and shall cooperate in any Remedial Work which may be
necessary, the costs of which shall be borne by the party responsible for the
said Discharge.
The Landlord shall remain owner of and responsible for any and all pollution
abatement or treatment equipment used in the Building at the Closing Date and
the Landlord shall, at its own costs, purchase and install any other pollution
abatement or treatment equipment required by any Government Entity as a result
of any default by the Landlord under the representations and warranties
provisions contained in the Asset Purchase Agreement and the Landlord shall
remain owner of and responsible for any such equipment.
The Landlord shall cooperate in securing or transferring to the Tenant
Environmental Permits which are necessary in respect of the Business as at the
Closing Date, provided that to the extent not contemplated in the Asset Purchase
Agreement, the same shall be at the cost of the Tenant.
Within thirty (30) days following the expiration of the Lease, the Tenant
will provide the Landlord with an environmental audit prepared by a reputable
consultant identifying and delineating the existence of any environmental
condition on or from the Lachine Space, all to be satisfactory to the Landlord,
acting reasonably. The Landlord will advise the Tenant within thirty (30) days
of any dispute it has, based on the information the Landlord possesses, as to
the conclusions of such report. Except for any matters of contamination for
which the Landlord claims the Tenant is responsible and which are identified by
Landlord to the Tenant, in writing, within three (3) years of the termination of
the Lease, the Tenant shall be deemed to be released from any and all liability
in connection with any environmental contamination of the Property.
The Tenant shall not assume any liability for the wire drawing solution tanks
present in Block C of the Building.
The Tenant shall not be liable with regard to existing contamination of
groundwater or soil in or under the Property.
12
<PAGE>
The Tenant shall not be responsible for any contamination covered by the
environmental indemnification provisions contained in the Asset Purchase
Agreement (to the extent that the Landlord has liability therefor under the
Asset Purchase Agreement) and the Landlord agrees that nothing in this Lease
shall be interpreted as limiting in any way the representations and warranties
as well as the environmental indemnification provisions contained in the Asset
Purchase Agreement.
14.12 SALE OF PROPERTY
----------------
This Lease may be terminated by Landlord effective any time on or after the
expiry of the Initial Term upon twelve (12) months prior written notice in the
event that the Landlord sells the Building in an arm's length transaction to a
third party. The Landlord shall give the Tenant reasonable notice (not less
than 72 hours) of any visit to the Leased Premises by a potential purchaser or
prospective tenant, including the identity of the prospective purchaser or
tenant if known to the Landlord.
One of the conditions of any sale of the Property by the Landlord shall be
that the purchaser of the Property assumes the obligations of the Landlord
hereunder and agrees to be bound by this Lease as if such purchaser had been a
party to this Lease.
14.13 NON-DISCRIMINATION
------------------
The Landlord shall provide all facilities and services described herein in a
reasonable and non-discriminatory manner.
SECTION 15
MISCELLANEOUS
-------------
15.1 WAIVER
------
The failure of the Landlord or the Tenant to insist upon the strict
performance of any covenants and conditions hereof shall not operate as a waiver
of the Landlord's or the Tenant's rights hereunder in respect of any continuing
or subsequent nonperformance and no waiver shall be inferred from or implied by
anything done or omitted by the Landlord or the Tenant, save only an express
waiver in writing.
15.2 NOTICES
-------
All demands, notices or communications and reports provided for in this Lease
will be in writing and will be either sent by facsimile with confirmation to the
number specified below or personally delivered or sent by reputable overnight
courier service (delivery charges prepaid) to the party at the address specified
below, or at such address, to the attention of such other person, and with such
other copy, as the recipient party has specified by prior written notice to the
sending party pursuant to the provisions of this section 15.
13
<PAGE>
If to the Landlord at:
Northern Telecom Limited
3 Robert Speck Parkway
Mississauga, Ontario, Canada L4Z 3C8
Telecopy: (905) 566-3457
Attn: A. J. Lafleur,
Vice President and Associate General Counsel
with copies. which do not constitute notice, to:
- -----------------------------------------------
Northern Telecom Limited
2920 Matheson Blvd. East
Mississauga, Ontario, Canada L4W 4M7
Telecopy: (905) 238-7096
Attn: Martin A. Macdonald
Director of Real Estate
If to the Tenant at:
Nordx/CDT, Inc.
661 Andersen Drive
Foster Plaza 7
Pittsburgh, PA 15220
Telecopy: (412) 937-9690
Attn: Paul M. Olson
Chief Executive Officer
with copies, which do not constitute notice, to:
- -----------------------------------------------
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022-4675
Telecopy: (212) 446-4900
Attn: Charles B. Fromm
and
Desjardins Ducharme Stein Monast
600 de la Gauchetiere rue
Suite 2400
Montreal, Quebec H3B 4L8
Telecopy: (514) 878-9092
Attn: Paul Marcotte
Any such demand, notice, communication or report will be deemed to have
been given pursuant to this Lease when delivered personally or by means other
than facsimile or overnight courier, when confirmed if by facsimile or on the
business day after deposit with a reputable overnight courier service, as the
case may be.
14
<PAGE>
In the event the Landlord gives to the Tenant notice in writing of any
default under the Lease, the Landlord shall also give notice of such default to
any lender to whom the Tenant has requested, in writing, that such notice of
default be given.
15.3 ENTIRE AGREEMENT
----------------
This Lease and the documents it refers to constitute the entire agreement
between the Landlord and the Tenant with respect to the Leased Premises and may
not be modified except by subsequent agreement in writing duly signed by the
Landlord and the Tenant. Neither the Landlord nor the Tenant shall be bound by
any representation, warranty, promise or agreement not contained in this Lease
or in the other documents it refers to. For greater certainty, this Lease does
not in any way affect the obligations of the Landlord under the Asset Purchase
Agreement.
15.4 FORCE MAJEURE
-------------
Except as provided in section 1 1, if and to the extent that any party
shall be prevented, delayed or restricted by reason of an act of God, strikes or
other labour disputes, or any other cause beyond the reasonable control of the
party affected thereby, in the fulfillment of any obligation hereunder, then
such party shall be deemed not to be in default in the performance of such
covenant or obligation and any period necessary for the performance of such
obligation shall be extended accordingly, and the Tenant shall not be entitled
to compensation for any loss, inconvenience, nuisance or discomfort thereby
occasioned, provided that in no event will the Tenant be relieved of its
obligation to pay Rent as it becomes due.
15.5 HEADINGS
--------
The headings used in this Lease are for purposes of reference only and will
not affect the meaning or interpretation of any provisions of this Lease.
15.6 INTEREST ON ARREARS
-------------------
If the Tenant fails to pay Rent when due, the Tenant shall pay interest on
the unpaid amount from the due date until the date paid at the annual rate equal
to The Royal Bank of Canada's reference rate of interest then in effect for
commercial loans in Canada and commonly referred to by such bank as its Canadian
"prime rate", plus two percent (2%), without prejudice to and in addition to any
other remedy available to the Landlord under this Lease or at law.
15.7 HOLDING OVER
------------
If at the expiration or earlier termination of the Term, the Tenant shall
remain in possession without any further written agreement it shall be as a
monthly tenant only. In such event, the Rent payable for each month thereafter
shall be equal to one hundred and fifty percent (150%) of the Rent payable for
the month immediately prior to the expiration of the Term, and all other terms
and conditions of this Lease shall remain the same.
15.8 REGISTRATION
------------
The parties hereby agree a short form of this Lease shall be executed
between them for purposes of registration. In the event of a conflict between
the terms of this Lease and the term of the said short form of agreement, the
terms of this Lease shall prevail.
15
<PAGE>
15.9 SUBORDINATION
-------------
One of the conditions of any hypothec: granted by the Landlord shall be
that the holder of such hypothec: agrees not to disturb the enjoyment and
occupancy of the Leased Premises by the Tenant (or its authorized successors),
as long as the Tenant (or its authorized successors) complies with all
conditions, obligations and agreements hereof.
15.10 GOVERNING LAW
-------------
This Lease shall governed by and construed in accordance with the laws of
the Province of Quebec and the laws of Canada applicable therein.
15.11 ENGLISH LANGUAGE
----------------
The parties have requested that this Lease be prepared in the English
language. Les parties ont demande que la presente convention de bail soit
redigee en anglais.
IN WITNESS WHEREOF the parties have executed this Agreement of Lease as of the
date first written above.
NORTHERN TELECOM LIMITED
Per: /s/Anthony J. Lafleur
---------------------
Anthony J. Lafleur
Vice-President and Associate
General Counsel
Per: /s/Peter G. Kastner
-------------------
Peter G. Kastner
Assistant Vice-President
Financial Planning & Analysis
NORDX/CDT, INC.
(FORMERLY CABLE DESIGN TECHNOLOGIES
(CDT) CANADA INC.)
Per: /s/Kenneth O. Hale
------------------
Kenneth O. Hale
Vice-President
16
<PAGE>
EXHIBIT 10.21
LEASE
LANDLORD: NORTHERN TELECOM LIMITED
TENANT: NORDX/CDT, INC. (FORMERLY CABLE DESIGN
TECHNOLOGIES (CDT) CANADA INC.)
PREMISES: 105 Marcel Laurin Blvd.
St Laurent, Quebec
<PAGE>
AGREEMENT OF LEASE made as of the 2nd day of February, 1996
Between: NORTHERN TELECOM LIMITED, a Canadian
corporation
(hereinafter called the "Landlord")
And: NORDX/CDT, INC., a Canadian
corporation (formerly Cable Design
Technologies (CDT) Canada Inc.)
(hereinafter called the "Tenant")
SECTION I
DEFINITIONS
In this Lease,
"APPLICABLE LAWS" means all statutes, laws, by-laws, regulations, ordinances and
requirements of governmental or other public authorities having jurisdiction and
any applicable regulation or order of the Canadian Fire Underwriters'
Association or any body having similar functions, or of any fire insurance
company by which the Landlord or the Tenant may be insured, and all amendments
thereto at any time and from time to time in force which are applicable in the
circumstances;
"ARCHITECT" means a third party architect or engineer named by the Landlord from
time to time and acceptable to the Tenant;
"ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement by and among the
parties and Cable Design Technologies Corporation, made as of December 19, 1995;
"BUILDING" means the building and all improvements, facilities and appurtenances
situated on the Lands, municipally known as 105 Marcel Laurin Blvd., St.
Laurent, Quebec, and having a gross rentable area of approximately two hundred
and ninety-two thousand, six hundred and fifty (292,650) square feet;
"BUSINESS" shall have the same meaning as in the Asset Purchase Agreement but
restricted to the Business carried on on or about the Property;
<PAGE>
"CLOSING DATE" shall have the same meaning as in the Asset Purchase Agreement;
"COMMENCEMENT DATE" shall have the meaning ascribed thereto in section 3. 1;
"COMMON AREAS AND FACILITIES" means those common areas and facilities which
serve the Building including, without limitation, the landscaped areas, parking
areas, common corridors, halls, stairways and passageways, common lavatories,
cafeteria area and such other areas and facilities which are designated from
time to time by the Landlord (but in a way not to obstruct Tenant' s use of the
Leased Premises) for the common use and enjoyment or benefit of the Tenant and
the Landlord, their employees, agents and invitees;
"ENVIRONMENTAL LAWS" means all applicable foreign, federal, provincial,
municipal or local statutes, regulations or by-laws, common law, civil law and
orders of any Government Entity, to the extent relating to the Environment but
in each case solely to the extent having the force of law;
"INITIAL TERM" means the period specified in section 3. 1;
"LANDS" means the lands owned by the Landlord on which the Building is situated;
"LEASE" means this lease as it may be amended from time in accordance with the
provisions hereof;
"LEASED PREMISES" means the premises leased to the Tenant under this Lease;
"PROPERTY" means the Lands and Building;
"RENEWAL PERIOD" shall have the meaning ascribed thereto in section 3.2;
"RENT" means basic rent;
"REPORTS" shall have the meaning ascribed thereto in section 2.2;
"TERM" means the Initial Term as it may be extended or renewed by the Tenant or
earlier terminated in accordance with the provisions hereof.
Capitalized terms used herein which are not defined in this Lease but which
are defined in the Asset Purchase Agreement shall have the same meaning as in
the Asset Purchase Agreement.
-2-
<PAGE>
SECTION 2
LEASED PREMISES
2.1 AREA OF LEASED PREMISES
-----------------------
The Landlord hereby leases to the Tenant hereby accepting, upon the terms
and conditions herein contained, that portion of the Building shown cross-
hatched on the floor plan attached as Schedule A attached hereto having a gross
rentable area of thirty five thousand (35,000) square feet, it being
acknowledged that such rentable areas includes the Tenant's proportionate share
of the Common Areas and Facilities. The floor plan is subject to review and
modification by the Landlord and the Tenant, if necessary, to reflect the
Business carried on in the Building at the Closing Date.
The Tenant shall have the right, upon Siecor Corp. vacating the premises
leased by it in the Building, upon written notice to the Landlord, to include as
part of the Leased Premises, the main conference room and the "salle des Robots"
occupied by Siecor Corp. at the Closing Date, at a gross annual rental of eleven
thousand dollars ($1 1,000), and twenty-four thousand, nine hundred and ninety
dollars ($24,990), respectively, payable in equal monthly installments of nine
hundred and sixteen dollars and sixty six cents ($916.66), and two thousand and
eighty-two dollars and fifty cents ($2,082.50), respectively.
2.2 SEPARATION OF LEASED PREMISES, CONDITION
----------------------------------------
The Tenant acknowledges having examined the Building and the Leased Premises
and accepts same in their actual "as is" condition, subject to its right to
proceed at its discretion after reasonable prior notice to the Landlord, to an
environmental site assessment and subject to the Landlord providing the Tenant a
copy of any and all environmental site assessment reports or audit reports
concerning the Property.
The Landlord shall construct derfflsing partitions as soon as practicable
and in any event no later than three (3) months after the Closing Date, as
required, to separate the Leased Premises from the Landlord's premises and
premises of other tenants in the Building, by erecting partitions and fencing as
appropriate. Both parties shall agree on such demising partitions and shall not
unreasonably withhold their consent thereto. The Landlord and the Tenant shall
each pay one half of the cost of such dernising partitions.
2.3 COMMON AREAS AND FACILITIES
---------------------------
Subject to the Landlord's security procedures with respect to the Property,
the Landlord hereby grants to the Tenant, its employees, agents, visitors and
other persons transacting business with it, in common with the Landlord, the
right to use the Common Areas and Facilities including the parking lot,
washrooms, cafeteria and shipping area, for their intended purpose.
-3-
<PAGE>
SECTION 3
TERM
----
3.1 INITIAL TERM
------------
The initial term of this Lease shall be a period of two (2) years,
commencing on the Closing Date ("Commencement Date").
3.2 RENEWAL PERIOD
--------------
The Tenant shall have the option to renew the Lease for two (2) successive
periods of one (1) year (the "Renewal Period") each upon the same terms and
conditions as contained herein, except that the Rent payable during the Renewal
Periods shall be as set forth in section 4. 1. The Tenant may exercise each
renewal option by giving written notice to the Landlord at least six (6) months
prior to the end of the Tenn, failing which the option to renew shall be null
and void.
3.3 THE TENANT'S RIGHT OF TERMINATIOM
---------------------------------
Tenant shall have the right to terminate the Lease effective any time on or
after eighteen (18) months after the Closing Date on at least twelve (12) months
prior written notice.
SECTION 4
RENT
----
4.1 RENT
----
The Tenant covenants to pay to the Landlord as Rent for the Leased Premises
during the Initial Term, Five Hundred Thousand Dollars ($500,000) payable in
equal monthly installments of Forty One Thousand, Six Hundred and Sixty Six
Dollars and Sixty Six Cents ($41,666.66) payable in advance on the first day of
each month.
The Rent for each Renewal Period shall be negotiated and agreed upon by the
Landlord and Tenant at the latest seven (7) months before the expiration of the
Term; failing agreement, the Rent for each renewal period shall be equal to Five
Hundred Thousand Dollars ($500,000) payable in equal monthly installments of
Forty One Thousand, Six Hundred and Sixty Six Dollars and Sixty Six Cents
($41,666.66) payable in advance on the first day of each month during each
Renewal Period, plus the same rental rates for the main conference room and
"salle des Robots" as stipulated in section 2.1
-4-
<PAGE>
4.2 PAYMENT OF RENT
---------------
All payments by the Tenant to the Landlord, of whatsoever nature, required
or contemplated by this Lease shall be made when due hereunder, without prior
demand therefor and without any abatement, compensation or deduction whatsoever
(except for any abatement under section I 1 of this Lease), at the office of the
Landlord as set out in section 15.2 or at such other address as the Landlord may
designate, in writing, from time to time to the Tenant.
SECTION 5
USE OF PREMISES
---------------
5.1 PERMITTED USE
-------------
The Tenant covenants to use the Leased Premises only for the purposes of
offices, warehousing, laboratory purpose, and related uses to carry on business
substantially the same as that carried on by the Landlord immediately prior to
the Closing Date.
5.2 COMPLIANCE WITH LAWS
--------------------
Subject to the construction work, repairs and services for which the
Landlord is responsible, as provided hereunder, including without limitation the
construction work, repairs and services mentioned in sections 2.2, 6, 7 and 14,
the Tenant shall, at its expense, promptly comply with and conform to all
Applicable Laws including Environmental Laws affecting the Leased Premises and
the business carried on therein.
5.3 RULES AND REGULATIONS
---------------------
The Landlord shall have the right to make (after prior consultation with the
Tenant) such reasonable rules and regulations as it considers necessary or
desirable related to the operation, maintenance, security or safety in respect
of the Property. Such rules and regulations shall not be amended without the
consent of the Tenant, such consent not to be unreasonably withheld. The Tenant
shall comply, and cause every person over whom it has control to comply, with
such rules and regulations.
SECTION 6
UTILITIES AND SERVICES
----------------------
The Landlord shall, subject to interruption beyond its control, provide and
pern-dt the Tenant to use the electricity, domestic water, sewage disposal and
other utility services serving
-5-
<PAGE>
the Building at no additional cost and provided that the Tenant uses said
services for the purpose for which they are intended.
The Landlord shall heat and air condition the Leased Premises to a
reasonable temperature at the appropriate times of the year.
The Landlord shall consult with and cooperate with the Tenant in respect of
all services provided to the Leased Premises.
Any special services required by the Tenant from the Landlord, such as
office rearrangement and moving of equipment, shall be at Tenant's sole expense.
SECTION 7
MAINTENANCE AND REPAIR
----------------------
7.1 LANDLORD'S OBLIGATIONS
----------------------
Except to the extent the Tenant is responsible therefor as provided in the
Lease, the Landlord shall, at its expense, maintain the Property in a good state
of repair and in compliance with applicable Laws, including Environmental Laws.
Without limiting the generality of the foregoing, the Landlord shall effect all
necessary structural repairs and repairs and maintenance to the roof, the
heating, air conditioning, electrical, plumbing, lighting and sprinkler and
other building systems.
7.2 TENANT'S OBLIGATIONS
--------------------
The Tenant shall, at its expense, maintain all leasehold improvements added
by the Tenant during the Term in the Leased Premises in a good state of repair,
reasonable wear and tear excepted; provided that the Tenant shall be responsible
for any maintenance or repairs caused as a result of the negligence of the
Tenant, its employees, agents or invitees, and provided further that Tenant
shall be responsible for the cost of all interior decorations, fixtures,
carpeting and any improvements in the Leased Premises as may be required by the
Tenant.
SECTION 8
ALTERATIONS
-----------
The Tenant may, at its expense and with the prior written consent of the
Landlord, not to be unreasonably withheld or delayed, make such changes,
alterations and additions in the Leased Premises which it may reasonably require
from time to time for the conduct of its business. At the expiry of the Term,
the Tenant may remove all such changes, additions and leasehold
-6-
<PAGE>
improvements from the Leased Premises, provided that the Tenant shall repair any
damage to the Leased Premises or Building caused by such removal. At the expiry
of the Term, the Landlord shall also have the right (other than with respect to
initial installations and in the event that the Lease is terminated by the
Landlord pursuant to a sale of the Building) to require the Tenant to remove
from the Leased Premises any leasehold improvements and, in such event, the
Tenant shall be obligated, at its expense, to restore the Leased Premises to
their condition at the Commencement Date, reasonable wear and tear, any repairs
arising from the removal on departure of assets purchased from the Landlord that
are in some manner attached or affixed to the Leased Premises (except to the
extent repairs are necessary because of negligence of the Tenant, its employees
or agents effecting such removal), damage by fire and other insured perils
excepted.
SECTION 9
SUBLET AND ASSIGNMENT
---------------------
The Tenant shall not have any right to assign the Lease or sublet all or
any part of the Leased Premises without the Landlord's consent, such consent not
to be unreasonably withheld. However, the Tenant shall have the right to
hypothecate its right in the Lease as security for the fulfillment of its
obligations.
SECTION 10
INSURANCE, LIABILITY
--------------------
10.1 LANDLORD'S INSURANCE
--------------------
The Landlord shall maintain throughout the Term:
(a) "all risks" property insurance upon the Building and all property owned
therein by the Landlord (other than leasehold improvements effected in
respect of the Leased Premises);
(b) comprehensive general liability insurance with a limit of not less than
Five Million Dollars ($5,000,000) per occurrence with respect to injuries
to or death of persons and damage to tangible property; and
(c) broad form boiler and machinery insurance.
The Landlord waives any right of recovery against the Tenant, its employees
and agents for any loss or damage caused by or resulting from the perils to be
insured against under paragraph (a) above and covenants to have its insurers
waive all rights of recovery against the Tenant for any such loss.
-7-
<PAGE>
The insurance described in paragraph (b) above shall name the Tenant as an
additional insured.
The Landlord shall, on request, provide to the Tenant certificates
evidencing the insurance described above.
10.2 TENANT'S INSURANCE
------------------
The Tenant shall maintain throughout the Term:
(a) "all risks" property insurance in respect of all property of the Tenant in
or about the Leased Premises;
(b) comprehensive general liability insurance with a limit of not less than
Five Million Dollars ($5,000,000) per occurrence for its operations with
respect to injuries to or death of persons and damage to tangible property;
and
The Tenant waives any right of recovery against the Landlord, its employees
and agents for any loss or damage caused by or resulting from the perils to be
insured against under paragraph (a) above and covenants to have its insurers
waive all rights of recovery against the Landlord for any such loss.
The insurance described in paragraph (b) above shall name the Landlord as
an additional insured.
The Tenant shall, on request, provide to the Landlord certificates
evidencing the insurance described above.
10.3 LIMITATION OF LIABILITY
-----------------------
Unless caused by the negligence of a party, its employees or agents, or the
inexecution of its obligations hereunder, such party shall not be liable for
(a) any damage to or destruction or loss of the other party, its employees or
agents or any property in the Building or the Leased Premises; or
(b) any bodily injury (including death), personal injury, damages for personal
discomfort sustained by either party, its employees or agents.
In no circumstances (including the negligence of a party, its employees or
agents) shall such party be liable for any indirect or consequential damages
sustained by the other party, its employees, agents or visitors.
-8-
<PAGE>
SECTION 11
DAMAGE OR DESTRUCTION
---------------------
If during the Term, the Building or the Leased Premises shall be damaged by
fire, lightning, tempest, impact of aircraft, acts of God or the Queen's
enemies, riots, insurrections or explosion or other similar cause, the following
provisions shall have effect:
(a) if, in the opinion of the Architect, the Leased Premises are fit for
tenancy in whole, the Lease shall continue in full force and effect without
abatement or diminution of any Rent;
(b) if, in the opinion of the Architect, the Leased Premises are rendered
partly unfit for tenancy, this Lease shall continue in full force and
effect, except that the Rent will abate to the extent the Architect
determines that the Leased Premises cannot reasonably be used for their
intended purposes;
(c) if the Architect determines that the Leased Premises are rendered wholly
unfit for tenancy, this Lease shall continue in full force and effect,
except that the Rent will fully abate to zero;
(d) all abatements will occur from the date of the damage or destruction until
the date that the Leased Premises are delivered to the Tenant fit for the
Tenant's occupancy and the conduct of its business;
(e) the Landlord will commence and proceed diligently to reconstruct, rebuild
or repair any damage to the Building and Leased Premises to meet the
Landlord's base building criteria for the Building which the Landlord may
modify to be consistent with the plans, specifications and design criteria
for the rebuilding of the Building and/or the Leased Premises, chosen by
the Landlord acting reasonably, provided same are at least as high quality
as the original construction;
(f) whether or not the damage to the Leased Premises may have been caused by
the Tenant's negligence or fault, the Tenant shall commence to repair,
rebuild or reconstruct, at its own cost, all Leasehold improvements,
fixtures and equipment in the Leased Premises within fifteen (15) days from
the Landlord's notice that the Landlord has completed its work and the
Tenant shall complete said work with all due diligence;
(g) the Tenant shall not be entitled to any allowance, inducement, payment or
other consideration from the Landlord in connection with the Tenant's work
described in subparagraph (f);
(h) notwithstanding any provision herein to the contrary, if the Building is
totally or partially damaged or destroyed (whether the Leased Premises are
affected or not), and in the Architect's opinion, the damaged or destroyed
portions cannot reasonably be repaired,
-9-
<PAGE>
restored or rebuilt within one hundred and eighty (I 80) days following the
occurrence, the Landlord or the Tenant may, at its option, to be exercised
by written notice to the other party within ninety (90) days following any
such occurrence elect to terrr@inate this Lease, in which case the
following will apply:
(i) if the Leased Premises have been rendered wholly unfit for tenancy,
the termination will take effect from the date of damage or
destruction and all Rent will only apply through to that date;
(ii) if the Leased Premises have been rendered only partly unfit for
tenancy and the Tenant has occupied any part of the Leased Premises
from the date of the damage or destruction, the Lease will terminate
at least sixty (60) days from the Landlord's notice. All unabated
Rent will be adjusted to the date of termination. Rent will abate
from the date of the damage and destruction until the date of
termination to the extent the Leased Premises cannot reasonably be
used for their intended purposes;
(iii) if the Building is totally or partially damaged or destroyed and
neither the Landlord nor the Tenant elects to terminate this Lease,
the Landlord, at its sole cost, shall commence and proceed diligently
to reconstruct, rebuild or repair, as necessary, those portions of
the Building which have been so damaged or destroyed in accordance
with the Landlord's base building criteria for the Building.
SECTION 12
RIGHT OF INSPECTION AND REPAIR
------------------------------
The Tenant agrees to permit the Landlord, its employees or agents, upon
prior notice (except in case of emergency), to enter upon the Leased Premises at
any time and from time to time, for the purposes of (i) inspecting and making
necessary repairs, alterations or improvements to the Leased Premises or to the
Building and (ii) showing the Leased Premises to prospective purchasers or
lessees. The Landlord covenants to act in a reasonable manner and to use all
due diligence in the exercise of its rights hereunder. The Tenant shall not be
entitled to any compensation for any inconvenience, nuisance or discomfort
occasioned thereby unless the Tenant is prevented or materially hindered from
carrying on its business in the Leased Premises.
-10-
<PAGE>
SECTION 13
DEFAULT
-------
If the Tenant shall be in default of any of its covenants hereunder, the
Landlord shall give to the Tenant notice in writing stating that the said
default is to be remedied and that if such default is not remedied by the Tenant
within thirty (30) days after the receipt of such notice, or such longer period
as may be reasonably necessary in view of the nature of the default, the
Landlord may, at its option, enter either into and upon the said Leased Premises
or any part thereof in the name of the whole, and this Lease shall be
terminated, or the Landlord itself may take such steps and do or cause to be
done such things as may be necessary to remedy and correct such defaults and may
thereupon charge its total reasonable costs and expenses incurred in respect
thereof to the Tenant who hereby covenants and agrees to pay the same forthwith,
and the Tenant hereby covenants that any and all such costs and expenses
incurred by the Landlord and unpaid by the Tenant shall be recoverable by the
Landlord as if the same were and in the same manner as rental reserved and in
arrears under the terms of this Lease.
SECTION 14
SPECIAL PROVISIONS
------------------
14.1 PARKING
-------
The Tenant shall have access to and use of, in common with other occupants
of the Building, the parking areas associated with the Building.
The Landlord shall cooperate with the Tenant to provide an appropriate
number of reserved and visitor parking spaces, taking into account the number of
reserved parking spaces used by the Business at the Closing Date.
14.2 SECURITY
--------
The Tenant shall comply with security measures in place for the Building.
The Landlord shall consult with Tenant in the establishment or changes to such
requirements for the Building including the Leased Premises, provided that any
special requirements of the Landlord or the Tenant shall be at such party's
costs.
14.3 SHIPPING AND RECEIVING
----------------------
It is acknowledged that Tenant will receive shipping and receiving services
from Siecor Corp. for such period of time as it occupies the premises leased in
the Building; after such time, the Landlord and Tenant shall negotiate mutually
satisfactory arrangements.
-11-
<PAGE>
14.4 SIGNAGE
-------
The Tenant shall have the right to install, at its own expense, its signage
at the entrance of the Leased Premises, subject to the Landlord's reasonable
approval.
14.5 CAFETERIA
---------
The Tenant's employees and visitors shall have the right to use the
cafeteria during its normal business hours.
14.6 JANITORIAL SERVICES
-------------------
The Landlord, at its sole cost, shall provide janitorial services to the
Building and the Leased Premises. Such services shall be provided irrespective
of whether Landlord shall vacate the Building, provided that the Landlord shall
discuss with the Tenant in a timely manner and before it vacates the Building,
the provision of such services prior to vacating the Building.
14.7 MAIL, COURIER SERVICE
---------------------
The Landlord shall provide, at its sole cost, receiving and delivery
services for incoming mail and courier to the Building and the Leased Premises.
Such services shall be provided irrespective of whether the Landlord shall
vacate the Building, provided that the Landlord shall discuss with the Tenant in
a timely manner and before it vacates the Building, the provision of such
services prior to vacating the Building. The Tenant shall provide for itself as
required outgoing mail and courier service.
14.8 HVAC. ELECTRICAL EQUIPMENT
---------------------------
The Landlord shall be responsible, at its sole expense, for the operation,
maintenance and repair of all HVAC, mechanical and electrical equipment in or
serving the Building. Such services shall be provided irrespective of whether
the Landlord shall vacate the Building, provided that the Landlord shall discuss
with the Tenant in a timely manner, the provision of such services prior to
vacating the Building.
14.9 OTHER SERVICES
--------------
The Landlord shall provide, at its sole cost, building and land maintenance
and repair services, as well as main lobby reception, 24 hour security and
adequate elevator services and access thereto in respect of the Building and the
Leased Premises. Such services shall be provided irrespective of whether the
Landlord shall vacate the Building, provided that the Landlord shall discuss
with the Tenant in a timely manner and before it vacates the Building, the
provision of such services prior to vacating the Building.
-12-
<PAGE>
14.10 LEVEL AND QUALITY OF SERVICES
-----------------------------
The level and quality of services to be provided by Landlord hereunder
shall be substantially the same as existing immediately prior to the Closing
Date.
14.11 ENVIRONMENT
-----------
The Landlord shall remain responsible for any and all damages, claims,
complaints, orders or notices resulting or arising from any environmental state
or condition of the Property not caused by or on behalf of the Tenant
notwithstanding the Tenant's use of the Leased Premises.
14.12 SALE OF PROPERTY
----------------
This Lease may be terminated by the Landlord effective any time on or
after the expiry of the Initial Term upon twelve (12) months prior written
notice in the event that the Landlord sells the Building in an arm's length
transaction to a third party. The Landlord shall give the Tenant reasonable
notice (not less than 72 hours) of any visit to the Leased Premises by a
potential purchaser or prospective tenant, including the identity of the
prospective purchaser or tenant if known to the Landlord.
One of the conditions of any sale of the Property by the Landlord shall be
that the purchaser of the Property assumes the obligations of the Landlord
hereunder and agrees to be bound by this Lease as if such purchaser had been a
party to this Lease.
14.13 NON-DISCRIMINATION
------------------
The Landlord shall provide all facilities and services described herein in
a reasonable and non-discriminatory manner.
SECTION 15
MISCELLANEOUS
-------------
15.1 WAIVER
------
The failure of the Landlord or the Tenant to insist upon the strict
performance of any covenants and conditions hereof shall not operate as a waiver
of the Landlord's or the Tenant's rights hereunder in respect of any continuing
or subsequent nonperformance and no waiver shall be inferred from or implied by
anything done or omitted by the Landlord or the Tenant, save only an express
waiver in writing.
15.2 NOTICES
-------
-13-
<PAGE>
All demands, notices or communications and reports provided for in this
Lease will be in writing and will be either sent by facsimile with confirmation
to the number specified below or personally delivered or sent by reputable
overnight courier service (delivery charges prepaid) to the other party at the
address specified below, or at such address, to the attention of such other
person, and with such other copy, as the recipient party has specified by prior
written notice to the sending party pursuant to the provisions of this section
15.
If to the Landlord at:
Northern Telecom Limited
3 Robert Speck Parkway
Mississauga, Ontario, Canada L4Z 3C8
Telecopy: (905) 566-3457
Attn: A. J. Lafleur,
Vice President and Associate General Counsel
with copies, which do not constitute notice, to:
- ------------------------------------------------
Northern Telecom Limited
2920 Matheson Blvd. East.
Mississauga, Ontario, Canada L4W 4M7
Telecopy: (905) 238-7096
Attn: Martin A. Macdonald
Director of Real Estate
If to the Tenant at:
Nordx/CDT, Inc.
661 Andersen Drive
Foster Plaza 7
Pittsburgh, PA 15220
Telecopy: (412) 937-9690
Attn: Paul M. Olson
Chief Executive Officer
with copies, which do not constitute notice, to:
- ------------------------------------------------
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022-4675
Telcopy: (212) 446-4900
Attn: Charles B. Fromm
-14-
<PAGE>
and
Desjardins Ducharme Stein Monast
600 de la Gauchetiere rue
Suite 2400
Montreal, Quebec 113B 4L8
Telecopy: (514) 878-9092
Attn: Paul Marcotte
Any such demand, notice, communication or report will be deemed to have
been given pursuant to this Lease when delivered personally or by means other
than facsimile or overnight courier, when confirmed if by facsimile or on the
business day after deposit with a reputable overnight courier service, as the
case may be.
In the event the Landlord gives to the Tenant notice in writing of any
default under the Lease, the Landlord shall also give notice of such default to
any lender to whom the Tenant has requested, in writing, that such notice of
default be given.
15.3 ENTIRE AGREEMENT
----------------
This Lease and the documents it refers to constitute the entire agreement
between the Landlord and the Tenant with respect to the Leased Premises and may
not be modified except by subsequent agreement in writing duly signed by the
Landlord and the Tenant. Neither the Landlord nor the Tenant shall be bound by
any representation, warranty, promise or agreement not contained in this Lease
or in the other documents it refers to. For greater certainty, this Lease does
not in any way affect the obligations of the Landlord under the Asset Purchase
Agreement.
15.4 FORCE MAJEURE
-------------
Except as provided in section I 1, if and to the extent that any party
shall be prevented, delayed or restricted by reason of an act of God, strikes or
other labour disputes, or any other cause beyond the reasonable control of the
party affected thereby, in the fulfillment of any obligation hereunder, then
such party shall be deemed not to be in default in the performance of such
covenant or obligation and any period necessary for the performance of such
obligation shall be extended accordingly, and the Tenant shall not be entitled
to compensation for any loss, inconvenience, nuisance or discomfort thereby
occasioned, provided that in no event will the Tenant be relieved of its
obligation to pay Rent as it becomes due.
15.5 HEADINGS
--------
The headings used in this Lease are for purposes of reference only and
will not affect the meaning or interpretation of any provisions of this Lease.
-15-
<PAGE>
15.6 INTEREST ON ARREARS
-------------------
If the Tenant fails to pay Rent when due, the Tenant shall pay interest on
the unpaid amount from the due date until the date paid at the annual rate equal
to The Royal Bank of Canada's reference rate of interest then in effect for
commercial loans in Canada and commonly referred to by such bank as its Canadian
"prime rate", plus two percent (2%), without prejudice to and in addition to any
other remedy available to the Landlord under this Lease or at law.
15.7 HOLDING OVER
------------
If at the expiration or earlier ten-nination of the Term, the Tenant shall
remain in possession without any further written agreement it shall be as a
monthly tenant only. In such event, the Rent payable for each month thereafter
shall be equal to one hundred and fifty percent (150%) of the Rent payable for
the month immediately prior to the expiration of the Term, and all other terms
and conditions of this Lease shall remain the same.
15.8 REGISTRATION
------------
The parties hereby agree a short form of this Lease shall be executed
between them for purposes of registration. In the event of a conflict between
the terms of this Lease and the term of the said short form of agreement, the
terrns of this Lease shall prevail.
15.9 SUBORDINATION
-------------
One of the conditions of any hypothec granted by the Landlord shall be
that the holder of such hypothec agrees not to disturb the enjoyment and
occupancy of the Leased Premises by the Tenant (or its authorized successors),
as long as the Tenant (or its authorized successors) complies with all
conditions, obligations and agreements hereof.
15.10 GOVERNING LAW
-------------
This Lease shall governed by and construed in accordance with the laws of
the Province of Quebec and the laws of Canada applicable therein.
15.11 ENGLISH LANGUAGE
----------------
The parties have requested that this Lease be prepared in the English
language. Les parties ont demands que la pr6sente convention de bail soit
r6dig6e en anglais.
-16-
<PAGE>
IN WITNESS WHEREOF the parties have executed this Agreement of Lease as of the
date first written above.
NORTHERN TELECOM LIMITED
Per: /s/Anthony J. Lafleur
---------------------
Anthony J. Lafleur
Vice-President and Associate
General Counsel
Per: /s/Peter G. Kastner
-------------------
Peter G. Kastner
Assistant Vice-President
Financial Planning & Analysis
NORDX/CDT, INC.
(FORMERLY CABLE DESIGN TECHNOLOGIES
(CDT) CANADA INC.)
Per: /s/Kenneth O. Hale
------------------
Kenneth O. Hale
Vice-President
-17-
<PAGE>
EXHIBIT 10.22
___________________________________________________
LEASE
___________________________________________________
LANDLORD: NORDX/CDT, INC.
TENANT: NORTHERN TELECOM LIMITED
PREMISES: 700 Gardiners Road, Kingston, Ontario
<PAGE>
AGREEMENT OF LEASE made as of the 2nd day of February l996
Between: NORDX/CDT, INC., a Canadian corporation
(hereinafter called the "Landlord")
And: NORTHERN TELECOM LIMITED, a Canadian corporation
(hereinafter called the "Tenant")
SECTION I
DEFINITIONS
-----------
In this Lease,
"APPLICABLE LAWS" means all statutes, laws, by-laws, regulations, ordinances and
requirements of governmental or other public authorities having jurisdiction and
any applicable regulation or order of the Canadian Fire Underwriters'
Association or any body having similar functions, or of any fire insurance
company by which the Landlord or the Tenant may be insured, and all amendments
thereto at any time and from time to time in force which are applicable in the
circumstances;
"ASSET PURCHASE AGREEMENT" means the asset purchase Agreement dated December 19,
1995 among Cable Design Technologies Corporation, the Landlord (formerly Cable
Design Technologies (CDT) Canada Inc.) and the Tenant;
"ARCHITECT" means the third party architect or engineer named by the Landlord
from time to time;
"ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement by and among the
parties and Cable Design Technologies Corporation, made as of December 19, 1995;
"BASIC RENT" means the rent payable by the Tenant pursuant to section 4.1;
"BUILDING" means the building and all improvements, facilities and appurtenances
situate on the Lands, municipally known as 700 Gardiners Road, Kingston,
Ontario, and having a gross rentable area of approximately five hundred and
twenty-eight thousand (528,000) square feet;
"BUSINESS" shall have the same meaning as in the Asset Purchase Agreement but
restricted to the Business carried on or about the Property;
"CLOSING DATE" shall have the same meaning as in the Asset Purchase Agreement;
"COMMENCEMENT DATE" shall have the meaning ascribed thereto in section 3.1;
"COMMON AREAS AND FACILITIES" means those common areas and facilities which
serve the Building including, without limitation, the landscaped areas, parking
areas, common corridors, halls, stairways and passageways, common lavatories,
cafeteria area and such other areas and facilities which are designated from
time to time by the Landlord (but in a way not to obstruct Tenant's use of the
Leased Premises) for
2
<PAGE>
the common use and enjoyment or benefit of the Tenant and the Landlord, their
employees, agents and invitees;
"ENVIRONMENTAL LAWS" means all applicable foreign, federal, provincial,
municipal or local statutes, regulations or by-laws, common law, and orders of
any Government Entity, to the extent relating to the Environment but in each
case solely to the extent having the force of law;
"INITIAL TERM" means the period specified in section 3.1;
"LANDS" means the lands owned by the Landlord on which the Building is situated,
being those Parts of Lots 10, 11, and 12, Concession 2, in the Township of
Kingston, in the County of Frontenac, designated as Part I on Reference Plan
13R-13052;
"LEASE" means this lease as it may be amended from time in accordance with the
provisions hereof;
"LEASED PREMISES" means the premises leased to the Tenant under this Lease, and
described in section 2.1;
"PROPERTY" means the Lands and Building;
"RENT" means Basic Rent; and
"TERM" means the Initial Term as it may be extended or renewed by the Tenant or
earlier terminated in accordance with the provisions hereof.
Capitalized terms used herein which are not defined in this Lease but which
are defined in the Asset Purchase Agreement shall have the same meaning as in
the Asset Purchase Agreement.
SECTION 2
LEASED PREMISES
---------------
2.1 DEMISE OF LEASED PREMISES
-------------------------
The Landlord hereby leases to the Tenant hereby accepting, upon the terms
and conditions herein contained, that portion of the Building shown cross-
hatched on the floor plan attached as Schedule A hereto (the "Leased Premises")
having a gross rentable area of sixty one thousand, four hundred (61,400) square
feet, it being acknowledged that such rentable area includes the Tenant's
proportionate share of the Common Areas and Facilities.
2.2 SEPARATION OF LEASED PREMISES, CONDITION
----------------------------------------
The Tenant acknowledges having examined the Building and the Leased
Premises and accepts same in their actual "as is" condition.
The parties acknowledge that the Leased Premises are currently separated
from the remainder of the premises in the Building.
3
<PAGE>
2.3 COMMON AREAS AND FACILITIES
---------------------------
Subject to the Landlord's security procedures, the Landlord hereby grants to
the Tenant, its employees, agents, visitors and other persons transacting
business with it, in common with Landlord, the right to use the Common Areas and
Facilities including the parking lot, washrooms, cafeteria and shipping area,
for their intended purpose.
SECTION 3
TERM
----
3.1 INITIAL TERM
------------
The initial term of this Lease (the "Initial Term") shall commence on the
day following the Closing Date ("Commencement Date") and terminate on June 30,
1996.
3.2 RENEWAL TERMS
-------------
The Tenant shall have the option to renew the Lease for three (3) successive
periods of one (1) month each upon the same terms and conditions as contained
herein, except that the Basic Rent shall be as set forth in section 4. 1. The
Tenant may exercise each renewal option by giving written notice to the Landlord
at least thirty (30) days prior to the beginning of each Renewal Tenn, failing
which the option to renew shall be null and void.
SECTION 4
RENT
----
4.1 RENT
----
The Tenant covenants to pay to the Landlord as rent (the "Basic Rent") for
the Leased Premises during the Initial Term, Seven Hundred and Seventy Six
Thousand Dollars ($776,000.00) per annum, in equal monthly installments of Sixty
Four Thousand, Six Hundred and Sixty Six Dollars and Sixty Seven Cents
($64,666.67) payable in advance on the first day of each month during the
Initial Term.
The Basic Rent for each Renewal Period shall be Sixty Four Thousand, Six
Hundred and Sixty Six Dollars and Sixty Seven Cents ($64,666.67) payable in
advance on the first day of the month during each Renewal Period.
4.2 PAYMENT OF RENT
---------------
All payments by the Tenant to the Landlord, of whatsoever nature, required
or contemplated by this Lease shall be made when due hereunder, without prior
demand therefor and without any abatement, compensation, set-off or deduction
whatsoever (except for any abatement under section 1 1 of this Lease), at the
office of the Landlord as set out in section 15.2 or at such other address as
the Landlord may designate from time to time to the Tenant and in lawful money
of Canada.
4
<PAGE>
SECTION 5
USE OF PREMISES
---------------
5.1 PERMITTED USE
-------------
The Tenant covenants to use the Leased Premises only for the purposes of
offices, warehousing, manufacturing, and related uses to carry on business
substantially the same as that carried on by the Tenant immediately prior to the
Commencement Date.
5.2 COMPLIANCE WITH LAWS
--------------------
The Tenant shall, at its expense, promptly comply with and conform to all
Applicable Laws including Environmental Laws affecting the Leased Premises and
the business carried on therein.
5.3 RULES AND REGULATIONS
---------------------
The Landlord shall have the right to make (after prior consultation with the
Tenant) such reasonable rules and regulations as it considers necessary or
desirable related to the operation, maintenance, security or safety in respect
of Building and Lands including the Leased Premises. Such rules and regulations
shall not be amended without the consent of the Tenant, such consent not to be
unreasonably withheld. The Tenant shall comply, and cause every person over
whom it has control to comply, with such rules and regulations.
SECTION 6
UTILITIES AND SERVICES
----------------------
The Landlord shall, subject to interruption beyond its control, provide and
permit the Tenant to use the electricity, domestic water, sewage disposal and
other utility services serving the Building, at no additional cost and provided
that the Tenant uses said services for the purpose for which they are intended.
The Landlord shall heat and air condition the Leased Premises to a
reasonable temperature at the appropriate times of the year.
The Landlord shall consult with and cooperate with the Tenant in respect of
all services provided to the Leased Premises.
SECTION 7
MAINTENANCE AND REPAIR
----------------------
7.1 LANDLORD'S OBLIGATIONS
----------------------
Except to the extent the Tenant is responsible therefor as provided in the
Lease or the Asset Purchase Agreement, the Landlord shall, at its expense and in
compliance with Applicable Laws including Environmental Laws, maintain the Lands
and Building including the Leased Premises and all Common Areas and Facilities
in a good state of repair. Without limiting the generality of the foregoing,
the
5
<PAGE>
Landlord shall effect all necessary structural repairs and repairs and
maintenance to the roof, the heating, air conditioning, electrical, plumbing and
sprinkler systems.
7.2 TENANT'S OBLIGATIONS
--------------------
The Tenant shall, at its expense, maintain the Leased Premises and all
leasehold improvements added by the Tenant during the Term in the Leased
Premises in a good state of repair, reasonable wear and tear, damage by fire and
other insured perils excepted; provided that the Tenant shall be responsible for
any maintenance or repairs to the Lands or the Building caused as a result of
the acts or negligence of the Tenant, its employees, agents or invitees, and
provided further that Tenant shall be responsible for the cost of all interior
decorations, fixtures, carpeting and any improvements in the Leased Premises as
may be required by the Tenant.
SECTION 8
ALTERATIONS
-----------
The Tenant may, at its sole expense, and with the prior written consent of
the Landlord, not to be unreasonably withheld or delayed, make such changes,
alterations and additions in the Leased Premises which it may reasonably require
from time to time for the conduct of its business, provided that such work is
performed in a good and workmanlike manner, subject to the reasonable regulation
and supervision of the Landlord and at such time or times, as required by the
Landlord, acting reasonably, and in any event in such a manner so as to minimize
any disruption to the Landlord's operations at the Building. At the expiry of
the Term, the Tenant will remove all the Tenant's assets, including, without
limitation, leasehold improvements and the Tenant shall restore the Leased
Premises at its sole cost and expense to their condition at the Commencement
Date, reasonable wear and tear excepted.
SECTION 9
SUBLET AND ASSIGNMENT
---------------------
The Tenant shall not have any right to assign the Lease or sublet all or
any part of the Leased Premises.
SECTION 10
INSURANCE, LIABILITY
--------------------
10.1 LANDLORD'S INSURANCE
--------------------
The Landlord shall maintain throughout the Term:
(a) "all risks" property insurance upon the Building and all property owned
therein by the Landlord (other than leasehold improvements effected in
respect of the Leased Premises);
6
<PAGE>
(b) comprehensive general liability insurance with a limit of not less than
Five Million Dollars ($5,000,000) per occurrence with respect to injuries
to or death of persons and damage to tangible property; and
(c) broad form boiler and machinery insurance.
The Landlord waives any right of recovery against the Tenant, its employees
and agents for any loss or damage caused by or resulting from the perils to be
insured against under paragraph (a) above and covenants to have its insurers
waive all rights of recovery against the Tenant for any such loss.
10.2 Tenant's Insurance
The Tenant shall maintain throughout the Term:
(a) "all risks" property insurance in respect of all property of the Tenant,
moveable and immovable, located in or about the Leased Premises; and
(b) comprehensive general liability insurance with a limit of not less than
Five Million Dollars ($5,000,000) per occurrence for its operations with
respect to injuries to or death of persons and damage to tangible property.
The Tenant waives any right of recovery against the Landlord, its employees
and agents for any loss or damage caused by or resulting from the perils to be
insured against under paragraph (a) above and covenants to have its insurers
waive all rights of recovery against the Landlord for any such loss.
The insurance described in paragraph (b) above shall name the Landlord as
an additional insured.
The Tenant shall, on request, provide to the Landlord certificates
evidencing the insurance described above.
10.3 LIMITATION OF LIABILITY
-----------------------
Unless caused by the negligence of a party, its employees or agents, such
party shall not be liable for
(a) any damage to or destruction or loss of the other party, its employees or
agents or any property in the Building or the Leased Premises; or
(b) any bodily injury (including death), personal injury, damages for personal
discomfort sustained by either party, its employees or agents.
In no circumstances (including negligence of a party, its employees or
agents) shall such party be liable for any indirect or consequential damages
sustained by the other party, its employees, agents or visitors.
7
<PAGE>
SECTION 11
DAMAGE OR DESTRUCTION
---------------------
If during the Term, the Building or the Leased Premises shall be damaged by
fire, lightning, tempest, impact of aircraft, acts of God or the Queen's
enemies, riots, insurrections or explosion or other similar cause, the following
provisions shall have effect:
(a) if, in the opinion of the Architect, the Leased Premises are fit for
tenancy in whole, the Lease shall continue in full force and effect without
abatement or diminution of any Rent, provided that the Landlord will have
no obligation to reconstruct, rebuild or repair any damage to the Building;
(b) if, in the opinion of the Architect, the Leased Premises are rendered
partly unfit for tenancy, this Lease shall continue in full force and
effect, except that the Rent will abate to the extent the Architect
determines that the Leased Premises cannot reasonably be used for their
intended purposes, provided that the Landlord will have no obligation to
reconstruct, rebuild or repair any damage to the Building;
(c) if the Landlord determines that the Leased Premises are rendered wholly
unfit for tenancy, this Lease shall, unless otherwise agreed between the
parties, be terminated with effect from the date of damage or destruction.
SECTION 12
RIGHT OF INSPECTION AND REPAIR
------------------------------
The Tenant agrees to permit the Landlord, its employees or agents, upon
prior notice (except in case of emergency), to enter upon the Leased Premises at
any time and from time to time, for the purposes of (i) inspecting and making
necessary repairs, alterations or improvements to the Leased Premises or to the
Building and (ii) showing the Leased Premises to prospective purchasers or
lessees. The Landlord covenants to act in a reasonable manner and to use all
due diligence in the exercise of its rights hereunder. The Tenant shall not be
entitled to any compensation for any inconvenience, nuisance or discomfort
occasioned thereby unless the Tenant is prevented from carrying on its business
in the Leased Premises.
SECTION 13
DEFAULT
-------
If the Tenant shall be in default of any of its covenants hereunder, the
Landlord shall give to the Tenant notice in writing stating that the said
default is to be remedied and that if such default is not remedied by the Tenant
within thirty (30) days after the receipt of such notice, or such longer period
as may be reasonably necessary in view of the nature of the default, the
Landlord may, at its option, enter either into and upon the said Leased Premises
or any part thereof in the name of the whole, and this Lease shall be
terminated, or the Landlord itself may take such steps and do or cause to be
done such things as may be necessary to remedy and correct such defaults and may
thereupon charge its total reasonable costs and expenses incurred in respect
thereof to the Tenant who hereby covenants and agrees to pay the same forthwith
and the Tenant hereby covenants that any and all such costs and expenses
incurred by the Landlord and unpaid by the Tenant shall be recoverable by the
Landlord as if the same were and in the
8
<PAGE>
same manner as rental reserved and in arrears under the terms of this Lease.
SECTION 14
SPECIAL PROVISIONS
------------------
14.1 PARKING
-------
The Tenant shall have access to and use of, in common with other occupants
of the Building, the parking areas associated with the Building.
The Landlord shall cooperate with the Tenant to provide an appropriate
number of reserved and visitor parking spaces.
14.2 SECURITY
--------
The Tenant shall comply with security measures in place for the Building.
The Landlord shall consult with Tenant in the establishment or changes to such
requirements for the Building including the Leased Premises, provided that any
special requirements of the Landlord or the Tenant shall be at such party's
costs.
14.3 SHIPPING AND RECEIVING
----------------------
During the Term, the Tenant shall have the non-exclusive right to use the
shipping and receiving facilities located in the Building. The Landlord shall
cooperate with the Tenant so as to provide satisfactory shipping and receiving
services to the Leased Premises. The Tenant shall use the shipping and
receiving facilities in such a manner so as to minimize any disruption to the
Landlord's operations at the Building.
14.4 SIGNAGE
-------
The Tenant shall have the right to install, at its own expense, its
signage at the entrance of the Leased Premises, subject to the Landlord's
reasonable approval.
14.5 CAFETERIA
---------
The Tenant's employees and visitors shall have the use of the cafeteria
during its normal business hours. The Tenant shall pay its proportionate share
(based on headcount) of any subsidies granted by the Landlord to the cafeteria
operator, within ten (10) days of receipt of an invoice therefor from the
Landlord.
14.6 JANITORIAL SERVICES
-------------------
The Landlord shall provide janitorial services to the Building and the
Leased Premises, provided that any special requirements of the Tenant shall be
at its sole cost.
9
<PAGE>
14.7 MAIL, COURIER SERVICE
---------------------
The Landlord shall provide receiving and sorting services for incoming
mail and courier to the Building and Leased Premises. The Tenant shall provide
for itself as required outgoing mail and courier service.
14.8 HVAC, ELECTRICAL EQUIPMENT
--------------------------
The Landlord shall be responsible for the operation, maintenance and
repair of all HVAC, mechanical and electrical equipment in or serving the
Building. Any such equipment installed by the Tenant after the Commencement Date
shall be the Tenant's responsibility.
14.9 OTHER SERVICES
--------------
The Landlord shall provide building and land maintenance and repair
services, as well as main lobby reception and 24 hour security services in
respect of the Building and the Leased Premises. The Tenant shall provide the
following services for itself as required: (i) shipping and receiving, (ii)
telephone service and maintenance; and (iii) medical services.
SECTION 15
MISCELLANEOUS
-------------
15.1 WAIVER
------
The failure of the Landlord or the Tenant to insist upon the strict
performance of any covenants and conditions hereof shall not operate as a waiver
of the Landlord's or the Tenant's rights hereunder in respect of any continuing
or subsequent nonperformance and no waiver shall be inferred from or implied by
anything done or omitted by the Landlord or the Tenant, save only an express
waiver in writing.
15.2 NOTICES
-------
All demands, notices or communications and reports provided for in this
Lease will be in writing and will be either sent by facsimile with confirmation
to the number specified below or personally delivered or sent by reputable
overnight courier service (delivery charges prepaid) to the other party at the
address specified below, or at such address, to the attention of such other
person, and with such other copy, as the recipient party has specified by prior
written notice to the sending party pursuant to the provisions of this section
15.2.
If to Tenant at:
Northern Telecom United
3 Robert Speck Parkway
Mississauga, Ontario, Canada L4Z 3C8
Telecopy: (905) 566-3457
Attn: A. J. Lafleur,
Vice President and Associate General Counsel
10
<PAGE>
with copies, which do not constitute notice, to:
- -----------------------------------------------
Northern Telecom Limited
2920 Matheson Blvd. East.
Mississauga, Ontario, Canada L4W 4M7
Telecopy: (905) 238-7096
Attn: Martin A. Macdonald
Director of Real Estate
If to Landlord at:
Cable Design Technologies Corporation
661 Andersen Drive, Foster Plaza 7
Pittsburgh, PA 15220
Telecopy: (412) 937-9690
Attn: Paul M. Olson
Chief Executive Officer
and
Nordx/CDT, Inc.
700 Gardiners Road
Kingston, Ontario
K7M 3Y1
with copies, which do not constitute notice, to:
- -----------------------------------------------
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022-4675
Telecopy: (212) 446-4900
Attn: Charles B. Fromm
Any such demand, notice, communication or report will be deemed to have
been given pursuant to this Agreement when delivered personally or by means
other than facsimile or overnight courier, when confirmed if by facsimile or on
the business day after deposit with a reputable overnight courier service, as
the case may be.
15.3. ENTIRE AGREEMENT
----------------
This Lease constitutes the entire agreement between the Landlord and the
Tenant with respect to the Leased Premises and may not be modified except by
subsequent agreement in writing duly signed by the Landlord and the Tenant.
Neither the Landlord nor the Tenant shall be bound by any representation,
warranty, promise or agreement not contained in this Lease.
15.4 FORCE MAJEURE
-------------
Except as provided in section I 1, if and to the extent that any party
shall be prevented, delayed or restricted by reason of an act of God, strikes or
other labour disputes, or any other cause beyond the
11
<PAGE>
reasonable control of the party affected thereby, in the fulfillment of any
obligation hereunder, then such party shall be deemed not to be in default in
the performance of such covenant or obligation and any period necessary for the
performance of such obligation shall be extended accordingly, and the Tenant
shall not be entitled to compensation for any loss, inconvenience, nuisance or
discomfort thereby occasioned, provided that in no event will the Tenant be
relieved of its obligation to pay Rent as it becomes due.
15.5 HEADINGS
--------
The headings used in this Lease are for purposes of reference only and will
not affect the meaning or interpretation of any provisions of this Lease.
15.6 INTEREST ON ARREARS
-------------------
If the Tenant fails to pay Rent when due, the Tenant shall pay interest on
the unpaid amount from the due date until the date paid at the annual rate equal
to The Royal Bank of Canada's reference rate of interest then in effect for
commercial loans in Canada and commonly referred to by such bank as its Canadian
"prime rate", plus two percent (2%), without prejudice to and in addition to any
other remedy available to the Landlord under this Lease or at law.
15.7 HOLDING OVER
------------
If at the expiration or earlier termination of the Term, the Tenant shall
remain in possession without any further written agreement it shall be as a
monthly tenant only. In such event, the Rent payable for each month thereafter
shall be equal to one hundred and fifty percent (150%) of the Rent payable for
the month immediately prior to the expiration of the Term, and all other terms
and conditions of this Lease shall remain the same.
15.8 GOVERNING LAW
-------------
This Lease shall be governed by and construed in accordance with the laws
of the Province of Ontario and the laws of Canada applicable therein.
12
<PAGE>
IN WITNESS WHEREOF the parties have executed this Agreement of Lease as of the
date first written above.
NORTHERN TELECOM LIMITED
Per: /s/Anthony J. Lafleur
--------------------------
Anthony J. Lafleur
Vice-President and Associate
General Counsel
Per: /s/Peter G. Kastner
--------------------------
Peter G. Kastner
Assistant Vice-President
Financial Planning & Analysis
NORDX/CDT, INC. (FORMERLY CABLE DESIGN
TECHNOLOGIES (CDT) CANADA INC.)
Per: /s/Kenneth O. Hale
--------------------------
Kenneth O. Hale
Vice-President
13
<PAGE>
EXHIBIT 10.23
1996 AMENDMENT OF LEASE
-----------------------
This 1996 Amendment of Lease dated as of September 3, 1996 between Stephen
C. Rice and H. Brune Levering, as Trustees of 9 Mohawk Drive Realty Trust
("Landlord") and Cable Design Technologies Inc. "CDT"), formerly known as
Intercole Inc. and doing business as Mohawk Wire and Cable Corporation
("Tenant").
W I T N E S S E T H:
WHEREAS, Landlord and Mohawk Wire and Cable Corporation entered into a
lease dated March 24, 1986 (the "Lease") as amended by Notice of Amendment to
Lease dated July 20, 1989 wherein Landlord leased to Tenant the premises in
Leominster, Massachusetts consisting of 9.66 acres of land (the "Land") more
particularly described in Exhibit "Legal Description" attached hereto and the
---------------------------
118,440 square foot building (the "Building") located thereon (the Land and
Building are collectively referred to as the "Property"); and
WHEREAS, pursuant to that certain Amendment of Lease dated August 18, 1993
between Landlord and Tenant, and that certain Confirmatory Amendment of Lease
dated as of December 1, 1993 between Landlord and Tenant, Landlord constructed
two additions adding a total of 40,000 square feet to the Building (the Building
with said two additions being referred to herein as the "1994 Building"); and
WHEREAS, the parties desire to further expand the Building by Landlord's
construction of a third addition comprising 42,880 square feet (the "Addition"),
to add the Addition to the Property demised under the Lease, and to modify the
Base Rent, Lease Term and certain other terms of the Lease;
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which the parties hereby acknowledge, the parties agree as follows:
1. Landlord shall commence construction of the Addition promptly upon
completion of the closing of the financing for the same. Landlord anticipates
that construction shall commence on or about September 15, 1996 but in no event
(except by reason of force majeure) shall construction commence later than
September 30, 1996.
2. Landlord shall construct the Addition (the "Work") substantially in
accordance with the plans and specifications referenced in Exhibit "Addition
-----------------
Plans and Specifications" attached hereto. The Work contemplated by the
- -------------------------
Addition Plans and Specifications shall be performed in a good and workmanlike
<PAGE>
manner using new materials and in compliance with all laws, ordinances and
regulations (including without limitation applicable building and zoning codes).
Landlord anticipates that said construction shall be completed within five
months of the commencement thereof. Landlord shall use commercially reasonable
best efforts to complete said construction within said five-month period.
3. Landlord shall have the right of access to the Property to perform the
construction of the Addition (including, without limitation, the right to take
all material into and upon the Property that may be required to complete the
Work). Landlord may, upon reasonable advance notice, temporarily use discrete
portions of the Property to the extent reasonably necessary to perform the Work
or to ensure the safety of Tenant's personnel and may, from time to time, but
only when reasonably necessary and not less than 24 hours prior notice to
Tenant, temporarily stop the supply of certain utilities and services referenced
in Section 4.03 of the Lease; provided, however, Landlord shall not unreasonably
interfere with the normal conduct of Tenant's business and Tenant's use and
occupancy of the Property. Tenant shall reasonably cooperate with Landlord in
order to permit the Work to proceed without delays or interference. In
determining the extent of the Landlord's aforementioned access to the Property
and Tenant's obligation to cooperate therewith, due regard shall be given to the
nature and scope of the Work and that such work is expressly contemplated by the
parties hereto.
4. Effective upon the earlier of "substantial completion" of the Addition
or the use and occupance thereof by Tenant for business purposes (said earlier
date being referred to herein as the "Addition Completion Date"), the Lease
shall be deemed amended as follows, without the necessity of any further
amendment thereof:
A. The figure "158,440" is deleted from Section 1.04 and the figure
"201,320" is substituted therefor.
B. Section 1.05 is deleted and there is substituted therefor the
following:
"Section 1.05 LEASE TERM: The period (sometimes referred to herein
as the "Original Term") commencing on March 24, 1986 and ending on the day
preceding the tenth anniversary of the Addition Completion Date (as defined
in the 1996 Amendment of Lease), subject to Tenant's Options to Extend as
set forth in this Lease."
C. Subparagraph (a) of Section 1.13 is deleted and there is substituted
therefor the following:
-2-
<PAGE>
"(a) BASE RENT (being the total of (1) and (2) below:
(1) For the space included in the 1994 Building: Forty-Four Thousand
-------------------------------------------
Two Hundred Thirty-One and 00/100 Dollars ($44,231.00) per month, said
amount to be increased, commencing on January 1, 1999, for the balance of
the Original Term in accordance with the increase in the United States
Department of Labor, Bureau of Labor Statistics, Consumer Price Index for
Urban Wage Earners and Clerical Workers (all items for the Boston,
Massachusetts Statistical Area on the basis of 1987=100 (the "Index"), as
provided in Section 3.02, provided, however, that in no event shall the
Base Rent for the period from January 1, 1999 through the balance of the
Original Term be less than Forty-Nine Thousand Five Hundred Twelve and
00/100 Dollars ($49,512.00) per month.
(1) For the space included in the Addition: Eleven Thousand Nine
--------------------------------------
Hundred Seventy and 00/100 Dollars ($11,970.00) per month, said amount to
be increased, commencing on the fifth anniversary of the Addition
Completion Date, for the balance of the Original Term in accordance with
the increase in the United States Department of Labor, Bureau of Labor
Statistics, Consumer Price Index for Urban Wage Earners and Clerical
Workers (all items for the Boston, Massachusetts Statistical Area on the
basis of 1987=100 (the "Index"), as provided in Section 3.02, provided,
however, that in no event shall the Base Rent for the period from the fifth
anniversary of the Addition Completion Date through the balance of the
Original Term be less than Thirteen Thousand Four Hundred and 00/100
($13,400.00) per month."
The term "the 1994 Building" and the term "the Addition" shall have the
meanings set forth in the 1996 Amendment of Lease.
D. Section 3.02 is amended by deleting the first sentence thereof and
substituting the following: "The Base Rent shall be increased at the times
specified in Paragraph 1.13(a) above, in proportion to the increase in the Index
-3-
<PAGE>
which has occurred, (i) in the case of Base Rent for the 1994 Building, between
January 1, 1994 and the month in which the rent is to be increased, and (ii) in
the case of the Base Rent for the Addition, between the month in which the
Addition Completion Date shall occur and the month in which the rent is to be
increased."
E. Clause 4 on page 2A is deleted and there is substituted therefor the
following:
"Notwithstanding the foregoing, the Base Rent for the 1994 Building and the
Base Rent for the Addition, as increased in accordance with this Section
3.02, shall not in any event be at a rate less than #3.75 per square foot
per year."
F. The term "substantial completion" as used herein shall mean completion
of the Work to be performed by Landlord pursuant to Exhibit "Addition Plans and
---------------------------
Specifications" and the issuance of a certificate of occupancy (or its
- --------------
equivalent) for the Addition by the appropriate governmental authorities with
the exception of: (a) minor punch list items (the "Punch List Items") which can
be fully completed without material interference with the use of the Addition by
Tenant for the Permitted Uses referred to in Section 1.06 of the Lease and
Tenant's actual and intended use of the Property and the Addition, provided that
the Punch List Items are completed within thirty (30) days after the Addition
Completion Date, and (b) other items which, because of the season or weather or
the nature of the item, are not practicable to do at the time and the absence of
which do not interfere with Tenant's actual and intended use of the Property and
the Addition. Landlord shall achieve substantial completion of the Addition on
or before April 30, 1997, except by reason of force majeure. If Landlord fails
to achieve substantial completion by such date and is not diligently prosecuting
the completion of the Addition, Tenant may, upon written notice to Landlord
given not later than May 10, 1997, terminate this 1996 Amendment of Lease and
Tenant shall have no further obligation or liability under the 1996 Amendment of
Lease nor right to occupy the Addition. Upon achieving substantial completion,
Landlord shall assign to Tenant any warranties (including without limitation the
roof warranty) provided to Landlord by any subcontractors performing the Work or
manufacturers supplying materials to complete the Work.
5. No trustee of 9 Mohawk Drive Realty Trust shall be personally liable
hereunder, it being understood that execution
-4-
<PAGE>
of this document by any such Trustee is in its capacity as a Trustee of said
Trust, and not in its individual capacity.
EXECUTED as a sealed instrument as of the date and year first above
written.
LANDLORD:
--------
/s/ H. Brune Levering
-----------------------------------------------
H. Brune Levering, as Trustee of 9 Mohawk Drive
Realty Trust, for self and Co-Trustee, but not
individually
TENANT:
------
CABLE DESIGN TECHNOLOGIES INC., doing business as
Mohawk Wire and Cable Corporation
By: /s/ Barry Gelf
------------------------------------------
Its: E. V. P.
-------------------------------------
hereunto duly authorized
-5-
<PAGE>
EXHIBIT
-------
Legal Description
That certain parcel of land, together with the buildings and improvements
thereon, situated in Leominster, Worcester County, Massachusetts, as shown on a
plan of land entitled "Plan of Land in Leominster, Mass." dated December 8,
1979, by Hayes Engineering, Inc., Civil Engineers and Land Surveyors, recorded
with Worcester Northern District Registry of Deeds in Plan Book 238, Page 16,
bounded and described as follows:
Commencing at a point at the intersection of Nashua Street and Mohawk Drive
as shown on said plan, thence
South 53 degrees 15' 47" West by Mohawk Drive as shown on said plan
four hundred and eight and 32/100
(408.32) feet; thence
by a curve to the right with a radius by Scott Drive as shown on said plan
of twenty feet an arc distance of thirty and 56/100
(30.56) feet; thence
North 39 degrees 10' 29" West by said Scott Drive and by other land
of owners unknown, as shown on said
plan, seven hundred eighty seven and
94/100 (787.94) feet and eighty nine
and 73/100 (89.73) feet,
respectively; thence
North 50 degrees 49' 31" East by land of owners unknown four
hundred and fifty and 00/100 (450.00)
feet; thence
South 39 degrees 10' 29" East by State Highway Route 2 four hundred
eighty nine and 73/100 (489.73) feet;
thence
South 77 degrees 40' 07" East by said State Highway Route 2 one
hundred seventy seven and 14/100
(177.14) feet; thence
By a curve to the left with a radius by Nashua Street ninety nine and
of eight hundred and fifty feet 39/100 (99.39) feet; thence
South 24 degrees 10' 19" West by said Nashua Street sixty and
88/100 (60.88) feet; thence
-6-
<PAGE>
South 31 degrees 48' 13" East by said Nashua Street one hundred
seventy eight and 67/100 (178.67)
feet to the point of beginning.
There is appurtenant to the above described premises the right to pass and
repass in common with others over said Mohawk Drive by vehicles or on foot.
-7-
<PAGE>
EXHIBIT
-------
Addition Plans and Specifications
A. Plans prepared by Hayes Engineering, Inc., consisting of the following
sheets:
1. Locus Plan Revision Date 7/12/96
2. Site Plan Revision Date 7/12/96
B. Plans prepared by BKA Associates, consisting of the following sheets:
1. A1 Floor Plan Schedules & Notes 8/19/96
2. A2 Office Floor Plan 8/19/96
3. A3 Office Reflect. Ceiling Plan 8/19/96
4. A4 Roof Plan & Details 8/19/96
5. A5 Exterior Elevations 8/19/96
6. A6 Building Sections 8/19/96
7. A7 Wall Sections 8/19/96
8. A8 Wall Sections 8/19/96
9. A9 Schedules & Details 8/19/96
10. S-1 Foundation Plan and Sections 8/08/96
11. S-2 Roof Framing Plan and Sections 8/08/96
12. S-3 General Notes and Typical Details 8/08/96
C. Construction Specifications for Mohawk Wire and Cable, 9 Mohawk Drive,
Leominster, MA, dated August 19, 1996, the index of which is attached hereto.
-8-
<PAGE>
EXHIBIT 10.24
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
-------------------------------------------------------------
This First Amendment to Second Amended and Restated Loan Agreement is made
as of this 31st day of July, 1996 by and among:
CABLE DESIGN TECHNOLOGIES CORPORATION, a Delaware corporation (the
"Parent"); and
CABLE DESIGN TECHNOLOGIES, INC., a Washington corporation and wholly owned
subsidiary of Parent (the "US Borrower"); and
NORDX/CDT, INC., a corporation incorporated under the federal laws of
Canada (the "CAN Borrower");
The LENDERS and other financial institutions parties hereto (individually,
a "Lender" and collectively, the "Lenders"); and
THE FIRST NATIONAL BANK OF BOSTON, BANQUE PARIBAS, CHICAGO BRANCH, PARIBAS
BANK OF CANADA, BANK OF AMERICA ILLINOIS AND BANK OF AMERICA CANADA, as
Agents for the Lenders (in such capacity, the "Agents")
in consideration of the mutual covenants herein contained and the benefits to be
derived herefrom.
W I T N E S S E T H:
-------------------
WHEREAS, on February 5, 1996, the Parent, the US Borrower, the CAN
Borrower, the Lenders and the Agents entered into a Second Amended and Restated
Credit Agreement pursuant to which revolving credit and term loan facilities
were established in favor of the US Borrower and the CAN Borrower; and
WHEREAS, the parties desire to amend the Agreement on the terms set forth
herein.
NOW, THEREFORE, it is hereby agreed as follows:
1. All capitalized terms used herein and not otherwise defined shall have
the same meaning herein as in the Agreement.
2. The definition of "CAN Borrowing Base" is hereby amended by adding the
following after the words "and its Subsidiaries" appearing in clause (b) in the
fifth line of such definition:
"and Nordx/CDT Corp."
3. The definition of "US Borrowing Base" is hereby amended by adding the
following after the words "and its Domestic
<PAGE>
Subsidiaries" appearing in clause (b) in the fifth line of such definition:
"(other than Nordx/CDT Corp.)"
4. The definition of "Discretionary Capex" is hereby amended by adding the
following new subparagraphs at the end thereof:
"and (e) in a sum not to exceed US$865,000.00 for the purchase of certain
wire and cable machinery from American Telephone and Telegraph Company; and
(f) in a sum not to exceed US$2,750,000.00 for the purchase or lease of a
building for Raydex/CDT's operations in Littleborough, England."
5. The provisions of Section 12.1(a) of the Agreement are hereby amended
by deleting the following language which appears immediately after "(B)" on page
105 of the Agreement:
"a report of sales and operating profit by division or operating unit; and
(C)"
6. The provisions of Section 12.1(l) of the Agreement are hereby amended
by
o adding the following at the end of each of clauses (i) and (ii)
thereof:
provided, however, that for the Fiscal Year commencing August 1,
1996 only, such forecast shall be furnished not later than
September 30, 1996;
o deleting the words "a projection of the sales and operating profit by
division and operating unit and" appearing in clause (iii) thereof.
7. The provisions of Section 12.17 of the Agreement are hereby deleted in
their entirety.
8. The provisions of (S)13.1 of the Agreement are hereby amended by
deleting the number .025 appearing in the "Amount" column for each "Period", and
substituting in its stead the number .030.
9. The provisions of (S)13.2 of the Agreement are hereby amended by
adding the following new subparagraph:
"(g) Liens upon any Real Estate or machinery and equipment of any
Domestic Subsidiary which is an Acquired
-2-
<PAGE>
Person, which Liens secure DS Assumed Debt and were outstanding at the time
of the Acquisition."
10. The provisions of (S)13.3(i) of the Agreement are hereby amended by
adding the words "(including letters of credit)" immediately after the word
"lines" appearing as the first word in the second line thereof.
11. The provisions of (S)13.4(f) of the Agreement are hereby amended by
adding the following at the end thereof:
"and Investments of CDT International in the stock of the CAN Borrower
evidenced by the contribution of cash and property described in Schedule
13.4(f) hereof;"
12. The provisions of (S)13.4(p) of the Agreement are hereby amended by
adding the following at the end thereof:
", other than Investments of property described in Schedule 13.4(f)
hereof;"
13. The provisions of (S)13.4(g) of the Agreement are hereby amended by
adding the following at the end thereof:
"and Investments by the Parent or the US Borrower in Noslo Limited
evidenced by the contribution of the capital stock of NEK Kabel AB to Noslo
Limited;"
14. The provisions of (S)13.5 of the Agreement are hereby amended by
adding the following new subparagraphs:
"(m) any transfer of assets from the Parent to the US Borrower or the US
Borrower to any Domestic Subsidiary, or the CAN Borrower to any of the CAN
Borrower's Subsidiaries;
(n) the transfer by the US Borrower or the Parent of the capital stock
of NEK Kabel AB to Noslo Limited;
(o) the transfer of the capital stock of Noslo Limited from the Parent
to CDT International."
15. Schedule 15.1(d) to the Agreement is hereby amended by deleting NEK
Kabel AB as a Subsidiary of CDT International and including it as a Subsidiary
of Noslo Limited.
16. The Agreement is hereby amended by adding thereto Schedule 13.4(f) in
the form annexed hereto.
17. The Agents and the Lenders acknowledge and agree that the stock of NEK
Kabel AB is not considered a "material portion
-3-
<PAGE>
of the Collateral" for purposes of clause (ii) to the sixth provision of
(S)16.2(c) of the Agreement.
18. Except as provided herein, all terms and conditions of the Agreement
remain in full force and effect.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals as
of the date first above written.
CABLE DESIGN TECHNOLOGIES
CORPORATION
By: /s/Kenneth O. Hale
----------------------
Name: Kenneth O. Hale
Title: Vice President
CABLE DESIGN TECHNOLOGIES,
INC.
By: /s/Kenneth O. Hale
----------------------
Name: Kenneth O. Hale
Title: Vice President
NORDX/CDT, INC.
By: /s/Kenneth O. Hale
----------------------
Name: Kenneth O. Hale
Title: Vice President
THE FIRST NATIONAL BANK OF
BOSTON, AS AGENT AND US LENDER
By: /s/Maura C. Wadlinger
----------------------
Name: Maura C. Wadlinger
Title: Vice President
-4-
<PAGE>
BANQUE PARIBAS, CHICAGO
BRANCH, AS AGENT AND US LENDER
By: /s/Mark A. Radzik
---------------------
Name: Mark A. Radzik
Title: Vice President
PARIBAS BANK OF CANADA, AS
AGENT AND CAN LENDER
By: /s/Michael Gosselin
----------------------
Name: Michael Gesselin
Title: Vice President
BANK OF AMERICA ILLINOIS, AS
AGENT AND US LENDER
By: /s/Sandra S. Ober
---------------------
Name: Sandra S. Ober
Title: Vice President
BANK OF AMERICA CANADA, AS
AGENT AND CAN LENDER
By: /s/Stephen Baker
--------------------
Name: Stephen Baker
Title: Vice President
FLEET NATIONAL BANK, AS US
LENDER
By: /s/Mark A. Siegel
---------------------
Name: Mark A. Siegel
Title: Assist. Vice President
-5-
<PAGE>
GIRO-CREDIT BANK, AS US LENDER
By: /s/Timothy Dailender
---------------------
/s/John Redding
-----------------
Name: Timonthy Dailender/
John Redding
Title: Asst. Vice President
Vice President
THE BANK OF NOVA SCOTIA, AS
CAN LENDER
By: /s/F. Carone
----------------
Name: F. Carone
Title: Account Manager
HARRIS TRUST AND SAVINGS BANK,
AS US LENDER
By: /s/John M. Dillon
------------------
Name: John M. Dillon
Title: Vice President
BANK OF MONTREAL, AS CAN
LENDER
By: /s/Lester Fernandes
----------------------
Name: Lester Fernandes
Title: Managing Director
LaSALLE NATIONAL BANK, AS US
LENDER
By:
----------------------
Name:
----------------------
Title:
----------------------
-6-
<PAGE>
ABN-AMRO BANK OF CANADA, AS
CAN LENDER
By: /s/R. Dupuis
-------------
/s/B. Marchand
---------------
Name: R. Dupuis
B. Marchand
Title: Vice President
Assistant Vice President
MELLON BANK, N.A., AS US LENDER
By: /s/Mark T. Latterner
-----------------------
Name: Mark T. Lutterner
Title: Assist. Vice President
MELLON BANK (CANADA), AS CAN
LENDER
By: /s/Joseph L. Cavanaugh
----------------------
Name: Joseph L. Cavanaugh
Title: Vice President
NATIONAL BANK OF CANADA, AS US
LENDER
By: /s/Donald P. Haddad
-----------------------
Name: Donald P. Haddad
Title: Vice President
NATIONAL BANK OF CANADA, AS CAN
LENDER
By: /s/William Goseland
--------------------
Name: William Goseland
Title: Manager
131634.5
-7-
<PAGE>
EXHIBIT 10.25
SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
----------------------------------------------------------------
This Second Amendment to Second Amended and Restated Credit Agreement is
made as of this 31st day of July, 1996 by and among:
CABLE DESIGN TECHNOLOGIES CORPORATION, a Delaware corporation (the
"Parent"); and
CABLE DESIGN TECHNOLOGIES INC., a Washington corporation and wholly owned
subsidiary of Parent (the "US Borrower"); and
NORDX/CDT, INC., a corporation incorporated under the federal laws of
Canada (the "CAN Borrower");
The LENDERS and other financial institutions parties hereto (individually,
a "Lender" and collectively, the "Lenders"); and
THE FIRST NATIONAL BANK OF BOSTON, BANQUE PARIBAS, CHICAGO BRANCH, PARIBAS
BANK OF CANADA, BANK OF AMERICA ILLINOIS AND BANK OF AMERICA CANADA, as
Agents for the Lenders (in such capacity, the "Agents")
in consideration of the mutual covenants herein contained and the benefits to be
derived herefrom.
W I T N E S S E T H:
-------------------
WHEREAS, on February 5, 1996, the Parent, the US Borrower, the CAN
Borrower, the Lenders and the Agents entered into a Second Amended and Restated
Credit Agreement pursuant to which revolving credit and term loan facilities
were established in favor of the US Borrower and the CAN Borrower as amended by
a certain First Amendment to Second Amended and Restated Credit Agreement dated
as of July 31, 1996 (the "Agreement"); and
WHEREAS, the parties desire to amend the Agreement on the terms set forth
herein.
NOW, THEREFORE, it is hereby agreed as follows:
1. All capitalized terms used herein and not otherwise defined shall have
the same meaning herein as in the Agreement.
2. Section 13.18 of the Agreement is hereby amended to read as follows:
(S)13.18. CAN Plans. (a) Cause, allow or permit any CAN Plan to be
---------
other than duly qualified and administered in all material respects in
compliance with all applicable laws (including regulations, orders and
directives) and the terms of the CAN Plan and any agreements relating
thereto, (b) cause, allow or permit
<PAGE>
any CAN Plan to have any material unfunded liability or contribution
due and not paid which does or is capable of giving rise to any trust
or Lien, (c) fail to ensure that all amounts required to be paid by it
under or in connection with any CAN Plan are paid when due and,
notwithstanding the foregoing, that written notice is provided to the
CAN Collateral Agent of any amount due and unpaid under or in
connection with any CAN Plan, (d) cause, allow or permit any liability
upon it or Lien on any of its Property to arise in respect of any CAN
Plan, (e) cause, allow or permit any Termination Event to occur in
respect of any CAN Plan which could reasonably be expected to have a
Material Adverse Effect on the Parent and its Subsidiaries, (f) make
any payments in respect of any CAN Plan in excess of any minimum
amounts required to be made by law and the terms of the CAN Plan, (g)
after the Closing Date, except as contemplated under the Bigfoot
Acquisition Agreement, amend or create any CAN Plan, if the result
thereof is to increase the payment obligations in respect of any CAN
Plan or the amounts of any solvency deficiencies or liabilities on wind
up (in whole or in part) of any CAN Plan which could reasonably be
expected to have a Material Adverse Effect on the Parent and its
Subsidiaries, (h) maintain any new trust accounts for payments or
contributions in respect of any CAN Plan other than those opened
initially in connection with the CAN Plans in substitution for existing
trust accounts or as required in connection with any new or amended CAN
Plan, and (i) fail to ensure that all contributions in respect of any
CAN Plan are actually paid to the trustee under such CAN Plan prior to
the date when due except to the extent no Material Adverse Effect would
result. The CAN Borrower hereby irrevocably directs the trustee under
the CAN Plans to apply an appropriate amount of any current credits
then existing to reduce and eliminate (to the extent of available
surpluses under the CAN Plans) any CAN Plan contributions or payments
not made by the Parent or its Subsidiaries when due.
3. Section 15.19 of the Agreement is hereby amended to read as follows:
(S)15.19. CAN Plans. (a) All CAN Plans, which will be maintained by the
---------
Parent or its Subsidiaries, are consistent with those maintained by the
seller under the Bigfoot Purchase Agreement, with such changes
negotiated by the CAN Borrower; (b) no CAN Plan which is a registered
pension plan has been terminated (in whole or in part) nor have any
proceedings been instituted or threatened to terminate (in whole or in
part) any such CAN Plan; (c) neither the Parent nor any
-2-
<PAGE>
of its Subsidiaries has ceased to participate (in whole or in part) as
a participating employer in any CAN Plan which is a registered pension
plan; (d) except as disclosed in EXHIBIT 15.19, neither the Parent nor
any of its Subsidiaries has any material unfunded liability (including
contingent unfunded liability) on wind up (in whole or in part) to any
CAN Plan which is a registered pension plan or any solvency deficiency
in any such CAN Plan; (e) except as disclosed in EXHIBIT 15.19, neither
the Parent nor any of its Subsidiaries has any material liability in
respect of any CAN Plan other than for required insurance premiums or
contributions or remittances which have been paid, contributed and
remitted when due; (f) all contributions have been made to the CAN
Plans as required by law or the terms thereof to be made when due and
neither the Parent nor any of its Subsidiaries is in arrears in the
payment of any contribution, payment, remittance or assessment or in
default in filing any reports, returns, statements and similar
documents in respect of the CAN Plans required to be made or paid
pursuant to any CAN Plan, any law, act, regulation, directive or order
or any employment, union, pension, deferred profit sharing, benefit,
bonus or other similar agreement or arrangement, except to the extent
no Material Adverse Effect would result; (g) neither the Parent nor any
of its Subsidiaries is liable or, to the best of its knowledge, alleged
to be liable, to any employee or former employee, director or former
director, officer or former officer resulting from any violation or
alleged violation of any CAN Plan which is a registered pension plan,
any fiduciary duty, any law or agreement in relation to any such CAN
Plan and, except as disclosed in EXHIBIT 15.19, does not have any
unfunded pension or like obligations or solvency deficiency (including
any past service or experience deficiency funding liabilities), other
than accrued obligations not yet due, for which it has made full
provision in its books and records; (h) without limiting the foregoing,
all of the CAN Plans are, and have been since their inception,
administered in all material respects in accordance with their terms
and all applicable laws and are duly registered where required by, and
are in compliance and good standing in all material respects under, all
applicable laws, acts, statutes, regulations, orders, directives and
agreements, including, without limitation, the Income Tax Act of
--------------
Canada, and the Pension Benefits Act of Ontario, any successor
--------------------
legislation thereto, and other applicable laws of any jurisdiction, and
(i) except for claims for benefit payments in the normal course, there
are no outstanding or pending or threatened investigations, claims,
suits or proceedings in respect
-3-
<PAGE>
of any CAN Plans (including to assert rights or claims to benefit
payment other than in the normal course or that could give rise to any
material liability).
4. The Lenders hereby waive any Events of Default under Sections 13.18 and
15.19 of the Credit Agreement as a result of the CAN Borrower's failure to pay
approximately CD $970,000.00 in monthly contributions in connection with the CAN
Plans.
5. Except as provided herein, all terms and conditions of the Agreement
remain in full force and effect.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals as
of the date first above written.
CABLE DESIGN TECHNOLOGIES
CORPORATION
By: /s/Kenneth O. Hale
----------------------
Name: Kenneth O. Hale
Title: Vice President
CABLE DESIGN TECHNOLOGIES INC.
By: /s/Kenneth O. Hale
----------------------
Name: Kenneth O. Hale
Title: Vice President
NORDX/CDT, INC.
By: /s/Kenneth O. Hale
----------------------
Name: Kenneth O. Hale
Title: Vice President
-4-
<PAGE>
THE FIRST NATIONAL BANK OF
BOSTON, AS AGENT AND US LENDER
By: /s/Maura Wadlinger
--------------------------
Name: Maura Wadlinger
Title: Vice President
BANQUE PARIBAS, CHICAGO BRANCH,
AS AGENT AND US LENDER
By: /s/Mark A. Radzik
---------------------
Name: Mark A. Radzik
Title: Vice President
PARIBAS BANK OF CANADA, AS
AGENT AND CAN LENDER
By: /s/Michael Gosselin
-----------------------
Name: Michael Gesselin
Title: Vice President
BANK OF AMERICA ILLINOIS, AS
AGENT AND US LENDER
By: /s/Sandra S. Ober
---------------------
Name: Sandra S. Ober
Title: Vice President
BANK OF AMERICA CANADA, AS
AGENT AND CAN LENDER
By: /s/Stephen Baker
--------------------
Name: Stephen Baker
Title: Vice President
-5-
<PAGE>
FLEET NATIONAL BANK, AS US
LENDER
By: /s/Mark A. Siegel
---------------------
Name: Mark A. Siegel
Title: Assist. Vice President
GIRO-CREDIT BANK, AS US LENDER
By: /s/Timothy Dailender
---------------------
/s/John Redding
---------------------
Name: Timonthy Dailender/
John Redding
Title: Asst. Vice President
Vice President
BANK OF NOVA SCOTIA, AS CAN
LENDER
By: /s/F. Carone
-------------
Name: F. Carone
Title: Account Manager
HARRIS TRUST AND SAVINGS BANK,
AS US LENDER
By: /s/John M. Dillon
------------------
Name: John M. Dillon
Title: Vice President
BANK OF MONTREAL, AS CAN LENDER
By: /s/Lester Fernandes
--------------------
Name: Lester Fernandes
Title: Managing Director
-6-
<PAGE>
LaSALLE NATIONAL BANK, AS US
LENDER
By: __________________________
Name: ________________________
Title: _______________________
ABN-AMRO BANK OF CANADA, AS
CAN LENDER
By: /s/R. Dupuis
-------------
/s/B. Marchand
---------------
Name: R. Dupuis
B. Marchand
Title: Vice President
Assistant Vice President
MELLON BANK, N.A., AS US LENDER
By: /s/Mark Latterner
------------------
Name: Mark Latterner
Title: Assistant Vice President
MELLON BANK (CANADA), AS CAN
LENDER
By: /s/Joseph L. Cavanaugh
----------------------
Name: Joseph L. Cavanaugh
Title: Vice President
NATIONAL BANK OF CANADA, AS US
LENDER
By: /s/Donald P. Haddad
--------------------
Name: Donald P. Haddad
Title: Vice President Manager
-7-
<PAGE>
NATIONAL BANK OF CANADA, AS
CAN LENDER
By: /s/William Goseland
--------------------
Name: William Goseland
Title: Manager
174733.2
-8-
<PAGE>
EXHIBIT 11.1
CABLE DESIGN TECHNOLOGIES CORPORATION
COMPUTATION OF EARNINGS PER SHARE
(Thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended July 31,
--------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Primary:
Income before extraordinary items $ 15,881 $ 14,713 $ 10,138
Extraordinary loss (596) ---- (3,998)
----------- ----------- -----------
Net income $ 15,285 $ 14,713 $ 6,140
=========== =========== ===========
Average number of shares of common stock outstanding 15,977,334 14,582,915 12,896,418
Assumed exercise of stock options and warrants 2,649,453 2,499,635 2,586,678
----------- ----------- -----------
Total shares 18,626,792 17,082,550 15,483,096
=========== =========== ===========
Primary earnings before extraordinary items per common share
$ 0.85 $ 0.86 $ 0.65
Primary loss from extraordinary items (0.03) ---- (0.25)
----------- ----------- -----------
Primary earnings per common share $ 0.82 $ 0.86 $ 0.40
<CAPTION>
Year Ended July 31,
--------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Fully Diluted:
Income before extraordinary items $ 15,881 $ 14,713 $ 10,138
Extraordinary loss (596) (3,998)
----------- ----------- -----------
Net income $ 15,285 $ 14,713 $ 6,140
=========== =========== ===========
Average number of shares of common stock outstanding 15,977,339 14,582,915 12,896,418
Assumed exercise of stock options and warrants 2,649,453 2,589,933 2,640,126
----------- ----------- -----------
Total shares 18,626,792 17,172,848 15,536,544
=========== =========== ===========
Fully Diluted earnings before extraordinary items
per common share $ 0.85 $ 0.86 $ 0.65
Fully Diluted loss from extraordinary items (0.03) ---- (0.25)
----------- ----------- -----------
Fully Diluted earnings per common share $ 0.82 $ 0.86 $ 0.40
</TABLE>
<PAGE>
EXHIBIT 13.1
CDT 1996 Annual Report
connectivity
[Photo of Electronic wire and cable on reels.]
[Photo of Room with person watching computer monitors.]
[Photo of Montage of electronic wire and cables computer and digital readouts.]
[Photo of Offshore oil platform.]
[Photo of Spray of fiber optic conductors.]
[Photo of Video camera.]
[Logo of CDT]
cable design technologies
annual report 1996
<PAGE>
company profile
[Photo of Modern office building.]
[Photo of High performance multiconductor cable test equipment.]
[Photo of Factory floor with various cable manufacturing equipment]
[Photo of Man working in network communications wiring closet.]
[Photo of Array of various electronic wire and cable products.]
[Photo of Factory floor with various cable manufacturing equipment.]
cable design technologies is a leading designer and manufacturer of
technologically advanced electronic data transmission cables for network,
computer interconnect, and automation, sound & safety applications. Its
NORDX/CDT subsidiary is a supplier of complete voice and data wiring solutions,
telecommunications distribution cables, the DynaTraX(TM) automated electronic
cross-connect switch, fiber optic solutions and other components required to
build high performance telecommunications infrastructures.
table of contents
1 Financial Summary
2 Letter to Stockholders
4 Network Structured Wiring Products
5 Automation, Sound & Safety Products
6 Computer Interconnect Products
7 Communications/Multimedia Products
8 NORDX/CDT
9 Management's Discussion and Analysis
14 Report of Independent Public Accountants
15 Consolidated Financial Statements
39 Selected Historical Consolidated Financial Data
40 Directors, Officers and Corporate Information
Foldout Operations at a Glance
<PAGE>
1
-----------------
financial summary
financial summary
(Dollars in thousands, except per share information)
<TABLE>
<CAPTION>
Income Statement Data: 1996/1/ 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Sales $ 357,352 $188,941
- --------------------------------------------------------------------------------
Gross profit 111,819 63,164
Gross margin 31.3% 33.4%
- --------------------------------------------------------------------------------
Operating profit 31,527/2/ 29,613
Operating margin 8.8% 15.7%
- --------------------------------------------------------------------------------
Income before extraordinary items 15,881 14,713
Income per common share before
extraordinary items .85 .86
- --------------------------------------------------------------------------------
Net income 15,285/3/ 14,713
Net income per common share .82 .86
- --------------------------------------------------------------------------------
<CAPTION>
Balance Sheet Data:
- --------------------------------------------------------------------------------
<S> <C> <C>
Total assets $ 320,105 $118,976
Current assets 208,456 74,341
Long-term debt (excluding current maturities) 73,068 52,696
Stockholders' equity 165,457 31,865
- --------------------------------------------------------------------------------
</TABLE>
/1/Includes the post-acquisition results of businesses acquired during fiscal
year 1996.
/2/Includes $16.7 million of non-recurring charges, see Note 19 to the Financial
Statements. Excluding these non-recurring charges, the operating margin was
13.5%.
/3/Excluding non-recurring and extraordinary charges, net income and net income
per common share for fiscal year 1996 would have been $26.4 million and
$1.42, respectively.
- --------------------------------------------------------------------------------
more than a decade of growth. . .
[Chart with background of various pictures displayed on cover and inside cover.
Chart title: more than a decade of growth. Data points: Sales, in millions: 1985
$27.1 and 1996 $357.4. Chart x-axis is years 1985 through 1996 with diagonal
line connecting the 1985 and 1996 data points.]
<PAGE>
2
- ----------------------
letter to stockholders
Dear Fellow Stockholders: By any measure, fiscal 1996 was a landmark year for
CDT. Sales rose 89.1% to $357.4 million, while net income, excluding non-
recurring and extraordinary charges, jumped 79.5% to $26.4 million. We completed
a highly successful common stock offering, split the stock 3-for-2 and by fiscal
year-end our stock price had appreciated 95%. And that's only half the story. In
fiscal 1996 we continued our aggressive acquisition strategy and completed five
acquisitions including the purchase in February 1996 of Northern Telecom
Limited's structured wiring and communications cable businesses. This new
Canadian subsidiary -- NORDX/CDT -- will be discussed in greater detail later in
this report, however, it is important to highlight what it brings to our
Company. As a result of the NORDX/CDT purchase we have doubled our revenues,
added outstanding senior managers and gained one of the industry's most
comprehensive R&D facilities. We now have over 2,000 new products that will
allow us to offer customers complete, certified network systems installations.
In August 1995 we purchased Cole-Flex Corporation and combined it with
Manhattan/CDT, adding the competitive advantage of tubing and sleeving to our
product lines and distribution capabilities. In September we acquired the
British-based Raydex Cable Division of Volex Group p.l.c., which expanded sales
in the European market of specialty cable for network, CATV, military and
industrial applications. In June 1996 we purchased Denmark-based Cekan A/S, a
manufacturer of high performance telecommunications connectors, and in July we
acquired X-Mark Industries, a highly regarded manufacturer of specialized metal
enclosures for network systems. Concurrent with our common stock offering, CDT
negotiated a new $200 million credit agreement. As a result of the common stock
offering and after the acquisition of five businesses in fiscal 1996, we ended
the fiscal year with a stronger balance sheet than a year ago. At July 31, 1996,
CDT had over 2,100 employees and approximately 2.3 million square feet of
manufacturing space and warehousing facilities. We have emerged as a true
industry leader in the specialty cable and connectivity markets worldwide.
[Graphic of Background is picture of spray of optic conductors. Data +89%.
Caption: sales.]
RESULTS . . . Net sales for the fiscal year ended July 31, 1996 were a record
$357.4 million versus $188.9 million for fiscal 1995 with the addition of sales
by CDT's recently acquired NORDX/CDT, Raydex/CDT, X-Mark/CDT and Cekan/CDT
operations. Operating income, excluding certain non-recurring charges, was $48.3
million compared to $29.6 million in fiscal 1995. Net income, excluding non-
recurring and extraordinary charges, was $26.4 million ($1.42 per share)
compared to net income of $14.7 million ($0.86 per share) in fiscal 1995. Net
income for fiscal 1996, including non-recurring and extraordinary charges, was
$15.3 million ($0.82 per share).
Results for fiscal 1996 reflect increased profits in three of our primary
business groups: network structured wiring; automation, sound & safety; and
communications/multimedia products. Sales outside of North America
<PAGE>
3
----------------------
letter to stockholders
rose 191.4%, including acquisitions, especially at Raydex/CDT (United Kingdom)
and NEK/CDT (Sweden) where the addition of high-speed production equipment and
capacity expansions were completed during the year. A disruption in the Level 5
Teflon(R) FEP plenum cable marketplace during the third and fourth quarters and
the unusual drop in copper prices, precipitated by the Sumitomo situation in
June 1996, negatively impacted fiscal 1996 earnings.
[Graphic Background is earth picture with electronic cable around it. Data:
+65%. Caption: Earnings per Share**]
WORLDWIDE EXPANSION . . . Global demand for information and higher speed
communication links are providing CDT with excellent opportunities. In a rapidly
growing market, geographic expansion is critical to developing a leadership
position and we have been doing just that -- expanding our international base.
In fiscal 1995, 16% of CDT's total sales came from overseas. In fiscal 1996 that
number had grown to 24%. Adding in the strong market share that NORDX/CDT brings
to us, the Company is targeting 50% international sales by the end of the
decade. CDT is aggressively pursuing European business through its NEK/CDT,
Raydex/CDT and Anglo/CDT (United Kingdom) operations. Sales to the former
eastern bloc countries, Latin America and the Pacific Rim should increase in
fiscal 1997.
THE YEAR AHEAD . . . Today, CDT is truly a worldwide presence in the high-growth
specialty cable and connectivity marketplace. We are at a strategic crossroads
in our history. The demand for high performance cable and connectivity products
continues to be strong. Growth of the Internet, acceptance of asynchronous
transfer mode (ATM) technology, higher speed and bandwidth requirements and the
fast-growing multimedia markets -- all of these developments point to an
expanding market for CDT's products.
[Graphic Background is picture of Montage of electronic wire and cables computer
and digital readouts. Data + 79%. Caption: Earnings per Share*]
In fiscal 1997, we have four principal objectives:
. To grow both internally and externally by broadening the Company into
growth categories of electronic connectivity like factory automation, robotics,
medical care and specialty niche markets.
. To integrate our NORDX/CDT acquisition and its four operating divisions
and implement a management initiative to reduce costs and streamline operations
over the next 24 months.
. To incent and rationalize the CDT sales forces worldwide to cross-sell
the expansive product offerings that we now have available.
. To continue to aggressively develop and market high-performance products
like the DynaTraX(TM) automated electronic network system switch, which
represents the new product innovation essential to maintaining global growth.
Underlying all the exciting accomplishments discussed in this Letter are
the talented and highly-motivated employees who have helped make CDT a
recognized leader in its markets. To our stockholders, customers and employees,
I extend my gratitude for an outstanding year.
/s/ Paul M. Olson
Paul M. Olson
President and CEO
*Excluding non-recurring charges October 9, 1996
<PAGE>
4 [Graphic of Two segment pie chart. Proportions: 52 and 48.]
- ----------------------------------
network structured wiring products
In fiscal 1996, network structured wiring products accounted for 52% of CDT's
total sales.
Network structured wiring products remains one of the fastest growing and
profitable CDT product groups. With the addition of NORDX/CDT, we are now in a
position to reach 40% of the connectivity network market that was previously
unavailable. The reason is simple: end-to-end certified solutions. CDT is now
one of only a few manufacturers in North America that can offer customers a
complete, warranted and certified, end-to-end network structured wiring system
including cables, connecting hardware and a group of certified installers to put
it all in place. The Mohawk/CDT, Montrose/CDT and Phalo/CDT divisions also now
supply certified, end-to-end systems in conjunction with connectivity partners.
Fueling the demand for network structured wiring products has been the
unprecedented technological advances in computers and software that have
necessitated faster data speeds without diminishing data integrity. The move to
Category 5 cable is expected to continue to increase as office buildings are
upgraded to accommodate advanced network requirements. The demand for greater
speed has been driven by the evolution of multimedia computing -- the
integration of video images, high fidelity sound, synthesized human speech and
data. Multimedia needs are expected to fuel continued growth in the PC markets,
thereby creating an expanding base for computer networks to link them.
left to right starting top left:
[Photo of Man working in network communications wiring closet]
[Photo of Four electron wire and cable products.]
[Photo of Modern office building]
[Photo of Factory floor with various cable manufacturing equipment.]
highlights
. Fiscal 1996 sales were $186.2 million, an 82% increase over 1995 sales of
$102.4 million.
. A new addition was completed to double our fiber optic cable capacity and
broaden product offerings.
. International sales continue to grow with additional opportunities for CDT
opening up in the Pacific Rim and Eastern Europe.
. CDT recently opened a 40,000 sq. ft. manufacturing facility at Phalo/CDT for
the production of shielded and unshielded high speed data cables capable of
622 Mbps.
<PAGE>
[Graphic of Two segment pie chart. Proportions: 19 and 81. 5
-----------------------------------
automation, sound & safety products
Automation, sound & safety products accounted for 19% of fiscal 1996 sales.
Automation, sound & safety encompasses three distinct applications for data and
signal transmission cables. Automation applications include climate control and
sophisticated security systems involving motion detection and video
surveillance. Sound includes voice activation, evacuation and similar systems,
and safety cable refers to certain attributes of data transmission cable that
improve its performance under hazardous conditions like fires and environmental
difficulties. Opportunities for CDT's products exist in Europe as a result of
growing demand for zero halogen cables and for cables that maintain circuit
integrity in a building fire. Also, the change from analog to digital systems is
creating demand for specialized shielded cables to replace existing unshielded
twisted pair products. Finally, demand is growing for more sophisticated
"intelligent building" applications in locations like hospitals, schools and
major buildings.
left to right, starting top left:
[Photo of Factory floor with various cable manufacturing equipment.]
[Photo of Five electronic wire and cable products.]
[Photo of Offshore oil platform.]
[Photo of Factory floor with various cable manufacturing euqipment.]
highlights
. Fiscal 1996 sales were $68.7 million, an increase of 46% over 1995 sales of
$47.2 million.
. CDT has developed prototype composite cables that integrate climate control,
security, video, sound, communications and power.
. Like the workplace, the anticipated growth of multimedia applications for the
"smart house" should create a strong demand for advanced cables that can
combine CATV, telephone, entertainment and automation. CDT is currently
developing cables to address this marketplace.
. Products in this group continue to receive an excellent reception. These
products include Aquaseal(R), multimedia composite cables and flexible plenum
cables.
<PAGE>
6 [Graphic of Two segment pie chart. Proportions: 5 and 95.]
- ------------------------------
computer interconnect products
In fiscal 1996, computer interconnect products accounted for 5% of CDT's total
sales.
Demand for more complex and efficient data computation has led to a
corresponding demand for both faster and smaller computing and switching
equipment with advanced cable requirements. Computer interconnect products
refers to CDT's family of data transmission cables used to internally connect
components of computer, telecommunication switching and related electronic
equipment, as well as to externally connect large and small computers to a
variety of peripheral devices. These cables are usually customized to meet
computer original equipment manufacturers (OEM) specifications as well as
international standards agency requirements. The close working relationship
between CDT's engineering personnel and OEM component engineers during the
product design and development process has enabled us to establish an excellent
supplier relationship with our OEMs with respect to new products.
left to right, starting top left:
[Photo of factory floor with various cable manufacturing equipment.]
[Photo of Array of 4 electronic wire and cable products.]
[Photo of Room with person watching computer monitors.]
[Photo of Cable processing machine.]
highlights
. CDT added new machinery to expand product offerings of flat, flexible cable.
. With the acquisition of NORDX/CDT, we expanded our product offering of foamed,
high-speed electronic interconnect mainframe cables.
. Looking ahead to fiscal 1997, we expect further penetration of the shielded
cable markets, increased sales of our specialty OEM product lines and
introduction of high performance cables to the automotive industry.
. With the acquisition of Raydex/CDT we enhanced European sales by offering PTFE
foamed, tape computer cables and we also added a European sales force to
address the specialty cable markets.
<PAGE>
[Graphic of Two segment pie chart. Proportions: 14 and 86] 7
----------------------------------
communications/multimedia products
Communications/multimedia products accounted for 14% of fiscal 1996 sales.
With the acquisition of NORDX/CDT, the Company added a fourth product grouping
communications/multimedia products. In fiscal 1996, this business group was
primarily communications-oriented, however, three separate CDT divisions are
currently working on multimedia product offerings for this growing marketplace.
Through the newly organized NORCOM Division of NORDX/CDT in Kingston, Ontario,
CDT now has the largest communications cable operations in Canada. Its
state-of-the-art, computer-driven facility has been meeting the demand for
communications cable, switchboard cable and equipment cable. This demand is
being partially driven by the household demand for additional phone lines to
carry fax and PC applications and to satisfy growing home Internet usage and
home office and telecommuting needs.
left to right, starting top left:
[Photo of Multimedia control console.]
[Photo of Work-in-process communication cable.]
[Photo of Man working in network communications wiring closet.]
[Photo of Video camera.]
highlights
. Since joining CDT, this group recorded fiscal 1996 sales of $49.4 million.
. NORDX's SuperPIC(R) cable for broadband multimedia applications is in the
process of being field-trialed with three major telephone companies. This high
bandwidth cable can carry 52 Mbps over distances of one kilometer in
conjunction with advanced electronics equipment.
. NEK/CDT, West Penn/CDT and Mohawk/CDT are working on the development of a
variety of multimedia products to bring cable into the home.
. Replacement and upgrade to the existing base of communications cable is long
overdue. CDT's communications cable group should be a direct beneficiary of
this replacement market.
<PAGE>
8
- ---------
NORDX/CDT
Introducing NORDX/CDT
[Photo of Various Nordx/CDT IBDN network structured wiring products.]
NORDX/CDT -- a new name in the marketplace -- is a company with a 100-year
history in the design and manufacture of products for the communications
industry. NORDX/CDT was created in February 1996 when Cable Design
Technologies purchased Northern Telecom Limited's communications cable and IBDN
network structured wiring products businesses. NORDX/CDT currently manufactures
and markets over 2,000 different products including cables, connectors and patch
panels of the IBDN structured wiring system, the DynaTraX(TM) wiring closet
automation product line and communications cables for outside plant needs. These
products are manufactured at facilities in Lachine, Quebec, Kingston, Ontario
and Mexico. NORDX/CDT maintains one of the industry's most sophisticated in-
house research and development laboratories dedicated to the design and
development of communications products for data, voice and video.
[Photo of DynaTraX automated electronic cross-connect switch.]
[Photo of Fireworks celebration commemorating 25 years of excellence at the
Kingston Communications cable plant.]
highlights
. Through its Certified Systems Vendors (CSVs) and Factory Authorized
Contractors (FACs), NORDX/CDT can offer complete, end-to-end, certified
systems to its customers.
. In 1996, NORDX/CDT introduced the industry's first large-scale automated
network cabling management solution: DynaTraX(TM). This is a unique, high-
performance electronic cross-connect switch that is installed in the wiring
closet and operated from a desktop PC.
. NORDX/CDT recently engineered an innovative broadband communications PIC cable
and drop wire that offers a six-fold increase in available bandwidth over
existing outside telephone distribution cabling.
. In June 1996, CDT purchased Denmark-based Cekan A/S, a high performance
telecommunications connector manufacturer. Reporting directly to NORDX/CDT,
Cekan/CDT greatly enhances the Company's capability in the areas of
engineering, manufacturing and design of connectors and plastic molded
components.
<PAGE>
9
- --------------------------------------------------------------------------------
management's discussion and analysis of financial condition and results of
operations
General
The following discussion of the Company's consolidated historical results of
operations and financial condition should be read in conjunction with the
Consolidated Financial Statements of the Company and the Notes thereto included
elsewhere in this report.
Results of Operations
The following table presents, for the periods indicated, the percentage
relationship to net sales of certain items in the Company's statement of
operations.
<TABLE>
<CAPTION>
Percentage of Net Sales
For Fiscal Year Ended July 31,
1996 1995 1994
---------------------------------
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of sales 68.7 66.6 66.3
Gross profit 31.3 33.4 33.7
Selling, general and administrative costs 17.8 17.8 18.7
Non-recurring charges 4.7 -- --
Income from operations 8.8 15.7 15.0
Income before extraordinary item 4.4 7.8 7.0
Net income 4.3 7.8 4.2
</TABLE>
Year Ended July 31, 1996 Compared with Year Ended July 31, 1995
Net Sales. Net sales increased $168.4 million, or 89.1%, to $357.4 million for
the year ended July 31, 1996 ("fiscal 1996") compared to $188.9 million for the
year ended July 31, 1995 ("fiscal 1995"). The increase in fiscal 1996 net sales
includes $143.1 million of post-acquisition sales by recently acquired
businesses. Sales of network structured wiring products increased $83.8 million,
or 82.0%, primarily as a result of the addition of the post-acquisition sales of
these products by NORDX/CDT and other recently acquired businesses, as well as
an increase in network cable products sales by the Company's existing operating
units during the first half of fiscal 1996. A disruption in the Category 5
Teflon(R) plenum network cable market early in the third quarter of fiscal 1996
due to a build-up of distributor inventories of these products and a greater
availability of Teflon(R) raw material resulted in reduced sales volume and
lower selling prices for these products by the Company's existing operating
units during the second half of fiscal 1996. The negative effect of the reduced
sales of Category 5 Teflon(R) plenum network cables was partially offset by
increased sales of fiber optic network cables and continued sales of non-plenum
Category 5 network cables during the period. Sales of automation, sound & safety
cable products increased $21.5 million, or 45.6%, primarily as a result of the
addition of the post-acquisition sales of these products by the recently
acquired businesses, Raydex/CDT in the United Kingdom and Manhattan/CDT in the
U.S., as well as a solid increase in sales by the Company's principal domestic
manufacturing division for these products, West Penn/CDT. As a part of the
Company's acquisition of NORDX/CDT, the Company acquired a new primary business
group, communications cable products. NORDX/CDT's post-acquisition sales of
communications cable products accounted for 29% of the Company's overall
increase in net sales for fiscal 1996. Sales of computer interconnect cable
products, which accounted for approximately 5% of fiscal 1996 overall sales,
decreased $4.1 million in fiscal 1996 primarily as a result of lower sales of
certain mid-range computer system interconnect cables which have been phased out
by hardware designers in favor of Category 5 twisted pair and patch cable
technology. International sales (outside of North America) increased $55.9
million, or 191.4%, to $85.1 million in fiscal 1996 compared to $29.2 million in
fiscal 1995 due primarily to the addition of the post-acquisition international
sales by the recently acquired businesses, Raydex/CDT and NORDX/CDT, as well as
increased international sales by the Company's existing businesses.
------------------------------------------------------
CABLE DESIGN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
<PAGE>
10
- --------------------------------------------------------------------------------
management's discussion and analysis of financial condition and results of
operations (continued)
Year Ended July 31, 1996 Compared with Year Ended July 31, 1995 continued
Gross Profit. Gross profit increased $48.7 million, or 77.0%, to $111.8 million
in fiscal 1996 compared to $63.2 million for fiscal 1995. The increase in fiscal
1996 gross profit includes the post-acquisition gross profit generated by
recently acquired businesses of $37.1 million. The gross profit from the sales
of network structured wiring products accounted for approximately 62% of the
increase in gross profit for fiscal 1996. Gross profit from the sales of
communications cable products and automation, sound & safety cable products
represented approximately 25% and 10% of the overall increase in gross profit,
respectively. The significant drop in the market prices of copper in June 1996
due primarily to the news of the alleged Sumitomo trading scandal resulted in a
reduction in the selling prices for communication cables which negatively
impacted earnings in the fourth fiscal quarter. The negative effect on gross
profit because of the reduction in the selling prices for communications cables
is temporary and should be neutralized when the higher cost copper raw material
on hand for communication cables has been worked out of inventory. The gross
margin for fiscal 1996 was 31.3% compared to a gross margin of 33.4% for fiscal
1995. The decrease in the gross margin for fiscal 1996 was due primarily to the
comparatively lower gross margin of certain of the recently acquired businesses,
primarily NORDX/CDT's communication cables business and Raydex/CDT's non-network
cable products sales.
Selling, General and Administrative Expense. Selling, general and
administrative expense ("SG&A") increased $30.0 million, or 89.4%, to $63.6
million, for fiscal 1996 compared to $33.6 million for fiscal 1995. The increase
in fiscal 1996 SG&A was primarily the result of the addition of $25.9 million
post-acquisition SG&A of the recently acquired businesses, principally
NORDX/CDT. As a percentage of sales, SG&A of 17.8% for fiscal 1996 was
unchanged as compared to 17.8% for fiscal 1995.
Non-Recurring Charges. In connection with the NORDX/CDT acquisition, the
Company engaged an independent appraisal firm to prepare a valuation of the
assets acquired to serve as a basis for allocation of the purchase price. As a
result of the valuation, the fair market value of the purchased in-process
research and development relating to the development of the DynaTraX(TM)
automated network cross-connect switch was determined to be $9.8 million. In
accordance with generally accepted accounting practices this amount was charged
to operations upon the acquisition of NORDX/CDT in the third quarter of fiscal
year 1996. In addition, stock appreciation rights of $6.9 million vested upon
the completion of the February 28, 1996 Common Stock Offering (the "Offering").
Income from Operations. Income from operations excluding non-recurring charges
for fiscal 1996 increased $18.6 million, or 63.0%, to $48.3 million compared to
$29.6 million for fiscal 1995. Including non-recurring charges, income from
operations for fiscal 1996 was $31.5 million. The operating margin for fiscal
1996, derived by dividing operating income excluding non-recurring charges by
net sales, was 13.5% compared to 15.7% for fiscal 1995. The decrease in the
operating margin in fiscal 1996 was due primarily to the comparatively lower
gross margin of certain of the recently acquired businesses discussed above
under Gross Profit.
Net Income. Fiscal 1996 net income was $15.3 million, or $0.82 per share,
compared to net income of $14.7 million, or $0.86 per share, for fiscal 1995.
Excluding the non-recurring charges (of $10.5 million, net of tax) discussed
above under Non-Recurring Charges and an extraordinary charge (of $0.6 million,
net of tax) due to the early extinguishment of debt in the third quarter of
fiscal 1996, net income for fiscal 1996 was $26.4 million, or $1.42 per share.
- ------------------
ANNUAL REPORT 1996
<PAGE>
11
- --------------------------------------------------------------------------------
management's discussion and analysis of financial condition and results of
operations (continued)
Year Ended July 31, 1995 Compared with Year Ended July 31, 1994
Net Sales. Net sales increased $43.6 million, or 30.0%, to $188.9 million for
the year ended July 31, 1995 compared to $145.4 million for the year ended July
31, 1994 ("fiscal 1994") primarily as a result of an increase in demand for
network systems cable products as well as an increase in prices of Teflon(R) FEP
Level 5 cable products. Significant growth in sales of network systems cable
products of $29.2 million, or 39.9%, was driven by the strong demand for higher
speed communication networks, the growth of networked high-speed workstations
and personal computers and the favorable pricing environment for Category 5
Teflon(R) FEP cable products. The sales of automation, sound & safety cable
products continued to grow as a result of the strong domestic economy,
increasing $7.5 million, or 18.9%, over sales of these products for fiscal 1994.
In fiscal 1995, sales of computer interconnect cable products increased $4.3
million, or 23.1%, primarily as a result of higher sales of zero halogen
products. International sales increased $10.8 million, or 52.7%, primarily as a
result of increased sales by the Company's foreign subsidiaries, NEK/CDT in
Sweden and Anglo/CDT in the U.K. and greater export sales of network systems
cable products.
Gross Profit. Gross profit increased $14.2 million, or 29.0%, to $63.2 million
in fiscal 1995 from $49.0 million for fiscal 1994. Approximately 60% of the
increase in gross profit is attributable to network systems cable sales as a
result of higher sales volume and improved product pricing. The gross profit
attributable to sales of automation, sound & safety products and computer
interconnect products represented approximately 22% and 13%, respectively, of
the overall increase in gross profit.
Gross margin for fiscal 1995 was 33.4% compared to 33.7% for fiscal 1994. The
Company's Swedish subsidiary acquired in May 1994, NEK/CDT, emerged from its
post-acquisition turnaround period in the second half of fiscal 1995, generating
67.4% of its year-to-date gross profit in the last two quarters. Excluding
NEK/CDT's gross margin, which was not comparable to that of the Company's other
operations, the gross margin for fiscal 1995 would have been 34.0%.
Selling, General and Administrative Expense. SG&A increased by $6.4 million, or
23.5%, to $33.6 million in fiscal 1995 from $27.2 million in fiscal 1994. The
increase in SG&A was primarily the result of higher sales related items, such as
commissions and delivery expenses, and the incremental SG&A attributable to
recent acquisitions. As a percentage of sales, SG&A in fiscal 1995 decreased to
17.8% compared to 18.7% in fiscal 1994.
Income from Operations. Income from operations increased $7.8 million, or
35.8%, in fiscal 1995 to $29.6 million compared to $21.8 million for fiscal
1994. The Company's operating margin, improved to 15.7% in fiscal 1995 compared
to 15.0% in fiscal 1994.
Net Income. Net income increased $4.1 million, or 39.2%, to $14.7 million for
fiscal 1995 compared to pro forma net income before extraordinary item of $10.6
million for fiscal 1994. Pro forma income before extraordinary items for fiscal
1994 reflects adjustments to interest expense indicating what these amounts
would have been had the Company's initial public offering occurred on August 1,
1993.
------------------------------------------------------
CABLE DESIGN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
<PAGE>
12
- --------------------------------------------------------------------------------
management's discussion and analysis of financial condition and results of
operations (continued)
Financial Condition
Liquidity and Capital Resources. Based on the Company's current expectations
for its business, management believes that its cash flow from operations and the
available portion of its revolving credit facilities and foreign credit facility
will provide it with sufficient liquidity to meet the current liquidity needs of
the Company.
On February 2, 1996, the Company entered into a new U.S. and Canadian credit
agreement (the "New Credit Agreement"). The New Credit Agreement, pursuant to
its provision for the adjustment of the loan structure upon the debt reductions
required as a result of the Offering is comprised of a $102.1 million revolver
loan (the "U.S. Revolver"), a CDN $48.1 million Canadian term loan and a CDN
$53.3 million Canadian revolver loan (the "Canadian Revolver"). The New Credit
Agreement specifies interest at varying margins over bank prime, London Inter-
Bank Offered Rate, Eurodollar, or bankers acceptances interest rates based on
certain financial ratios. The initial applicable margin of 1.75% was reduced to
1% after the completion of the Offering. A commitment fee of 3/8% to 1/2% will
be accrued on the unused portion of the U.S. Revolver and Canadian Revolver. The
initial proceeds provided by the New Credit Agreement were used to retire the
debt outstanding under the previous credit agreement and to purchase the
net assets of NORDX/CDT. On July 31, 1996, the Company had approximately $107.2
million of availability under the U.S. and Canadian Revolver loans and $4.7
million of availability under its $12.0 million foreign demand credit line.
As of February 2, 1996, the Company completed the acquisition of Northern
Telecom Limited's structured wiring systems and communication cables businesses,
now NORDX/CDT, for approximately $86 million.
On February 28, 1996, the Company effected the Offering, which involved a
primary and secondary offering of the Company's common stock. The net proceeds
received by the Company from the Offering were approximately $113.9 million
based on a public offering price of $40.50 per share. Approximately $94.8
million of the net proceeds were used to repay certain existing indebtedness
under the New Credit Agreement.
Working Capital. During fiscal 1996 operating working capital increased $24.1
million, excluding increases resulting from the initial recording of the working
capital of acquired businesses. The change in operating working capital was
primarily the result of increases in accounts receivable ($28.0 million) and
inventories ($13.0 million) which were partially offset by increases in accounts
payable ($5.3 million) and other accrued liabilities ($11.7 million). The change
in operating working capital excludes changes in cash and current maturities of
long-term debt.
Cash Flow. After providing for the increase in working capital, the Company
generated $4.7 million of net cash from operating activities during fiscal 1996.
The net cash used by investing activities during fiscal 1996 of $120.6 million
included $104.7 million for the acquisition of businesses (principally NORDX/CDT
and Raydex/CDT) and $15.9 million for capital projects. Net cash provided by
financing activities of $129.8 million included $116.3 million from the issuance
of common stock and $13.5 million (net) from debt sources. The net increase
in cash for fiscal 1996 was $13.9 million.
- ------------------
ANNUAL REPORT 1996
<PAGE>
13
- --------------------------------------------------------------------------------
management's discussion and analysis of financial condition and results of
operations (continued)
Financial Condition continued
Capital Expenditures. During fiscal 1996 and fiscal 1995, the Company expended
$15.9 million and $5.7 million, respectively, for capital projects. The
expenditures for fiscal 1996 were made to increase manufacturing efficiencies
and to expand the Company's overall production capacity of new and existing
product lines, particularly for the production of high performance network
systems cable products, including: the purchase of new production and testing
equipment for a new facility at Phalo/CDT to manufacture network cables that
exceed Level 5 performance standards; the construction of a new sales, training
and administration facility and the purchase of equipment for coaxial cable
production at West Penn/CDT; the purchase of additional production equipment for
the recently acquired Raydex/CDT and NORDX/CDT operations; and the expansion of
NEK/CDT's manufacturing plant and production capacity. The Company expects to
spend approximately $27.1 million for capital projects for the year ending July
31, 1997 without regard to potential acquisitions.
Effects of Inflation
The Company does not believe that inflation had a significant impact on the
Company's results of operations for the periods presented. On an ongoing basis,
the Company attempts to minimize any effects of inflation on its operation
results by controlling operation costs and, whenever possible, seeking to insure
that selling prices reflect increases in costs due to inflation.
New Accounting Standards
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed of." This statement
requires review and measurement methods to calculate impairment of long-lived
assets, including certain identifiable intangibles and goodwill, whenever events
or circumstances indicate that the carrying amount of an asset may not be
recoverable. The Company does not believe that adoption of the new statement
will have a material impact on the Company's financial results.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation," ("SFAS
No. 123") in October 1995. This statement establishes a "fair value based
method" of financial accounting and related reporting standards for stock-based
employee compensation plans, such as the Company's 1993 Stock Incentive Plan
(see Note 10). SFAS No. 123 becomes effective for the year ending July 31, 1997
("Fiscal 1997") and provides for adoption in the income statement or through
disclosure. The Company anticipates continuing to account for its 1993 Stock
Incentive Plan under APB Opinion No. 25, "Accounting for Stock Issued to
Employees," as permitted by SFAS No. 123, but will provide the required
disclosure in the footnotes to the fiscal 1997 financial statements.
Forward-Looking Statements -- Under the Private Securities Litigation Act of
1995
Certain of the statements in this annual report are forward-looking statements.
These statements are subject to various risks and uncertainties, many of which
are outside the control of the Company, including the level of market demand for
the Company's products, competitive pressures, the ability to achieve reductions
in operating costs and to continue to integrate acquisitions, price fluctuations
of raw materials and the potential unavailability thereof, foreign currency
fluctuations, technological obsolescence, environmental matters and other
specific factors discussed in the Company's Prospectus, dated February 27, 1996,
and other Securities and Exchange Commission filings. The information contained
herein represents management's best judgment as of the date hereof based on
information currently available; however, the Company does not intend to update
this information to reflect developments or information obtained after the date
hereof and disclaims any legal obligation to the contrary.
------------------------------------------------------
CABLE DESIGN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
<PAGE>
14
- --------------------------------------------------------------------------------
report of independent public accountants
To the Board of Directors of
Cable Design Technologies Corporation and Subsidiaries:
We have audited the accompanying consolidated balance sheets of Cable
Design Technologies Corporation (a Delaware corporation) and Subsidiaries as of
July 31, 1996 and 1995 and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended July 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Cable Design Technologies
Corporation and Subsidiaries as of July 31, 1996 and 1995, and the results of
their operations and their cash flows for each of the three years in the period
ended July 31, 1996 in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Pittsburgh, Pennsylvania
September 11, 1996
- ------------------
ANNUAL REPORT 1996
<PAGE>
15
- --------------------------------------------------------------------------------
consolidated statements of income
(Dollars in thousands, except per share information)
<TABLE>
<CAPTION>
Year Ended July 31,
1996 1995 1994
-------------------------------
<S> <C> <C> <C>
Net sales $ 357,352 $188,941 $145,389
Cost of sales 245,533 125,777 96,415
- -----------------------------------------------------------------------------------------------
Gross profit 111,819 63,164 48,974
Selling, general and administrative expenses 63,562 33,551 27,173
Non-recurring charges 16,730 -- --
- -----------------------------------------------------------------------------------------------
Income from operations 31,527 29,613 21,801
Interest expense, net 5,362 5,111 5,247
Other (income) expense, net 271 (5) (342)
- -----------------------------------------------------------------------------------------------
Income before income taxes and extraordinary items 25,894 24,507 16,896
Income tax provision 10,013 9,794 6,758
- -----------------------------------------------------------------------------------------------
Income before extraordinary items 15,881 14,713 10,138
- -----------------------------------------------------------------------------------------------
Extraordinary loss on the early extinguishment of debt (596) -- (3,998)
- -----------------------------------------------------------------------------------------------
Net income $ 15,285 $ 14,713 $ 6,140
- -----------------------------------------------------------------------------------------------
Income per share of common stock:
Primary:
Income before extraordinary items $ 0.85 $ 0.86 $ 0.65
Extraordinary loss (0.03) -- (0.25)
- -----------------------------------------------------------------------------------------------
Net income $ 0.82 $ 0.86 $ 0.40
- -----------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
------------------------------------------------------
CABLE DESIGN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
<PAGE>
16
- --------------------------------------------------------------------------------
consolidated balance sheets
(Dollars in thousands, except share information)
<TABLE>
<CAPTION>
July 31,
--------------------
1996 1995
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 16,097 $ 2,210
Accounts receivable, net of allowance for uncollectible accounts of
$2,660 and $1,553, respectively 96,490 32,925
Inventories 90,618 35,377
Prepaid expenses and other 1,965 1,654
Deferred income taxes 3,286 2,175
- -----------------------------------------------------------------------------------------------------------------------
Total current assets 208,456 74,341
- -----------------------------------------------------------------------------------------------------------------------
Property, plant and equipment, net 89,519 30,147
Intangible assets 4,321 1,534
Goodwill, net of accumulated amortization of $3,263 and $2,785, respectively 16,692 12,212
Other assets 1,117 742
- -----------------------------------------------------------------------------------------------------------------------
Total assets $ 320,105 $118,976
- -----------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 7,536 $ 8,829
Accounts payable 31,279 11,421
Accrued payroll and related benefits 11,689 4,630
Accrued taxes 6,346 1,625
Other accrued liabilities 15,832 4,365
- -----------------------------------------------------------------------------------------------------------------------
Total current liabilities 72,682 30,870
- -----------------------------------------------------------------------------------------------------------------------
Long-term debt 73,068 52,696
Other non-current liabilities 4,815 --
Deferred income taxes 4,083 3,545
- -----------------------------------------------------------------------------------------------------------------------
Total liabilities 154,648 87,111
- -----------------------------------------------------------------------------------------------------------------------
Contingencies (Note 16)
Stockholders' Equity:
Preferred stock, par value $.01 per share -- authorized 1,000,000 shares, no shares issued -- --
Common stock, par value $.01 per share -- authorized 25,000,000 shares,
issued and outstanding 18,054,498 and 14,615,855 shares, respectively 181 98
Paid-in capital 152,864 35,973
Deferred compensation (208) (330)
Retained earnings (accumulated deficit):
Retained earnings 64,840 48,848
Recapitalization distribution on July 14, 1988 (52,656) (52,656)
- -----------------------------------------------------------------------------------------------------------------------
Retained earnings (accumulated deficit), net 12,184 (3,808)
Currency translation adjustment 436 (68)
- -----------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 165,457 31,865
- -----------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 320,105 $118,976
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
- ------------------
ANNUAL REPORT 1996
<PAGE>
17
- --------------------------------------------------------------------------------
consolidated statements of cash flows
(Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended July 31,
1996 1995 1994
--------------------------------
<S> <C> <C> <C>
Cash flow from operating activities:
Net income $ 15,285 $ 14,713 $ 6,140
Adjustments for noncash items to reconcile net income
to cash provided by operating activities:
Depreciation 4,523 2,423 1,864
Amortization 1,465 1,392 1,496
Gain on termination of capital lease -- -- (332)
Extraordinary loss on early extinguishment of debt 596 -- 3,998
Tax benefit on extraordinary loss -- -- 2,754
Purchased in-process research and development 9,826 -- --
Deferred income taxes (2,550) (114) 43
Changes in assets and liabilities net of effects of business acquired:
Accounts receivable (27,972) (6,460) (4,260)
Inventories (13,037) (2,855) (6,237)
Prepaid expenses and other (90) (264) 17
Accounts payable 5,255 2,479 1,235
Accrued payroll and related benefits 5,542 1,411 232
Accrued taxes 4,718 283 (541)
Other accrued liabilities 1,469 1,882 (1,142)
Other non-current assets (333) (9) 64
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 4,697 14,881 5,331
- ----------------------------------------------------------------------------------------------------------------------------------
Cash flow from investing activities:
Purchases of property, plant and equipment (15,898) (5,686) (3,984)
Acquisition of businesses, including transaction costs,
net of cash acquired (104,681) (3,211) (1,490)
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (120,579) (8,897) (5,474)
- ----------------------------------------------------------------------------------------------------------------------------------
Cash flow from financing activities:
Change in restricted cash -- 1,485 99
Net change in revolving note borrowings 24,021 (8,044) (24,650)
Funds provided by long-term debt 82,517 7,612 124,500
Funds used to reduce long-term debt (90,950) (7,238) (116,704)
Net proceeds from issuance of common stock 116,291 187 29,221
Payments of deferred financing fees (2,121) -- (6,110)
Repurchase of common stock and warrants -- -- (4,260)
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 129,758 (5,998) 2,096
- ----------------------------------------------------------------------------------------------------------------------------------
Effect of currency translation on cash 11 (18) (1)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash 13,887 (32) 1,952
Cash, beginning of year 2,210 2,242 290
- ----------------------------------------------------------------------------------------------------------------------------------
Cash, end of year $ 16,097 $ 2,210 $ 2,242
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
------------------------------------------------------
CABLE DESIGN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
<PAGE>
18
- --------------------------------------------------------------------------------
consolidated statements of stockholders' Equity
For The Years Ended July 31, 1996, 1995 and 1994
(Dollars in thousands, except share information)
<TABLE>
<CAPTION>
Class B
Common Stock Common Stock Retained Total
---------------- ----------------- Earnings Currency Deferred Stock-
Shares Par Shares Par Paid-In (Accumulated Translation Compen- holders'
Issued Value Issued Value Capital Deficit) Warrants Adjustments sation Equity
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, July 31, 1993 6,161,379 $ 62 693,697 $ 7 $ 8,818 $(24,661) $ -- $(546) $ -- $ (16,320)
Net income -- -- -- -- -- 6,140 -- -- -- 6,140
Repurchase and cancellation
of Class B common stock -- -- (693,697) (7) (4,253) -- -- -- -- (4,260)
Warrants issued on
subordinate debt -- -- -- -- -- -- 1,500 -- -- 1,500
Initial public offering and
conversion of warrants 3,500,000 35 -- -- 30,681 -- (1,500) -- -- 29,216
Exercise of options 4,727 -- -- -- 5 -- -- -- -- 5
Deferred compensation --
stock grant plan 43,670 -- -- -- 513 -- -- -- (513) --
Deferred compensation --
stock option plan -- -- -- -- 23 -- -- -- (23) --
Amortization of deferred
compensation -- -- -- -- -- -- -- -- 41 41
Change in currency
translation adjustments -- -- -- -- -- -- -- (79) -- (79)
- ------------------------------------------------------------------------------------------------------------------------------
BALANCE, July 31, 1994 9,709,776 97 -- -- 35,787 (18,521) -- (625) (495) 16,243
Net income -- -- -- -- -- 14,713 -- -- -- 14,713
Exercise of options 34,127 1 -- -- 186 -- -- -- -- 187
Amortization of deferred
compensation -- -- -- -- -- -- -- -- 165 165
Change in currency
translation adjustments -- -- -- -- -- -- -- 557 -- 557
- ------------------------------------------------------------------------------------------------------------------------------
BALANCE, July 31, 1995 9,743,903 98 -- -- 35,973 (3,808) -- (68) (330) 31,865
Net income -- -- -- -- -- 15,285 -- -- -- 15,285
Exercise of options 255,100 3 -- -- 2,406 -- -- -- -- 2,409
Stock grants 2,250 -- -- -- 45 -- -- -- -- 45
Amortization of deferred
compensation -- -- -- -- -- -- -- -- 122 122
Stock split 4,871,934 48 -- -- -- (48) -- -- -- --
Stock offering 2,970,000 30 -- -- 113,850 -- -- -- -- 113,880
Pooling of interest 211,311 2 -- -- 590 755 -- -- -- 1,347
Change in currency
translation adjustments -- -- -- -- -- -- -- 504 -- 504
- ------------------------------------------------------------------------------------------------------------------------------
BALANCE, July 31, 1996 18,054,498 $181 -- $-- $152,864 $ 12,184 $ -- $ 436 $(208) $ 165,457
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
- ------------------
ANNUAL REPORT 1996
<PAGE>
19
- --------------------------------------------------------------------------------
notes to consolidated financial statements
1. Operations
Cable Design Technologies Corporation (the "Company") is a leading designer and
manufacturer of technologically advanced electronic data transmission cables and
passive components for network structured wiring; automation, sound & safety;
computer interconnect; and communications applications.
On July 14, 1988, the Company acquired all of the outstanding capital stock of
Cable Design Technologies Inc. The controlling stockholders of Cable Design
Technologies Inc. immediately prior to its acquisition by the Company were also
the controlling stockholders of the Company; therefore, the accompanying
consolidated financial statements have been prepared using Cable Design
Technologies Inc.'s historical cost basis of accounting, and the consideration
paid to stockholders of Cable Design Technologies Inc. of $52,656,000, was
charged to stockholders' equity as a recapitalization distribution in a manner
similar to a dividend distribution.
2. Significant Accounting Policies
The consolidated financial statements reflect the application of the following
significant accounting policies:
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its subsidiaries. All material intercompany transactions and balances have been
eliminated in consolidation.
Inventories
Inventories are stated at the lower of first-in, first-out (FIFO) cost or
market. Inventory costs include material, labor and manufacturing overhead. The
Company's products contain significant amounts of certain raw materials, such as
copper and Teflon(R). The Company believes that adequate sources are available
for these commodities; however, any disruption of the supplies or significant
deviations in market prices could impact the Company's operations.
Accounts Payable
Accounts Payable includes bank overdraft facilities which represent outstanding
checks of the Company's foreign subsidiaries of $658,000 and $287,000 at July
31, 1996 and 1995, respectively.
Property, Plant and Equipment
Property, plant and equipment are carried on the cost basis. Provisions for
depreciation and amortization are computed using the straight-line method based
upon the estimated useful lives of the assets. Maintenance and repair costs are
charged to operations as incurred. Major replacements or betterments are
capitalized. Cost and accumulated depreciation of property sold or retired are
removed from the accounts and any resulting gain or loss is included in
operations.
------------------------------------------------------
CABLE DESIGN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
<PAGE>
20
- --------------------------------------------------------------------------------
notes to consolidated financial statements (continued)
2. Significant Accounting Policies continued
Translation of Foreign Currency Financial Statements
The financial statements of foreign subsidiaries are translated using the
exchange rate in effect at year end for balance sheet accounts and the average
exchange rate in effect during the year for income and expense accounts.
Translation gains and losses are reported as a currency translation adjustment
component of stockholders' equity.
Although the acquisition of NORDX/CDT (see Note 13) resulted in a substantial
increase in operations outside of the United States, the Company does not
believe that its exposure to foreign currency fluctuations is significant for
the following reasons: (i) United States export sales are denominated in United
States dollars and (ii) the Company's foreign subsidiaries are located in
countries with stable economies.
Goodwill
Goodwill represents the excess of the purchase price over the fair market value
of identifiable net assets acquired in connection with various business
acquisitions and combinations. Goodwill is being amortized using the straight-
line method over periods of between 20 to 40 years.
The Company continually evaluates the carrying value of goodwill on the basis of
whether goodwill is fully recoverable from projected undiscounted net income,
before the effects of goodwill amortization, over the remaining amortization
period.
Loan Origination Fees
In connection with the issuance of the Company's debt instruments, the Company
defers related credit acquisition costs. These costs are amortized using the
straight-line method over the life of the debt instruments.
Income Taxes
The Company records income taxes in accordance with the provisions of Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("FAS
No. 109"). Under this standard, deferred tax assets or liabilities are computed
based on the difference between the financial statement and income tax bases of
assets and liabilities using the enacted marginal tax rate. These differences
are classified as current or non-current based upon the classification of the
related asset or liability. For temporary differences that are not related to an
asset or liability, classification is based upon the expected reversal date of
the temporary difference. Deferred income tax expense or benefit is based on the
changes in the assets and liabilities from period to period.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
- ------------------
ANNUAL REPORT 1996
<PAGE>
21
- --------------------------------------------------------------------------------
notes to consolidated financial statements (continued)
2. Significant Accounting Policies continued
Statement of Cash Flows
Supplemental disclosure of cash flow information.
<TABLE>
<CAPTION>
Year Ended July 31,
1996 1995 1994
---------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Cash paid during the year for:
Interest $5,759 $5,266 $5,533
Income taxes $8,965 $9,537 $4,394
</TABLE>
Research and Development
Research and development costs are charged to expense as incurred. Research and
development costs incurred were approximately $4,813,000, $1,815,000 and
$1,709,000 for the years ended July 31, 1996, 1995 and 1994, respectively.
Fiscal 1996 includes the post acquisition research and development costs of
NORDX/CDT.
In connection with the acquisition of NORDX/CDT, $9.8 million of the purchase
price was allocated to in-process research and development costs related to the
DynaTraX(TM) high performance cross-connect switch based on an independent
appraisal of the assets acquired. These costs were immediately charged to
operations in accordance with generally accepted accounting practices.
Reclassifications
Certain reclassifications have been made to the prior year statements to conform
with the current year presentation.
New Accounting Standards
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed of." This statement
requires review and measurement methods to calculate impairment of long-lived
assets, including certain identifiable intangibles and goodwill, whenever events
or circumstances indicate that the carrying amount of an asset may not be
recoverable. The Company does not believe that adoption of the new statement
will have a material impact on the Company's financial results.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation," ("SFAS
No. 123") in October 1995. This statement establishes a "fair value based
method" of financial accounting and related reporting standards for stock-based
employee compensation plans, such as the Company's 1993 Stock Incentive Plan
(see Note 10). SFAS No. 123 becomes effective for the year ending July 31, 1997
("Fiscal 1997") and provides for adoption in the income statement or through
disclosure. The Company anticipates continuing to account for its 1993 Stock
Incentive Plan under APB Opinion No. 25, "Accounting for Stock Issued to
Employees," as permitted by SFAS No. 123, but will provide the required
disclosure in the footnotes to the fiscal 1997 financial statements.
------------------------------------------------------
CABLE DESIGN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
<PAGE>
22
- --------------------------------------------------------------------------------
notes to consolidated financial statements (continued)
3. Stockholders' Equity
Prior to August 20, 1993, the Company had two classes of outstanding common
stock (Class A and Class B) possessing identical rights with the exception that
Class B common stock was nonvoting. In connection with the August 20, 1993 debt
refinancing (further described in Note 7), all of the outstanding warrants for
and shares of Class B common stock were repurchased by the Company for a net
cash price of $4,260,000. Contemporaneously with this repurchase, the Company
amended its Certificate of Incorporation to create a single class of common
stock,with authorized shares of 25,000,000 and a par value of $.01 per share.
Subsequent to the amendment discussed above, the Company further amended the
Certificate of Incorporation to authorize 1,000,000 shares of preferred stock,
par value $.01 per share. No preferred shares have been issued.
On November 24, 1993, the Company completed the sale of 3,243,288 shares of
common stock to the public at a price of $10.00 per share. The net proceeds of
$29,216,000 were utilized to reduce debt.
On December 29, 1995, the Company effected a 3-for-2 stock split in the form of
a common stock dividend. Prior period share information presented in the
financial statements and related notes have been adjusted to reflect the effect
of the split.
On February 28, 1996, the Company effected a public offering of 5,700,000 shares
(the "Offering") of its common stock, of which 2,730,000 were sold by selling
stockholders and 2,970,000 were sold by the Company. The net proceeds received
by the Company from the Offering were approximately $113,850,000 based on the
public offering price of $40.50 per share. Approximately $94,800,000 of the net
proceeds were used to repay certain indebtedness under the New Credit Agreement,
a substantial portion of which was incurred to finance the acquisition of
NORDX/CDT, and approximately $6,900,000 of the net proceeds were used to make
the payment in connection with the vesting of outstanding stock appreciation
rights. The remaining net proceeds, to the extent not already utilized, will be
used for general corporate purposes, including acquisitions.
4. Inventories
Inventories of the Company consist of the following:
<TABLE>
<CAPTION>
July 31,
1996 1995
----------------------
(Dollars in thousands)
<S> <C> <C>
Raw materials $24,004 $11,271
Work-in-process 21,981 6,971
Finished goods 44,633 17,135
- --------------------------------------------------------
$90,618 $35,377
- --------------------------------------------------------
</TABLE>
- ------------------
ANNUAL REPORT 1996
<PAGE>
23
- --------------------------------------------------------------------------------
notes to consolidated financial statements (continued)
5. Property, Plant and Equipment
Property, plant and equipment of the Company consist of the following:
<TABLE>
<CAPTION>
July 31,
1996 1995
----------------------
(Dollars in thousands)
<S> <C> <C>
Asset (asset lives):
Land $ 5,443 $ 1,562
Buildings and improvements (10-40 years) 19,119 11,368
Machinery and equipment (3-15 years) 83,385 31,117
Furniture and fixtures (5-15 years) 4,472 1,744
- -----------------------------------------------------------------------
Total 112,419 45,791
Less: accumulated depreciation (22,900) (15,644)
- -----------------------------------------------------------------------
$ 89,519 $ 30,147
- -----------------------------------------------------------------------
</TABLE>
6. Intangible Assets
Intangible assets of the Company consist of the following:
<TABLE>
<CAPTION>
July 31,
1996 1995
----------------------
(Dollars in thousands)
<S> <C> <C>
Asset (amortization period):
Loan origination fees, net of accumulated
amortization of $362,000 and $298,000, respectively
(term of related loans) $1,785 $ 945
Customer list, net of accumulated amortization
of $4,800,000 and $4,508,000, respectively (7 years) 297 589
Non-compete agreements, net of accumulated amortization
of $216,000 and $0, respectively (5-7 years) 2,239 --
- -----------------------------------------------------------------------------------------------
$4,321 $1,534
- -----------------------------------------------------------------------------------------------
</TABLE>
------------------------------------------------------
CABLE DESIGN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
<PAGE>
24
- --------------------------------------------------------------------------------
notes to consolidated financial statements (continued)
7. Long-Term Debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
July 31,
1996 1995
----------------------
(Dollars in thousands)
<S> <C> <C>
Canadian term loan with interest at LIBOR plus 1.0%
(5.5625% at July 31, 1996) and payable in quarterly
installments ending January 31, 2002 $ 34,398 $ --
Canadian revolver with interest at LIBOR plus 1.0%
(5.5625% at July 31, 1996) and due January 31, 2002 32,458 --
Old term loan -- 43,481
Old revolving credit facility -- 8,456
Old acquisition loan -- 7,574
Other indebtedness 13,748 2,014
- -----------------------------------------------------------------------------------------
80,604 61,525
Less: current portion 7,536 8,829
- -----------------------------------------------------------------------------------------
$ 73,068 $ 52,696
- -----------------------------------------------------------------------------------------
</TABLE>
On May 13, 1994, the Company entered into a credit agreement (the "Old Credit
Agreement"). The Credit Agreement consisted of (i) a $48.0 million term loan
(the "Old Term Loan"), (ii) a $30.0 million revolving credit facility (the "Old
Revolving Credit Facility") and (iii) a separate $15.0 million credit line that
is available to finance permitted acquisitions (the "Old Acquisition Loan").
Proceeds from this debt refinancing were used to retire all of the Company's
previous outstanding term and revolver debt.
On February 2, 1996, the Company entered into a new credit agreement (the "New
Credit Agreement") which was subsequently reconfigured as a result of the
proceeds applied against debt resulting from the Offering (see Note 3) on
February 28, 1996. The New Credit Agreement permits borrowings at applicable
margins above prime and LIBOR and is comprised of a $102.1 million revolver (the
"U.S. Revolver"), a CDN $48.1 million Canadian term loan and a CDN $53.3 million
Canadian revolver (the "Canadian Revolver"). The New Credit Agreement includes a
provision whereby the applicable margins over prime or LIBOR are based on the
attainment of certain performance factors. A commitment fee of 3/8% to 1/2% will
be applied to the unused portion of the U.S. Revolver and Canadian Revolver.
Proceeds from the New Credit Agreement were utilized to retire the debt
outstanding under the previous credit agreement and to purchase the net assets
of Northern Telecom Limited's communications cable and IBDN network structured
wiring products businesses ("NORDX/CDT"). The terms of the Credit Agreement
contain various customary financial and non-financial covenants including the
maintenance of minimum consolidated net worth and restrictions on payment of
dividends. The Company is in compliance with all applicable covenants.
- ------------------
ANNUAL REPORT 1996
<PAGE>
25
- --------------------------------------------------------------------------------
notes to consolidated financial statements (continued)
7. Long-Term Debt continued
On September 18, 1995, certain of the Company's foreign subsidiaries entered
into a new credit agreement (the "Foreign Credit Agreement") to support the
financing needs of its new and existing subsidiaries located in the United
Kingdom and Sweden. The Foreign Credit Agreement is comprised of a sterling
overdraft, multi currency short-term cash advance, a multi currency letter of
credit and a multi currency bank guarantee demand facility in an aggregate
amount of approximately $12.0 million. Terms of the facility permit borrowings
based on a percentage of certain accounts receivable and inventory at applicable
margins above the London Inter-Bank Offered Rate ("LIBOR") interest rate.
On July 31, 1996, the Company had approximately $107.2 million of availability
under the U.S. and Canadian Revolver loans and $4.7 million of availability
under its foreign demand credit line.
Included in other indebtedness are notes and commitments of approximately $7.0
million due to Volex Group p.l.c. of Manchester, England related to the purchase
of Raydex/CDT (see Note 13).
The scheduled aggregate annual principal payments of long-term debt as of July
31, 1996 are as follows:
<TABLE>
<CAPTION>
Long-Term Debt
- ---------------------------------------------------
Year Ended: (Dollars in thousands)
<S> <C>
1997 $ 7,536
1998 9,691
1999 9,839
2000 9,862
2001 8,444
Thereafter 35,232
- ---------------------------------------------------
$80,604
- ---------------------------------------------------
</TABLE>
In connection with the August 1993 and May 1994 debt refinancings and the net
proceeds of the Offering in fiscal year 1994, the Company recognized $6,752,000
(net of income tax $3,998,000) of extraordinary expense related to the early
extinguishment of debt. The pre-tax extraordinary charge of $6,752,000 was
comprised of the writeoff of $5,711,000 of deferred loan acquisition costs and
$1,041,000 of prepayment penalties.
As a result of the February 1996 debt refinancing and the net proceeds of the
Offering in fiscal year 1996, the Company recognized $993,000 (net of income tax
$596,000) of extraordinary expense related to the early extinguishment of debt.
- ------------------------------------------------------
CABLE DESIGN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
<PAGE>
26
- --------------------------------------------------------------------------------
notes to consolidated financial statements (continued)
8. Retirement and Other Employee Benefits
The Company and its subsidiaries have various defined contribution and defined
benefit pension plans covering substantially all of its employees. In connection
with the acquisition of NORDX/CDT, the Company established certain new defined
benefit plans. Benefits provided under the Company's defined benefit pension
plans are primarily based on years of service and the employee's compensation.
The defined contribution plans provide benefits primarily based on compensation
levels.
Defined Benefit Plan (U.S.)
For the U.S. defined benefit plan (the "U.S. Plan"), the Company's funding
policy is to annually contribute an amount based upon actuarial and economic
assumptions designed to achieve adequate funding of projected benefit
obligations. The components of pension credit for fiscal 1996, 1995 and 1994 are
as follows:
<TABLE>
<CAPTION>
Year Ended July 31,
1996 1995 1994
---------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Service cost for benefits earned
during the year $ 28 $ 23 $ 25
Interest cost on projected benefit obligation 127 126 124
Less: actual return on assets (347) (171) (174)
Net amortization and deferral 185 3 --
- --------------------------------------------------------------------------------------------------------------
Net periodic pension credit $ (7) $ (19) $ (25)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
The funded status of the U.S. Plan as of July 31, 1996 and 1995 was as follows:
<TABLE>
<CAPTION>
July 31,
1996 1995
----------------------
(Dollars in thousands)
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested $1,753 $1,744
Non vested 48 36
- ---------------------------------------------------------------------------------------------------------------------
Accumulated benefit obligation $1,801 $1,780
- ---------------------------------------------------------------------------------------------------------------------
Projected benefit obligation $1,801 $1,780
Plan assets (consisting principally of guaranteed deposit
accounts, fixed-income securities and equity securities
managed by CIGNA) at fair value 2,073 1,928
- ---------------------------------------------------------------------------------------------------------------------
Plan assets in excess of projected benefit obligation 272 148
Unrecognized net asset at transition (64) (76)
Unrecognized net loss 231 360
- ---------------------------------------------------------------------------------------------------------------------
Prepaid pension costs $ 439 $ 432
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
The assumed discount rate used for the U.S. Plan and the expected rate of return
on plan assets were 7.5% and 9.5%, respectively, for all years presented.
- ------------------
ANNUAL REPORT 1996
<PAGE>
27
- --------------------------------------------------------------------------------
notes to consolidated financial statements (continued)
8. Retirement and Other Employee Benefits continued
Defined Benefit Plans (Canadian)
For the Canadian defined benefit plans (the "Canadian Plans"), government
regulations require the Company to monthly fund contributions based upon
actuarial and economic assumptions designed to achieve adequate funding of
projected benefit obligations. The components of pension expense for fiscal 1996
are as follows:
<TABLE>
<CAPTION>
Year Ended July 31,
1996
----------------------
(Dollars in thousands)
<S> <C>
Service cost for benefits earned during the year $ 696
Interest cost on projected benefit obligation 62
- ----------------------------------------------------------------------------------------------------------
Net periodic pension expense $ 758
- ----------------------------------------------------------------------------------------------------------
</TABLE>
The funded status of the Canadian Plans as of July 31, 1996 was as follows:
<TABLE>
<CAPTION>
July 31, 1996
----------------------
(Dollars in thousands)
<S> <C>
Actuarial present value of benefit obligations:
Vested $ 496
Non vested 936
- ----------------------------------------------------------------------------------------------
Accumulated benefit obligation $1,432
- ----------------------------------------------------------------------------------------------
Projected benefit obligation $1,610
Plan assets at fair value --
- ----------------------------------------------------------------------------------------------
Projected benefit obligation in excess of plan assets
recognized in the consolidated balance sheet $1,610
- ----------------------------------------------------------------------------------------------
</TABLE>
On September 18, 1996, the Company funded a contribution to the Canadian Plans
in the amount of $537,000.
The assumed discount rate was 8.0%; the assumed growth rate of compensation was
5.0%; and the expected rate of return on plan assets was 8.0%.
------------------------------------------------------
CABLE DESIGN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
<PAGE>
28
- --------------------------------------------------------------------------------
notes to consolidated financial statements (continued)
8. Retirement and Other Employee Benefits continued
The Company also maintains defined contribution profit-sharing plans for all
eligible employees. Certain contributions are made under the matching provisions
of a 401(k) plan, while the remainder are made at the discretion of the
Company's Board of Directors. Expenses incurred by the Company in connection
with these profit-sharing plans were $2,450,000, $1,737,000 and $1,324,000 for
the years ended July 31, 1996, 1995 and 1994, respectively. The Company also
provides performance based and discretionary incentive payments to senior
management and other key employees subject to the approval of the Compensation
Committee of the Board of Directors. Expenses incurred by the Company as a
result of these incentive payments were $3,791,000, $2,374,000 and $1,365,000
for the years ended July 31, 1996, 1995 and 1994, respectively.
9. Postretirement Benefits Other Than Pensions
In connection with the acquisition of NORDX/CDT the Company assumed certain
postretirement health and life insurance benefits under unfunded plans.
The components of expense in fiscal 1996 were as follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
<S> <C>
Service cost of benefits earned during the period $ 97
Interest cost on accumulated postretirement benefit obligation 132
- ----------------------------------------------------------------------------------------
Net postretirement benefit expense $229
- ----------------------------------------------------------------------------------------
</TABLE>
The following sets forth the plans' funded status reconciled with the amount
recognized in the Company's Consolidated Balance Sheets:
<TABLE>
<S> <C>
Accumulated postretirement benefit obligation $3,441
- ----------------------------------------------------------------------------------------
Plan assets at fair value --
- ----------------------------------------------------------------------------------------
Accumulated benefit obligation in excess of plan assets 3,441
- ----------------------------------------------------------------------------------------
Accrued postretirement benefit liability $3,441
- ----------------------------------------------------------------------------------------
</TABLE>
Future benefit costs were estimated assuming medical costs would increase at
approximately a 10% annual rate for 1996, 8.25% for 1997, 6.50% for 1998 and
then remain at a 5% annual growth rate thereafter. A 1% increase in this annual
trend would have increased the accumulated postretirement benefit obligation at
July 31, 1996, by $449,000 and increased the fiscal 1996 postretirement benefit
expense by $37,000. The weighted average discount rate used to estimate the
accumulated postretirement benefit obligation was 8%.
- ------------------
ANNUAL REPORT 1996
<PAGE>
29
- --------------------------------------------------------------------------------
notes to consolidated financial statements (continued)
10. Stock Benefit Plans
The Company maintains a Stock Purchase and Option Plan (the "Former Plan") which
was terminated as to future grants effective upon completion of the Company's
initial public offering on November 24, 1993 (the "Initial Public Offering.") As
of the grant termination date, 2,777,696 options had been granted under the
Former Plan to directors, executives and other key employees of the Company.
Options issued under the Former Plan have an exercise price equal to the fair
market value of the common stock on the date of grant (July 1988 through
September 1992) and expire on the earlier of ten years after date of grant or
ten days after termination of employment. Substantially all of the outstanding
options became fully vested as of the date of the Initial Public Offering.
A new Long-Term Performance Incentive Plan (the "Stock Option Plan") was
adopted September 23, 1993 and provides for the granting to employees and other
key individuals the following types of incentive stock awards: stock options,
stock appreciations rights, restricted stock, performance units and grants and
other types of awards. The Stock Option Plan is scheduled to terminate in ten
years from the date of adoption but may be extended another five years by the
Company's Board of Directors for the grant of awards other than incentive stock
options. Employee rights to grants pursuant to the Stock Option Plan are
forfeited if a recipient's employment terminates within a specified period
following the grant. An aggregate of 436,722 shares of common stock are reserved
for issuance pursuant to the Stock Option Plan. On September 15, 1994, 150,000
non-qualified stock options were granted to various employees representing an
aggregate of 150,000 shares of common stock, which represent the only
outstanding awards under the Stock Option Plan as of such date. The terms of the
stock options include ratable vesting over five years and an exercise price
equal to the fair market value of the stock at the date of grant.
A new Supplemental Long Term Performance Incentive Plan (the "Supplemental
Plan") was adopted in December 1995 and authorizes the grant of awards with
respect to 800,000 shares of common stock. 500,000 shares are to be reserved for
grants only to new members of the Company's management who are employed in
connection with acquisitions by the Company. Under the Supplemental Plan, and in
conjunction with acquisitions completed by the Company in fiscal 1996, the
Company granted 565,000 options under the Supplemental Plan in fiscal 1996.
Additionally, in December 1995 the Company adopted the Non-Employee Director
Stock Plan (the "Non-Employee Plan"). The Non-Employee Plan provides 15,000
shares of common stock to be granted annually to non-employee directors each
August 1. There were 2,250 shares granted under the Non-Employee Plan in fiscal
1996.
------------------------------------------------------
CABLE DESIGN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
<PAGE>
30
- --------------------------------------------------------------------------------
notes to consolidated financial statements (continued)
10. Stock Benefit Plans continued
Certain information regarding stock options issued by the Company is summarized
below:
<TABLE>
<CAPTION>
Year Ended July 31,
1996 1995 1994
----------------------------------------
<S> <C> <C> <C>
Outstanding, beginning of year 2,863,414 2,770,605 2,766,777
Granted 670,013 150,000 10,919
Exercised (255,100) (57,191) (7,091)
- --------------------------------------------------------------------------------------------------
Outstanding, end of year 3,278,327 2,863,414 2,770,605
- --------------------------------------------------------------------------------------------------
Exercise prices $0.67 - $39.25 $0.67 - $9.33 $0.67 -$4.58
- --------------------------------------------------------------------------------------------------
</TABLE>
As of July 31, 1996, 2,447,564 options were exercisable.
On May 1, 1994 the Company awarded 65,505 shares of common stock grants to
certain key employees under a management stock award plan for a nominal amount
per share. The fair market value of the Company's common stock on the award date
was $7.83 per share. These grants vest ratably over a four year period. The
aggregate market value of the shares of common stock granted under this plan is
considered unearned compensation at the time of grant and compensation is earned
ratably over the stipulated period. At July 31, 1996, the Company had no
additional shares reserved for issuance under this particular plan.
In fiscal 1992, the Company granted 184,940 stock appreciation rights ("SARs")
to an officer/stockholder. Each SAR entitles the holder to a payment equal to
the excess of the fair value of the SAR upon vesting over a base of $1.33 per
SAR. As a result of the Initial Public Offering and the Offering, SARs totaling
2,743 and 182,197 vested, respectively. The related expense recognized in fiscal
1994 and fiscal 1996 was $12,806 and $6,904,000 respectively.
- ------------------
ANNUAL REPORT 1996
<PAGE>
31
- --------------------------------------------------------------------------------
notes to consolidated financial statements (continued)
11. Income Taxes
The Company accounts for income taxes in accordance with FAS No. 109. Except for
the effects of the reversal of net deductible temporary differences, the Company
is not aware of any factors which would cause any significant differences
between book and taxable income in future years. Although there can be no
assurances that the Company will generate any earnings or specific level of
continuing earnings in future periods, management believes that it is more
likely than not that the net deductible differences will reverse during periods
when the Company generates sufficient net taxable income.
Income before income taxes, as shown in the accompanying consolidated statements
of income, includes the following components:
<TABLE>
<CAPTION>
Year Ended July 31,
1996 1995 1994
---------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Domestic $25,751 $23,750 $16,390
Foreign 143 757 506
- ----------------------------------------------------------------------------------------------------------
Income before income taxes
and extraordinary items $25,894 $24,507 $16,896
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Taxes on income, as shown in the accompanying consolidated statements of income,
include the following components:
<TABLE>
<CAPTION>
Year Ended July 31,
1996 1995 1994
---------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Current provision:
Federal $ 8,525 $ 7,518 $ 5,183
State 2,261 2,154 1,327
Foreign 1,777 236 205
- --------------------------------------------------------------------------------------------------------
Total current provision 12,563 9,908 6,715
Deferred provision (benefit),
predominantly foreign (2,550) (114) 43
- --------------------------------------------------------------------------------------------------------
Income tax provision $10,013 $ 9,794 $ 6,758
- --------------------------------------------------------------------------------------------------------
</TABLE>
------------------------------------------------------
CABLE DESIGN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
<PAGE>
32
- --------------------------------------------------------------------------------
notes to consolidated financial statements (continued)
11. Income Taxes continued
The effective rate differs from the statutory rate for the following reasons:
<TABLE>
<CAPTION>
Year Ended July 31,
1996 1995 1994
---------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Tax provision based on the U.S. federal
statutory tax rate $ 9,063 $ 8,577 $ 5,914
State income taxes, net of federal income
tax benefit 1,470 1,400 862
Amortization of excess cost over net
assets acquired 186 117 117
Effect of capital loss -- -- (228)
Research and development tax credit (470) -- --
All other, net (236) (300) 93
- ---------------------------------------------------------------------------------------------------------------------------------
Income tax provision $10,013 $ 9,794 $ 6,758
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
As a result of acquisitions during fiscal 1996 net deferred tax liabilities of
$1,977,000 were recorded. The components of the deferred tax assets and
liabilities recorded in the accompanying balance sheets at July 31, 1996 and
1995 were as follows:
<TABLE>
<CAPTION>
Year Ended July 31,
1996 1995
----------------------
(Dollars in thousands)
<S> <C> <C>
Deferred tax assets
Reserves recorded for:
Accruals $ 1,134 $ 354
Insurance programs 1,980 598
Asset valuations 1,767 1,339
Contingent liabilities 342 143
Unicap 410 127
Net operating loss carryforward of foreign subsidiary -- 481
Other 44 5
- ----------------------------------------------------------------------------------------
Total deferred tax assets $ 5,677 $ 3,047
- ----------------------------------------------------------------------------------------
Deferred tax liabilities:
Excess of book basis over tax basis of fixed assets $(6,221) $(3,648)
Pension (183) (173)
Qualification costs (42) (155)
Other (28) (15)
- ----------------------------------------------------------------------------------------
Total deferred tax liabilities (6,474) (3,991)
- ----------------------------------------------------------------------------------------
Net deferred taxes before valuation allowance (797) (944)
Valuation allowance -- (426)
- ----------------------------------------------------------------------------------------
Net deferred taxes $ (797) $(1,370)
- ----------------------------------------------------------------------------------------
Reconciliation to the balance sheets --
Current portion of deferred taxes, net $ 3,286 $ 2,175
Long-term deferred taxes, net (4,083) (3,545)
- ----------------------------------------------------------------------------------------
Net deferred taxes $ (797) $(1,370)
- ----------------------------------------------------------------------------------------
</TABLE>
- ------------------
ANNUAL REPORT 1996
<PAGE>
33
- --------------------------------------------------------------------------------
notes to consolidated financial statements (continued)
12. Net Income Per Share of Common Stock
Primary net income per share of common stock is calculated by dividing net
income by the weighted average number of shares of common stock plus incremental
common stock equivalent shares (shares issuable upon exercise of options and
warrants). Incremental common stock equivalent shares are calculated for each
measurement period based on the treasury stock method. The repurchases are
assumed to be made at the average fair market value price per share of the
Company's common stock during the measurement period.
Fully diluted net income per share of common stock assumes similar conversions
as discussed above, except that the incremental weighted average common stock
equivalent shares based upon the treasury stock method are assumed to be
repurchased at the higher of the average market price per share during the
measurement period or the period end market value of the Company's common stock.
The weighted average number of shares of common stock outstanding and common
stock equivalents were as follows:
<TABLE>
<CAPTION>
July 31,
1996 1995 1994
----------------------------------
<S> <C> <C> <C>
Primary 18,626,792 17,082,550 15,483,096
Fully diluted 18,626,792 17,172,848 15,536,544
</TABLE>
13. Business Acquisitions
Business acquisitions during the fiscal year 1996 were as follows:
On September 22, 1995, the Company purchased the operating assets of the Raydex
Cable division of Volex Group p.l.c. of Manchester, England ("Raydex/CDT"). On
February 2, 1996 the Company completed the acquisition of Northern Telecom Ltd's
communication cable and IBDN network structured wiring products businesses
("NORDX/CDT"). Both acquisitions were accounted for using the purchase method
(APB 16) and, subject to final purchase adjustments, the assets acquired and
liabilities assumed were as follows:
<TABLE>
<CAPTION>
Raydex/CDT NORDX/CDT
---------- ---------
(Dollars in Thousands)
<S> <C> <C>
Assets acquired $15,149 $112,271
Liabilities assumed (4,950) (26,134)
Notes issued (7,199) --
- ---------------------------------------------
Cash paid $ 3,000 $ 86,137
</TABLE>
The pro forma information related to the acquisition of Raydex/CDT and
NORDX/CDT presented below assumes the transactions had occurred on August 1,
1994. The pro forma information also includes the effect of the Offering (see
Note 3) which occurred concurrently with the acquisition of NORDX/CDT, and
excludes the effect of non-recurring and extraordinary charges related to the
acquisitions and the Offering.
<TABLE>
<CAPTION>
(Pro Forma, unaudited)
Year Ended July 31,
1996 1995
----------------------
(Dollars in thousands)
<S> <C> <C>
Net sales $462,915 $387,532
Income before extraordinary items 29,211 20,073
Net income 29,211 20,073
Net income per common share $ 1.44 $ 1.00
</TABLE>
------------------------------------------------------
CABLE DESIGN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
<PAGE>
34
- --------------------------------------------------------------------------------
notes to consolidated financial statements (continued)
13. Business Acquisitions continued
The pro forma financial information presented above does not purport to present
what the Company's results of operations would actually have been if the
acquisition of Raydex/CDT and NORDX/CDT had occurred on August 1, 1994, or to
project the Company's results of operations for any future period.
On June 4, 1996, the Company acquired the outstanding stock of Cekan A/S, of
Arhus, Denmark. The acquisition was accounted for under the purchase method (APB
16). The prior results are not material; therefore, pro forma financial
information is not presented.
On July 25, 1996, the company purchased X-Mark Industries of Washington,
Pennsylvania in a pooling-of-interest transaction for 211,311 shares of the
Company's common stock. The transaction is not material to the consolidated
financial statements and accordingly, prior period financial statements have not
been restated.
Under APB No. 16, the Company has up to one year to finalize the purchase
adjustments related to its acquisitions.
14. Geographic Segments and Export Sales
The following summarizes the revenues and income generated by, and the
identifiable assets of, the Company's businesses located predominantly in each
geographic segment:
<TABLE>
<CAPTION>
North America Europe Consolidated
-----------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Segment Data:
Year ended 1996:
Revenues $308,254 $49,098 $357,352
Income from operations 29,017 2,510 31,527
Identifiable assets 270,028 50,077 320,105
Year ended 1995:
Revenues 174,822 14,119 188,941
Income from operations 28,230 1,383 29,613
Identifiable assets 102,381 16,595 118,976
Year ended 1994:
Revenues 137,744 7,645 145,389
Income from operations 20,984 817 21,801
Identifiable assets 90,124 12,595 102,719
</TABLE>
- ------------------
ANNUAL REPORT 1996
<PAGE>
35
- --------------------------------------------------------------------------------
notes to consolidated financial statements (continued)
14. Geographic Segments and Export Sales continued
The breakdown of total export sales (sales of products manufactured in the
United States and sold to customers outside of the United States) by
geographical location was:
<TABLE>
<CAPTION>
Year Ended July 31,
1996 1995 1994
-------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Export Sales:
Europe* $19,877 $13,631 $11,689
Other 9,140 6,965 4,471
- -----------------------------------------------------------------
Total export sales $29,017 $20,596 $16,160
- -----------------------------------------------------------------
</TABLE>
*Includes intercompany sales to the Company's U.K., Canadian and Swedish
subsidiaries of $3,674,000, $3,262,000 and $3,206,000 for the years ended July
31, 1996, 1995 and 1994, respectively.
15. Lease Commitments
Rental expense under all leases was approximately $3,721,000, $1,642,000 and
$1,159,000 for the years ended July 31, 1996, 1995 and 1994, respectively.
Operating leases relate principally to manufacturing, warehouse, office space
and various manufacturing and office equipment. Minimum annual rent payable
under noncancelable leases in each of the next five years and thereafter are as
follows:
<TABLE>
<CAPTION>
Year Ending
July 31, Total
- ------------------------------------
(Dollars in thousands)
<S> <C>
1997 $ 5,537
1998 3,969
1999 2,296
2000 1,907
2001 1,250
Thereafter 2,695
- ------------------------------------
$17,654
- ------------------------------------
</TABLE>
------------------------------------------------------
CABLE DESIGN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
<PAGE>
36
- -------------------------------------------------------------------------------
notes to consolidated financial statements (continued)
16. Commitments and Contingencies
Certain claims have been asserted against the Company in connection with
industrial accidents which are being administered by the Company's insurance
carriers. Other claims have been asserted in connection with patent matters. In
management's opinion, any liability that might be incurred in connection with
these claims would not have a material effect upon the Company's financial
position or results of operations.
As of July 31, 1996, the Company had outstanding letters of credit of $1,257,000
under its workers' compensation policy. The Company also maintains a $2,000,000
bond as excess worker's compensation insurance in the state of Massachusetts.
17. Related Party Transactions
The Company has an agreement to pay management fees of $12,500 per quarter to
each of two beneficial stockholders. Selling, general and administrative
expenses include $100,000 in 1996, 1995 and 1994 for fees paid under this
agreement.
In the normal course of business the Company enters into transactions for the
purchase of materials, equipment and services with entities that are affiliated
with or owned by an officer/stockholder. Such transactions totaled $1,840,370,
$1,729,000 and $1,481,000 for the years ended July 31, 1996, 1995 and 1994,
respectively.
18. Nature of Business and Disclosures About Fair Value of Financial Instruments
Concentrations of credit risk with respect to trade receivables are limited due
to the Company's wide variety of customers and the many markets into which the
Company's products are sold, as well as the many different geographic areas in
which such customers and markets are located. As a result, at July 31, 1996 the
Company does not believe it has any significant concentrations of credit risk.
No single customer in the year ended July 31, 1996, 1995 or 1994 accounted for
more than 10% of revenues.
The estimated fair values of the Company's significant financial instruments are
as follows:
<TABLE>
<CAPTION>
July 31
1996 1995
-----------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
---------------- ----------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Money market investments $ 9,723 $ 9,723 $ -- $ --
Term loan 34,398 34,398 43,481 43,481
Revolving loans 32,458 32,458 8,456 8,456
Acquisition loan -- -- 7,574 7,574
Other indebtedness 13,748 13,748 2,014 1,970
</TABLE>
The fair value and carrying amounts of the Company's Money Market Investments,
Term Loans, Revolving Loans and Acquisition Loan are deemed to be approximately
equivalent as they bear interest at floating rates which are based upon current
market rates.
- ------------------
ANNUAL REPORT 1996
<PAGE>
37
- --------------------------------------------------------------------------------
notes to consolidated financial statements (continued)
19. Non-recurring Charges
In connection with the NORDX/CDT acquisition, the Company engaged an independent
appraisal firm to prepare a valuation of the assets acquired to serve as a basis
for allocation of the purchase price. As a result of the valuation, the fair
market value of the purchased in-process research and development relating to
the development of the DynaTraX(TM) automated network cross-connect switch was
determined to be $9.8 million. In accordance with generally accepted accounting
practices this amount was charged to operations upon the acquisition of
NORDX/CDT in the third quarter of fiscal year 1996. In addition, stock
appreciation rights of $6.9 million vested upon the completion of the Offering.
20. Initial Public Offering
The unaudited pro forma income statement data in the following table gives
effect to the occurrence of the Initial Public Offering (see Note 3) as if it
had occurred on August 1, 1993. Proceeds from the Initial Public Offering were
utilized to retire a portion of the outstanding debt of the Company. The
adjustment to interest expense represents the effect of the reduction of debt as
if it had it occurred on August 1, 1993. Pro forma taxes are applied at an
effective tax rate of 40.0% of taxable income. The unaudited pro forma income
statement data does not purport to represent what the Company's results of
operations actually would have been if the foregoing had in fact occurred on
such date. See Note 13, Business Acquisitions, for the pro forma presentation of
the Company's February 28, 1996 common stock offering.
<TABLE>
<CAPTION>
(Unaudited)
Year Ended July 31, 1994
(In thousands, except per share data) Actual Adjustments Pro Forma
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating income $21,801 $ -- $21,801
Interest expense 5,247 (723) 4,524
Other (income) expense, net (342) -- (342)
- -------------------------------------------------------------------------------------------
Income before income taxes and
extraordinary items 16,896 723 17,619
Income tax provision (6,758) (289) (7,047)
- -------------------------------------------------------------------------------------------
Income before extraordinary items 10,138 434 10,572
Extraordinary item (3,998) -- 3,998
- -------------------------------------------------------------------------------------------
Net income $ 6,140 $ 434 $ 6,574
- -------------------------------------------------------------------------------------------
Income per common share:
Income before extraordinary items $ 0.65 $ 0.62
Extraordinary items (0.25) (0.23)
- -------------------------------------------------------------------------------------------
Net income $ 0.40 $ 0.39
- -------------------------------------------------------------------------------------------
Weighted average number of
common shares and common
stock equivalents 15,483,096 16,982,363
</TABLE>
------------------------------------------------------
CABLE DESIGN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
<PAGE>
38
- --------------------------------------------------------------------------------
notes to consolidated financial statements (continued)
21. Quarterly Financial Information (Unaudited)
Quarterly financial data are summarized as follows:
(In thousands, except per share data)
<TABLE>
<CAPTION>
Fiscal Year 1996 First Second Third Fourth
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $65,054 $67,243 $112,222 $112,833
Gross profit 20,951 21,726 34,944 34,198
Income from operations 10,755 10,345 (3,422) 13,849
Net income before extraordinary items 5,708 5,378 (3,357) 8,152
Net income 5,708 5,378 (3,953)/1/ 8,152
Per share information:
Income per common share
before extraordinary items 0.33 0.31 (0.20)/1/ 0.40
Net income per common share 0.33 0.31 (0.24) 0.40
Fiscal Year 1995
- ----------------------------------------------------------------------------------
Revenues $44,918 $44,386 $ 47,935 $ 51,702
Gross profit 14,643 14,292 15,606 18,623
Income from operations 6,820 6,227 7,495 9,071
Net income 3,420 2,930 3,710 4,653
Per share information:
Net income per common share 0.20 0.17 0.22 0.27
</TABLE>
/1/Excluding non-recurring and extraordinary charges (see Notes 7 and 19), net
income was $7.2 million, or $0.37 per share.
- ------------------
ANNUAL REPORT 1996
<PAGE>
39
- --------------------------------------------------------------------------------
selected historical consolidated financial data
<TABLE>
<CAPTION>
For the Fiscal Year Ended July 31,
(In thousands, except per share data) 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Net sales $ 357,352 $188,941 $145,389 $ 126,650 $ 119,563
Income from
operations 31,527/3/ 29,613 21,801 19,577 18,030/1/
Income before
extraordinary items 15,881 14,713 10,138 6,026/2/ 4,648
Extraordinary item
(net of tax):
Loss on early
extinguishment
of debt (596) -- (3,998) -- --
Net income 15,285/4/ 14,713 6,140 6,026 4,648
Net income per share
of common stock:
Primary 0.82 0.86 0.39 0.45 0.35
Fully diluted 0.82 0.86 0.39 0.41 0.35
Weighted average number
of shares of stock
outstanding:
Primary 18,627 17,082 15,483 13,488 13,424
Fully diluted 18,627 17,174 15,537 14,586 13,424
<CAPTION>
As of July 31,
1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total assets $ 320,105 $118,976 $102,719 $ 83,749 $ 80,527
Long-term debt 73,068 52,696 63,828 77,472 80,762
</TABLE>
/1/Effective August 1, 1991 the Company revised the estimated useful lives of
certain machinery and equipment from 5-10 years to 5-15 years. The effect of
this change was to increase fiscal 1992 income from operations by $780,000.
/2/Includes a non-recurring charge of $650,000 related to an acquisition of a
European manufacturer which was not consummated.
/3/Includes $16.7 million of non-recurring charges (see Note 19).
/4/Excluding non-recurring and extraordinary charges (see Notes 7 and 19), net
income would have been $26.4 million, or $1.42 per share.
------------------------------------------------------
CABLE DESIGN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
<PAGE>
40
- --------------------------------------------------------------------------------
directors, officers and corporate information
Directors
Bernard J. Bannan
President and Chief Executive Officer
Binley Inc.
Bryan C. Cressey*
Partner
Golder, Thoma, Cressey, Rauner Inc.
Myron S. Gelbach Jr.
Independent Financial Consultant
Michael F. O. Harris
Managing Director
NGI, Inc.
Glenn Kalnasy
Managing Director
NGI, Inc.
Paul M. Olson
President and Chief Executive Officer
Cable Design Technologies Corp.
Richard C. Tuttle
Executive Vice President
Health Care and Retirement Corp.
*Chairman of the Board of Directors
Cable Design Technologies Corporation
Executive Officers
Paul M. Olson
President and Chief Executive Officer
George C. Graeber
Executive Vice President
President, Montrose/CDT
Michael A. Dudley
Executive Vice President
President, CDT International
Normand R. Bourque
Executive Vice President
President, NORDX/CDT
David R. Harden
Senior Vice President
President, West Penn/CDT
Donald M. Hastings
Senior Vice President
Executive Vice President, West Penn/CDT
Kenneth O. Hale
Vice President
Chief Financial Officer and Secretary
Annual Meeting
Tuesday, December 10, 1996
9:00 A.M. (Eastern Time)
DoubleTree Hotel
1000 Penn Avenue
Pittsburgh, Pennsylvania 15222
A copy of the Company's annual report to the Securities and Exchange Commission
on Form 10-K for fiscal 1996 is available without charge to stockholders upon
written request to Investor Relations at the Company's headquarters.
Stock Transfer Agent & Registrar
Questions regarding stock certificates, replacement of lost certificates,
address changes, account consolidation and transfer procedures should be
addressed to:
The Bank of Boston
Investor Relations
Mail Stop 45-02-09
P.O. Box 644
Boston, Massachusetts 02102-0644
(617) 575-3120
Allow three weeks for a reply.
Inquiries
Cable Design Technologies Corporation both welcomes and encourages questions and
comments from its stockholders, potential investors, financial professionals,
institutional investors and security analysts. Interested parties should contact
the Company's headquarters by telephone at (412) 937-2300.
CDT maintains a Web site on the Internet at http://www.cdtc.com
Common Stock
The Company's common stock is listed for trading on the National Association of
Securities Dealers Automated Quotation System (National Market System) under the
symbol "CDTC."
The following table sets forth the high and low sales price per share of the
common stock during the fiscal periods indicated. The Company did not pay cash
dividends on the common stock during the periods set forth.
<TABLE>
<CAPTION>
Fiscal 1996 Fiscal 1995
- ---------------------------------------------
High Low High Low
- ---------------------------------------------
<S> <C> <C> <C> <C>
First 22 14-7/8 12-5/8 8-3/8
Second 44 21-1/8 13-1/8 10-3/8
Third 51 30 12-1/8 9-5/8
Fourth 49-1/4 24-3/4 15-3/8 11-1/2
</TABLE>
- ------------------
ANNUAL REPORT 1996
<PAGE>
- ----------------------
operations at a glance
[Photo of Anglo/CDT facility in Leeds, United Kingdom.]
[Photo of Mohawk/CDT facility in Leominster, MA.]
[Photo of West Penn/CDT satellite facility in Washington, PA.]
[Photo of Montrose/CDT facility in Auburn, MA.]
a history of successful acquisitions
1985 1986 1988 1991
West Penn/CDT Mohawk/CDT Montrose/CDT Anglo/CDT
West Penn/CDT manufactures specialty electronic wire and cable products which it
sells through a comprehensive catalog to over 4,000 customers. West Penn is a
leading supplier of electronic cables for the automation, sound & safety markets
and has established preferred specification positions with OEMs, sound and
security companies and building architects.
Mohawk/CDT manufactures high-performance network cables, many of which are
copper, fiber optic and composite constructions for use in local area networks,
multimedia ATM and WAN applications. Mohawk's ISO 9001 certification has been a
big asset to international sales. Approximately 10% of Mohawk's shipments are
for the international marketplace.
Montrose/CDT manufactures specialty electronic cables. For over 50 years,
Montrose has designed products and obtained specification approvals for the
computer OEM marketplace, including high data speed specialty cables for ATM,
medical electronics, PC memory cards markets and large communications mainframe
switches.
In 1990, the Company formed CDT International to serve markets in Europe and the
Pacific Rim. In 1991, CDT purchased Anglo American Cables, Ltd., a cable systems
distributor, to enhance its international business. This operation specializes
in European growth markets for network systems cables and for the electronic
cable marketplace.
Phalo/CDT was formed by the Company in 1993 to expand production capacity of its
Mohawk, Montrose and West Penn product lines and to utilize a well-established
trade name. Phalo has its own production capabilities, from base copper drawing
machinery to high-speed extrusion and cabling equipment for computer network
cable products.
<PAGE>
[Photo of Manhattan/CDT facility in Manchester, CT.]
[Photo of NORDX/CDT facility in Kingston, Ontario.]
[Photo of Phalo/CDT facility in Manchester, CT.]
[Photo of Raydex/CDT facility in Skelsmerdale, United Kingdom.]
[Photo of NEK/CDT facility in Kinna, Sweden.]
[Photo of X-Mark/CDT facility in Washington, PA.]
1993 1994 1995 1995 1996 1996
Phalo NEK/CDT Manhattan/CDT Raydex/CDT NORDX/CDT X-Mark/CDT
Purchased in May 1994, NEK/CDT in Sweden is an important link to expanded
overseas sales of CDT's products. NEK provides the Company with a
state-of-the-art manufacturing facility for the production of coaxial cable for
both European and U.S. markets for CATV/broadcast systems and for specialized
computer inter-connect products for LANs and WANs.
Established in June, 1995, Manhattan/CDT comprises two recent acquisitions,
Manhattan Electric Cable and Cole-Flex Corporation. This operation now combines
a well-recognized supplier of cable products to the electrical and electronic
distribution industry with a leading provider of tubing and sleeving product
offerings.
Raydex/CDT, established in September 1995, is a highly regarded manufacturer of
electrical and high performance wire and cable products to the electronic,
electrical OEM and distribution industry in both the UK and overseas. This
operation maintains two manufacturing plants in England along with an existing
distribution system throughout Europe.
Acquired in February 1996, NORDX/CDT is a leading manufacturer of LAN and
network structured wiring systems products. NORDX/CDT currently manufactures
over 2,000 different products including cables, connectors and patch panels of
the OBDN structured wiring system, the DynaTraX(TM) wiring closet automation
product line and communications cables for outside plant needs.
Acquired in July 1996, X-Mark/CDT is a highly regarded manufacturer of
specialized metal enclosures and wiring panels for use in computer and network
systems. X-Mark/CDT's products are manufactured using newly installed
state-of-the-art laser cutting technology which, together with its recent
facility expansion, will double production capacity.
<PAGE>
HEADQUARTERS
Foster Plaza 7, 661 Andersen Drive,
[Logo of CABLE DESIGN TECHNOLOGIES] Pittsburgh, PA 15220
Telephone: (412) 937-2300
FAX: (412) 937-9690
CDT INTERNATIONAL
Zeal Court, Moorfield Road, Yeadon
Leeds LS19 7BN, United Kingdom
[Photo of Electronic wire and cable on reels.]
[Photo of Room with person watching computer monitors.]
[Photo of Montage of electronic wire and cables computer and digital readouts.]
[Photo of Offshore oil platform.]
[Photo of Spray of fiber optic conductors.]
[Photo of Video camera.]
[On inside cover and outside cover last page.]
[Logo of WEST PENN WIRE] WEST PENN/CDT
P.O. Box 762, 2833 West Chestnut Street,
Washington, PA 15301
[Logo of MOHAWK] MOHAWK/CDT
9 Mohawk Drive, Leominster, MA 01453
[Logo of Montrose] MONTROSE/CDT
28 Sword Street, Auburn Industrial Park,
Auburn, MA 01501
[Logo of PHALO] PHALO/CDT
90 Progress Drive, Manchester, CT 06040
[Logo of ANGLO] ANGLO/CDT
Moorfield Industrial Estate,
Moorfield Road, Zeal Court Yeadon Leeds
LS19 7BN, United Kingdom
[Logo of NEK] NEK/CDT
Skene Skog Ind-omr, Box 208, S-511
22 Kinna, Sweden
[Logo of ADMIRAL] ADMIRAL/CDT
931 Seville Road, P.O. Box 1003,
Wadsworth, OH 44281
[Logo of Manhattan] MANHATTAN/CDT
203 Progress Drive, Manchester, CT 06040
[Logo of RAYDEX] RAYDEX/CDT
Gladden Place, West Gillibrands,
Skelmersdale Lancashire WN8 9SX,
United Kingdom
[Logo of NORDX] NORDX/CDT
105 Marcel-Laurin Boulevard, Saint Laurent,
Quebec Canada H4N 2M3
[Logo of CEKAN] CEKAN/CDT
Videhojvej 4, DK-8883 Gjern, Denmark
[Logo of X-MARK] X-MARK/CDT
2001 N. Main Street
Washington, PA 15301
<PAGE>
EXHIBIT 21.1
CABLE DESIGN TECHNOLOGIES CORPORATION
SUBSIDIARIES OF THE REGISTRANT
LIST OF SUBSIDIARIES OF CABLE DESIGN TECHNOLOGIES CORPORATION
Anglo-American Cables Limited (Incorporated - United Kingdom)
Cable Design Technologies, Inc. (Incorporated - State of Washington)
CDT International Holdings, Inc. (Incorporated - Delaware)
Cekan A/S (Incorporated - Denmark)
NEK Kabel AB (Incorporated - Sweden)
NORDX/CDT Asia Limited (Incorporated - Hong Kong)
NORDX/CDT, Corp. (Incorporated - Delaware)
NORDX/CDT, Limited (Incorporated - United Kingdom)
NORDX/CDT, Inc. (Incorporated - Canada)
NORDX/CDT - IP Corp. (Incorporated - Delaware)
Noslo Limited (Incorporated - United Kingdom)
Raydex/CDT Limited (Incorporated - United Kingdom)
Wire Group International, Limited (Incorporated - United Kingdom)
X-Mark/CDT Inc. (Incorporated - Pennsylvania)
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT
As independent public accountants, we hereby consent to the incorporation by
reference in this Form 10-K of our reports dated September 11, 1996, included in
Cable Design Technologies Corporation and Subsidiaries' annual report for the
year ended July 31, 1996, and of our reports, included or incorporated by
reference in this Form 10-K, into the Company's previously filed Form S-8
Registration Statements File No. 33-78418, File No. 33-73272, File No. 333-2450,
and File No. 333-06743, and Form S-3 Registration Statement File No. 333-00554.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
October 28, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
CONSOLIDATED FINANCIAL BALANCE SHEETS AND STATEMENTS OF INCOME AS OF JULY 31,
1996 AND THE TWELVE MONTH PERIOD THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> JUL-31-1996 JUL-31-1995
<PERIOD-START> AUG-01-1995 AUG-01-1994
<PERIOD-END> JUL-31-1996 JUL-31-1995
<CASH> 16,097 2,210
<SECURITIES> 0 0
<RECEIVABLES> 96,490 32,925
<ALLOWANCES> 0 0
<INVENTORY> 90,618 35,377
<CURRENT-ASSETS> 208,456 74,341
<PP&E> 89,519 30,147
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 320,105 118,976
<CURRENT-LIABILITIES> 72,682 30,870
<BONDS> 0 0
0 0
0 0
<COMMON> 181 98
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 320,105 118,976
<SALES> 357,352 188,941
<TOTAL-REVENUES> 0 0
<CGS> 245,533 125,777
<TOTAL-COSTS> 325,825 159,328
<OTHER-EXPENSES> 271 (5)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 5,362 5,111
<INCOME-PRETAX> 25,894 24,507
<INCOME-TAX> 10,013 9,794
<INCOME-CONTINUING> 15,881 14,713
<DISCONTINUED> 0 0
<EXTRAORDINARY> 596 0
<CHANGES> 0 0
<NET-INCOME> 15,285 14,713
<EPS-PRIMARY> .82 .86
<EPS-DILUTED> .82 .86
</TABLE>
