Document:

EXHIBIT 10.40

                             SEVERANCE AGREEMENT

      THIS SEVERANCE AGREEMENT (the "AGREEMENT"), is entered into as of
_______________, 1999, by and between Cornell Corrections, Inc., a Delaware
corporation (the "COMPANY"), and ____________________ (the "OFFICER").

      WHEREAS, the Compensation Committee (the "COMMITTEE") of the Company's
Board of Directors (the "COMPANY BOARD") has determined that it is in the best
interests of the Company and its stockholders to assure that the Company will
have the continued dedication of the Officer, notwithstanding the possibility,
threat or occurrence of a Change in Control (as defined herein) of the Company;
and

      WHEREAS, the Committee believes that it is imperative to diminish the
inevitable distraction of the Officer by virtue of the personal uncertainties
and risks created by a pending or threatened Change in Control, to encourage the
Officer's full attention and dedication to the Company currently and in the
event of any threatened or pending Change in Control, and to provide the Officer
with compensation arrangements upon a Change in Control which provide the
Officer with individual financial security and which are competitive with those
of other corporations.

      NOW, THEREFORE, in consideration of the premises and the agreements herein
contained, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Officer hereby agree as follows:

      1. DEFINITIONS. As used in this Agreement, the following terms shall have
the following meanings (the singular includes the plural, unless the context
clearly indicates otherwise):

      (a) An "AFFILIATE" shall mean, with respect to any person or entity, any
person or entity that, directly or indirectly, Controls, is Controlled by, or is
under common Control with, such person or entity in question. For the purposes
of the definition of Affiliate, "CONTROL" (including, with correlative meaning,
the terms "CONTROLLED BY" and "UNDER COMMON CONTROL with") as used with respect
to any person, shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such person
or entity, whether through the ownership of voting securities or by contract or
otherwise.

      (b) A "CHANGE IN CONTROL" shall be deemed to have occurred on the earliest
of the following dates:

            (i) the date the Company merges or consolidates with any other
      entity, and the Company's stockholders do not own, directly or indirectly,
      at least 50% of the voting capital stock of the surviving entity;
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            (ii) the date the Company sells all or substantially all of its
      assets to any other person or entity; provided that the sale or other
      transfer of Company facilities to a real estate investment trust, in a
      sale-leaseback transaction, or any similar transaction shall not be
      considered a sale of all or substantially all of the Company's assets;

            (iii) the date the Company is dissolved;

            (iv) the date any third person or entity together with its
      Affiliates becomes, directly or indirectly, the beneficial owner of the
      least 51% of the Voting Stock of the Company; or

            (v) the date the individuals who constituted the members of the
      Company's Board of Directors ("INCUMBENT BOARD") as of the date of this
      Agreement cease for any reason to constitute at least a majority thereof,
      provided that for purposes of this clause (v) any person becoming a
      director whose election or nomination for election by the Company's
      stockholders was approved by a vote of at least eighty percent (80%) of
      the directors comprising the Incumbent Board (either by the specific vote
      or approval of the proxy statement of the Company in which such person is
      named as a nominee for director, without objection by such person to such
      a nomination) shall be, for purposes of this clause (v), considered as
      though such person were a member of the Incumbent Board;

provided, however, that notwithstanding anything to the contrary contained in
clauses (i) - (v), a Change in Control shall not be deemed to have occurred in
connection with any bankruptcy or insolvency of the Company, or any transaction
in connection therewith.

      (c) "CHANGE IN CONTROL DATE" shall be the date on which a Change in
Control occurs.

      (d) "CODE" shall mean the Internal Revenue Code of 1986, as amended.

      (e) "TERMINATION DATE" shall mean the date on which the Officer's
employment with the Company is terminated, by either the Company or the Officer.

      (f) "VOTING STOCK" means all the outstanding shares of capital stock of
Company entitled to vote generally in elections for directors, considered as one
class; provided, however, that if Company has shares of Voting Stock entitled to
more or less than one vote for any such share, each reference to a proportion of
shares of Voting Stock shall be deemed to refer to such proportion of the votes
entitled to be cast by such shares.

      2. BENEFITS UPON CHANGE IN CONTROL. If, within one (1) year after a Change
in Control, the Officer's employment with the Company is terminated (for any
reason, including but not limited to death or retirement, and whether with or
without cause and whether by the Officer or the Company), the Company shall be
required to provide the following benefits to the Officer:

      (a) The Company shall pay to the Officer in a lump sum in cash,
concurrently with the Termination Date if the Company discharges the Officer and
within 30 days of the Termination Date if the Officer's employment is terminated
by the Officer or upon the Officer's

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death or retirement, a payment equal to __________ times the sum of (i) the
Officer's highest annual base salary as of the Termination Date and the Change
in Control Date plus (ii) the average of the annual bonus paid or payable,
including by reason of any deferral, to the Officer by the Company or its
Affiliates in respect of the two most recent full fiscal years ending on or
prior to the Termination Date (or if the Officer has not been employed for two
full fiscal years, then the annual bonus in respect of the most recent full
fiscal year).

      (b) In addition to the cash benefits payable pursuant to Section 2(a)
hereof, all stock options, restricted stock awards and similar awards granted to
the Officer by the Company prior to the Termination Date shall immediately vest
on the Termination Date, notwithstanding any existing vesting schedule or other
terms set forth in any plan or agreement governing the term of such stock
options, restricted stock awards and similar awards.

      3. FULL SETTLEMENT. The Company's obligations to perform hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Officer. In no
event shall the Officer be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Officer under any of
the provisions of this Agreement. The Company agrees to pay, to the fullest
extent permitted by law, all legal fees and expenses which the Officer may incur
as a result of any contest by the Company or others of the validity or the
enforceability of, or liability under, any provision of this Agreement.

      4. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Officer's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices provided by the
Company or any of its subsidiaries and for which the Officer may qualify, nor
shall anything herein limit or otherwise affect such rights as the Officer may
have under any stock option, restricted stock or other agreements with the
Company or any of its subsidiaries. Amounts which are vested benefits or which
the Officer is otherwise entitled to receive under any plan, policy, practice or
program of the Company or any of its subsidiaries on the Change in Control Date
shall be payable in accordance with such plan, policy, practice or program.

      5. FUNDING. The Company shall pay the benefits under this Agreement out of
its general assets pursuant to the terms of this Agreement. There shall be no
special fund out of which benefits shall be paid, nor shall the Officer be
required to make a contribution as a condition of receiving benefits.

      6. TAX WITHHOLDING. The Company may withhold or cause to be withheld from
any benefits payable under this Agreement all federal, state, city or other
taxes that are required by any law or governmental regulation or ruling.

      7. NOTICES. Any notice required or desired to be given under this
Agreement or other communications relating to this Agreement shall be in writing
and delivered personally or mailed by United States registered or certified
mail, return receipt requested, postage prepaid, to the party concerned at the
address set forth below:

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            If to the Company to:   Cornell Corrections, Inc.
                                    1700 West Loop South, Suite 1500
                                    Houston, Texas 77027
                                    Attn:  Secretary

            With a copy (which shall not
             constitute notice) to:
                                    Locke Liddell & Sapp LLP
                                    3400 Chase Tower
                                    600 Travis
                                    Houston, Texas   77002
                                    Attn:  Marcus A. Watts

            If to the Officer to:   At his residence address as
                                    maintained by the Company in
                                    the regular course of its
                                    business for payroll purposes.

      8. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties hereto with respect to severance payments and supersedes any prior
agreement, arrangement or understanding, whether oral or written, between the
Company and the Officer concerning severance payments.

      9. CHOICE OF LAW. This Agreement shall be governed by, and enforced
according to, the laws of the State of Texas. The invalidity of any provision
shall be automatically reformed to the extent permitted by applicable law and
shall not affect the enforceability of the remaining provisions hereof. The
Officer hereby waives any objection which he may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement brought in the District Court of Harris County, State of Texas,
or in the United States District Court for the Southern District of Texas, and
hereby further waives any claims that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.

      10. ASSIGNMENT. The rights and obligations under this Agreement of the
Company and the Officer may not be assigned, except that the Company may, at its
option, assign one or more of its rights or obligations under this Agreement to
any of its subsidiaries or affiliates, or in connection with a transfer of all
or substantially all of the assets or stock of the Company or a merger or
consolidation of the Company with and into another corporation or other entity,
provided that in each case the Company shall remain responsible for its
obligation hereunder.

      11. COUNTERPARTS. This Agreement may be executed in several identical
counterparts, and by the parties hereto on separate counterparts, and each
counterpart, when so executed and delivered, shall constitute an original
instrument, and all such separate counterparts shall constitute but one and the
same instrument.

      12. MODIFICATION. This Agreement may be modified only by written agreement
signed by the Officer and by the President or Secretary of the Company. The
failure to insist upon compliance with any provision hereof shall not be deemed
a waiver of such provision or any other provision hereof.

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<PAGE>
      IN WITNESS WHEREOF, the undersigned parties have executed this Agreement
effective as of the date first written above.

                                    CORNELL CORRECTIONS, INC.

                                    By: ___________________________
                                       John L. Hendrix
                                       Chief Financial Officer

                                    THE OFFICER

                                    _________________________________
                                    Name:____________________________

                                       5EXHIBIT 10.1

                                    AGREEMENT

                                     BETWEEN

                            YORK CASKET COMPANY - IN

                                       AND

                             DISTRICT LODGE 90, AND
                              LOCAL LODGE NO. 2532
                                     OF THE
                     INTERNATIONAL ASSOCIATION OF MACHINISTS
                         AND AEROSPACE WORKERS, AFL-CIO

                             EFFECTIVE JUNE 12, 1999
                              THROUGH JUNE 11, 2002
<PAGE>
                                      INDEX

                                                               PAGE
                                                               ----

            ARTICLE  1  Recognition of Union ....................1
            ARTICLE  2  Union Security...........................1
            ARTICLE  3  Management Rights........................2
            ARTICLE  4  Grievance Procedure......................2
            ARTICLE  5  No Strike - No Lockout...................5
            ARTICLE  6  Seniority ...............................5
            ARTICLE  7  Promotions ..............................8
            ARTICLE  8  Work By Non-Bargaining
                              Unit Employees.....................9
            ARTICLE  9  Rates of Pay............................10
            ARTICLE 10  Incentive Pay...........................11
            ARTICLE 11  Report Pay and Call-In
                              Pay ..............................13
            ARTICLE 12  Bereavement Pay.........................14
            ARTICLE 13  Jury Duty Pay...........................14
            ARTICLE 14  Insurance ..............................15
            ARTICLE 15  Profit Sharing and
                              401K Plan.........................15
            ARTICLE 16  Paid Holidays...........................16
            ARTICLE 17  Vacation Pay............................17
            ARTICLE 18  Hours of Work...........................19
            ARTICLE 19  Leaves of Absence.......................21
            ARTICLE 20  Union Representation....................22
            ARTICLE 21  Safety Committee........................23
            ARTICLE 22  Discrimination
                              Prohibited........................23
            ARTICLE 23  Savings Clause..........................23
            ARTICLE 24  Complete Agreement......................24
            ARTICLE 25  Duration of Agreement...................24
            APPENDIX A  ........................................26
            LETTER ON INSURANCE ................................27
            LETTER OF UNDERSTANDING.............................28

                                       i
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                         COLLECTIVE BARGAINING AGREEMENT

            THIS AGREEMENT is executed this 12th day of June, 1999, between York
Casket Company - IN (hereinafter called the "Company") and District Lodge 90,
and Local Lodge No. 2532 of the International Association of Machinists and
Aerospace Workers, AFL-CIO (hereinafter called the "Union"). This contract is
intended to be gender neutral. Any use of a masculine or feminine form of any
word is intended to include the other gender, unless specially noted otherwise.

                                   WITNESSETH:

                                    ARTICLE 1
                              RECOGNITION OF UNION

            The Company recognizes that the Union was certified by the National
Labor Relations Board as the exclusive bargaining agent with respect to rates of
pay, wages, hours of employment, and other conditions of employment for all
employees in the following appropriate bargaining unit, who are the employees
covered by this Agreement:

            All production and maintenance employees at the Employer's Lynn,
Indiana, establishment:

            BUT EXCLUDING all office clerical employees, all professional
employees, all over-the-road truck drivers, all part-time janitorial employees,
all guards, and all supervisors as defined in the Act.

                                    ARTICLE 2
                                 UNION SECURITY

            SECTION 2.1. UNION SHOP. Each employee shall, as a condition of
employment, become and remain a member of the Union provided that such
membership is available to him on the same terms and conditions generally
applicable to other members of the Union, and provided that such Union
membership is not denied or terminated for reasons other than the failure of the
employee to tender the periodic dues and the initiation fees uniformly required
as a condition of acquiring or retaining membership in the Union.

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<PAGE>
            For employees who, on the effective date of this Agreement, are
members of the Union, the obligation of Union membership shall commence on the
effective date of this Agreement. For employees who are not members of the Union
on the effective date of this Agreement, and for new employees hired hereafter,
such obligation shall commence on the sixty-first (61st) actual day worked
following the beginning of their employment or the effective date of this
Agreement, whichever is later. For this purpose, the "effective date" of this
Agreement shall be the date upon which its provisions become effective or the
date of execution, whichever is later.

            Whenever any employee is in default of his obligation under this
Section, the Union may give written notice of such default to the Company, which
shall discharge such employee.

            SECTION 2.2. CHECK-OFF OF DUES. The Company shall deduct from the
wages of each employee who heretofore or hereafter executes and delivers to the
Company a voluntary check-off card, conforming to law, the dues lawfully and
uniformly required of members of the Union. Such deductions shall be made from
the wages due each employee on the first payday in each month, provided the
employee had sufficient earnings in that week to cover the amount of the
deduction. The amount so deducted shall promptly be remitted to the financial
secretary of the Union together with a list of the names of employees in
alphabetical order on whose behalf remittance is made and the amount.

            SECTION 2.3. INDEMNIFICATION BY UNION. The Union agrees to hold the
Company free and harmless from any and all liability to which it may be
subjected under federal, state or municipal law as a result of action taken or
not taken by the Company for the purpose of complying with any of the provisions
of this Article 2, or in reliance on any list, notice or checkoff card furnished
under any of such provisions.

                                    ARTICLE 3
                                MANAGEMENT RIGHTS

            Except as expressly limited by this Agreement, the Company shall
have the exclusive right to manage the plant, including, without limiting the
generality thereof, the right to direct the working forces, plan, direct and
control the plant operations, determine the work to be performed or not
performed, to hire, promote, demote, discipline, suspend or discharge for just
cause, to establish and enforce reasonable rules governing the conduct of
employees, and to determine and improve methods of productions, and to establish
and attain reasonable work production standards. The exercise of the functions
of management will not be used for the purpose of discrimination against any
employee nor shall they be exercised in violation of any of the terms of this
Agreement.

                                    ARTICLE 4
                               GRIEVANCE PROCEDURE

            SECTION 4.1. GRIEVANCE DEFINED. A grievance is a dispute, arising
during the term of this Agreement, concerning the interpretation, application or
alleged violation of an express provision of this Agreement or a claim that the
discipline or discharge of an employee was without proper cause.

            SECTION 4.2. GRIEVANCE PROCEDURE. All grievances shall be disposed
of in the following manner:

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<PAGE>

            (a) STEP 1. The aggrieved employee shall present the grievance to
his foreman, with or without the steward as the employee shall choose, for
informal discussion and settlement. The foreman shall give the employee his
decision on the grievance within one (l) working day after it has been presented
to him.

            (b) STEP 2. If the grievance is not settled in Step 1, the grievance
shall, within three (3) working days after the employee or the Union Committee
knew or should have known of the incident or event which gives rise to the
grievance, be reduced to writing in duplicate by the employee or the Union
Committee and shall be signed by the employee or the Union Committee on forms
devised for that purpose by the Company and the Union. It shall then be
submitted to the Company for consideration at a grievance meeting to be composed
of the Shop Committee of the Union, the business representative of the Union,
and such representative of the Company who are designated by the President of
the Company for discussion and settlement. Only one (l) Step 2 grievance meeting
shall be held each month for the purpose of considering all grievances which
have proceeded to Step 2 by the date of such meetings, except for grievances
concerning the discharge of an employee where the parties will have a meeting,
to discuss and try to settle any discharge within two (2) working days of the
occurrence. The Company shall give the Union its Step 2 decision in writing
within five (5) working days after the date of the meeting. The monthly
grievance committee meeting will be held on the third Wednesday of each month,
commencing one (1) hour prior to end of shift if there are any grievances to
consider.

            A grievance involving a contract violation of general application
may be filed by the Shop Committee.

            SECTION 4.3. ARBITRATION.

            (a) If the grievance has not been settled under the steps outlined
above, the Union may, by written notice within thirty (30) calendar days after
the Company's answer at Step 2 of the grievance procedure, submit the grievance
to arbitration.

            (b) Promptly after notice of the Union's desire to arbitrate is
given, the parties shall request the Federal Mediation and Conciliation Service
to submit to them a list of seven (7) names from which the arbitrator will be
selected. The parties shall alternately strike names from the list until one
name remains who shall be the arbitrator for that grievance. In the selection of
the first panel under this Agreement, the Union shall strike first, and
thereafter the parties shall alternate in being the first to strike. Either
party may reject an entire panel of arbitrators up to a maximum of three (3)
panels.

            (c) The arbitrator so selected shall have the jurisdiction and
authority to interpret and apply the provisions of this Agreement to any
grievance which is subject to arbitration and has been submitted to him by the
parties in accordance with the provisions of this Agreement. No

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<PAGE>
arbitrator shall have the jurisdiction or authority to add to, take from or
modify any of the terms of this Agreement, nor to impair any rights reserved to
any party under this Agreement.

            (d) The arbitrator shall be bound by the evidence and exhibits
submitted to him at the hearing. The decision of the arbitrator shall be in
writing, shall be limited to the issues directly submitted to him by the
grievance and shall be final and binding upon the Company, the Union and the
grievant when rendered upon a matter within the authority of the arbitrator.

            (e) The fees and expenses of the arbitrator and the cost of the
hearing room shall be shared equally by the parties. All other expenses shall be
paid by the party incurring them.

            (f) An arbitrator selected under the provisions hereof shall act
only on one grievance at one time unless the parties, by mutual agreement, group
related grievances for submission in a single proceeding.

            SECTION 4.4. FAILURE TO OBSERVE TIME LIMITS. In the event the
grievant or the Union fails to exhaust its remedies under the grievance
procedures provided above, or to abide by the time limits with respect to each
step, the grievance shall be presumed to be abandoned and the matter shall be
settled in accordance with the Company's last answer thereto. In the event the
Company fails to give its answer at any step within the time limits prescribed,
the Union shall have the right to proceed immediately to the next step,
including arbitration. Any time limits may be extended by mutual agreement of
the parties.

            SECTION 4.5. Grievances must indicate Article and Section where
contract is violated and remedy requested by the employee or will not be subject
to this Article.

            SECTION 4.6. Grievance procedures will be limited to employees who
have completed their probationary period.

                                    ARTICLE 5
                             NO STRIKE - NO LOCKOUT

            SECTION 5.1. STRIKES AND LOCKOUTS PROHIBITED. As consideration for
the right to have a grievance processed through the grievance procedure, the
Union agrees that during the life of this Agreement neither it nor its officers,
representatives, committeemen, stewards, nor any employee will for any reason,
directly or indirectly, call, sanction or engage in any strike, walkout,
slow-down, sit-down, stay-away, limitation of production, boycott of a primary
or a secondary nature, picketing or any other form of interference with the
operation of the business of the Company.

            The Company agrees that during the term of this Agreement it will
not lock out any employees covered by this Agreement.

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<PAGE>
            SECTION 5.2. DISCIPLINE FOR VIOLATION. If any individual employee or
group of employees violates the previous paragraph, he or they may be summarily
dealt with by the Company at its discretion, by reprimand, suspension, or
discharge. Any such disciplinary action shall be subject to the grievance
procedure.

                                    ARTICLE 6
                                    SENIORITY

            SECTION 6.1. ACQUISITION OF SENIORITY. Seniority shall be plant-wide
and shall be established as of the date that the employee was last hired by the
Company. During the first sixty (60) actual days worked an employee shall be
probationary and shall have no seniority rights. At the completion of his
probationary period, the employee's name and date of last hire shall be placed
on the seniority list. Employees hired on the same day shall be ranked in
alphabetical order.

            SECTION 6.2. LAYOFF.

            (a) LESS THAN FIVE DAYS. If the Company shall be required to reduce
the number of employees in a given classification for less than five (5) full
working days, the reduction shall be accomplished as follows:

                  (i)   All probationary employees will be laid off from the
                        affected classification.

                  (ii)  Employees in the affected classification with the least
                        seniority will be removed from the affected
                        classification.

                  (iii) An employee with seniority rights who is removed from
                        an effected classification shall have the right to three
                        bumps of a less senior employee whose job he has the
                        ability to perform without trial or training.

            (b) FIVE DAYS OR MORE. In addition to the procedure as set forth in
paragraph (a) of this Section, if a classification is eliminated, or if the
layoff or reduction in force shall be for a period of five consecutive full
working days or more, then an employee with seniority rights who is removed from
his department pursuant to paragraph (iii) of paragraph (a) of this Section
shall thereupon have the right to three bumps of a less senior employee whose
job he has the ability to perform either presently or whose job he can perform
within a five working day training period, provided, however, that the training
period to qualify for a swing position shall be ten working days. An employee
laid off from his own job who does not wish to exercise such right shall have
the option to accept such layoff.

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            (c) A representative of the Union shall be present during any
discussion between an Employee and the Company concerning the effect on that
employee of any layoff.

            SECTION 6.3. RECALL. Recall to work from layoff shall be according
to seniority, taking into consideration the same requirements of ability as set
forth in Section 6.2. Employees who displace employees in another classification
upon recall may return to their former classifications, in order of seniority
standing, when openings occur. When employees do not return to former
classifications when seniority permits, the Company will not be required to
return them thereafter in the absence of successful exercise of bidding rights.
If an employee is laid off from the plant and is recalled to a job from which
the employee has not previously been disqualified, that employee will thereafter
be eligible for three bumps. An employee who is displaced from a classification
by a more senior employee may be recalled to his/her original position for a
period of twelve months, if the classification subsequently becomes vacant,
unless the employee has bid into another classification prior to the recall.

            SECTION 6.4. COMPENSATION DURING LAYOFF AND RECALL. Any employee who
displaces an employee in a different classification or is recalled to a
different classification as a result of a layoff will receive the rate of pay of
the classification to which he is transferred or recalled.

            SECTION 6.5. TEMPORARY ASSIGNMENTS. Aside from periods of layoff,
employees may at any time be temporarily assigned to other jobs and
classifications in the interest of efficient operation. Where practical to do
so, the Company shall attempt to make such temporary assignments from qualified
employees in available classifications who desire to perform the temporary work.
An employee temporarily assigned to a different classification for the
convenience of the Company will be paid the rate of pay which he received in his
regular classification or the rate of pay of the classification to which he is
temporarily assigned, whichever is higher. An employee who is temporarily
assigned to a job in another classification because of a condition of no work on
the job which he was performing will receive the rate of pay of the
classification to which he has been temporarily assigned. Unless the Company and
Union otherwise agree, temporary assignments will not extend beyond thirty (30)
days except in the case of filling vacancies of employees who are gone because
of sickness or personal leave of absence, in which event temporary assignments
will not extend beyond sixty (60) days.

            The Company agrees that they will use the swing person on jobs
before transferring an employee to a different job.

            If an employee is transferred from outside a department which raises
the number in the department to above the normal compliment, then the employee
transferred from outside will not be charged to the department bonus.

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            In selecting the person to be transferred to a higher paying job,
the seniority of the available employees will be given preference.

            SECTION 6.6. SENIORITY LIST. A list of employees rated according to
seniority will be posted quarterly by the Company in the plant. A copy of such
list will be given to the Chairman of the Shop Committee, who will be kept
advised of all periodic additions to and deletions from the list. Employees are
required to bring to the attention of the Company, within ten (10) days of the
date of posting, any irregularity or error affecting their seniority status;
otherwise the seniority list will not be subject to further challenge or change.

            SECTION 6.7. LOSS OF SENIORITY. Seniority shall be lost
if any of the following occurs:

                  (a) The employee quits or retires.

                  (b) The employee is discharged for just cause.

                  (c) The employee, when recalled from layoff, fails to report
to work within three working days after notice of recall is received by the
employee at his address reflected by the records of the Company.

                  (d) The employee fails to report for work at the expiration of
the period granted by the Company for a leave of absence.

                  (e) Remains off payroll for a period of more than twenty-four
(24) months, except that the period shall be thirty-six (36) months for an
employee who is off the payroll due to a work-related injury.

                  (f) The employee is absent for three consecutive working days
without notification to the Company.

            SECTION 6.9. NON-BARGAINING UNIT EMPLOYEES. The right to promote
employees to positions outside the bargaining unit is vested solely with the
Company. An employee who is transferred to a job outside the bargaining unit
shall retain the seniority which he had accumulated up to the time of his
transfer for a period of three (3) months but he shall not accumulate further
seniority during such period.

            SECTION 6.10. MILITARY SERVICE. Notwithstanding any other provision
of this Agreement, any employee with seniority rights who leaves the employment
of the Company to enter the military service of the United States shall have all
of the rights of reinstatement, seniority, status and pay provided in the
applicable laws of the United States as amended from time to time.

                                       7
<PAGE>
            SECTION 6.11. PHYSICAL DISABILITY. If an employee is unable to
perform his regular job because of physical disability, the Company and Union
will endeavor to place him on an open or temporary job which he can perform.
Where the disability is covered by the Americans with Disabilities Act, the
Company will comply with that law and its sections relating to accommodation and
nothing in this Agreement will supercede any obligation under that law.

            SECTION 6.12. VOLUNTARY JOB OPPORTUNITY. To the extent such
positions are available, employees eligible for recall from layoff will be
afforded the opportunity to work as a janitorial employee. When working in such
a job, the employee will be paid the legal minimum wage and be entitled to the
benefits of this agreement in all respects. The work opportunity shall be
offered to employees on the recall list in the order they appear on the list.
[Accepting a janitorial job under this Section will be voluntary and acceptance
or rejection of the job opportunity will not adversely affect any other right
under the agreement the employee may have.]

                                    ARTICLE 7
                                   PROMOTIONS

            Bidding will be permitted for employees upgrading to higher paying
jobs. Employees may also bid lateral and down. In the event a permanent vacancy
occurs in an existing job and the Company declares it open, a notice will be
posted for three (3) working days on such permanent vacancy and the employees in
the plant may indicate their desire to be considered for such job. The Company
will make the selection of such employee. Seniority shall be given consideration
where the employee has the skill, experience and ability to perform the work.

            Employees with less than six (6) months' service will not be
eligible to post under the procedure. Any employee who posts successfully shall
not be eligible to post again for a period of six (6) months. Special Skilled
jobs will be subject to the posting procedure; however, to be successful in a
bid, the bidding employee must be immediately qualified to perform the work. An
employee who is selected for a job bid and fails to meet the job requirement or
disqualifies himself within a period of two (2) weeks will be returned to his
former job without loss of seniority. The employee who disqualifies himself will
not be allowed to bid again for twelve (12) months and where the Company
disqualifies the employee six (6) months. An employee who is selected for a
swing job must qualify for the job within fifteen working days.

                  If an employee vacates a job due to a leave of absence for any
reason, during the first sixty days of the absence the Company may fill the
vacancy through the bid process or by temporary transfer. If the absence lasts
for more than sixty days, the vacancy must be filled through the bid process.
When the employee returns from the absence, the employees who changed jobs as a
result of the filling of the vacancy will return to the jobs from which they
came.

                  During the life of the contract, employees may bid on a
lateral job (to a same base wage rate job) only three times, provided that all
other conditions of this Article are satisfied.

                                       8
<PAGE>
                  Employees may bid on higher paying jobs as many times as this
Article may permit.

                                    ARTICLE 8
                  WORK BY NON-BARGAINING UNIT EMPLOYEES

                  Employees not covered by this agreement shall not perform work
which is recognized as the work of the bargaining unit, except for the
following:

                  1.    In connection with the instruction, training and
                        assisting of the bargaining unit employees.

                  2.    In connection with experimental work, new methods and
                        trial runs.

                  3.    In urgent circumstances involving plant or employee
                        security or safety.

                  4.    When a bargaining unit employee qualified to perform the
                        work is not available. After the first two (2) hours,
                        the Company will make every reasonable effort to fill
                        vacant jobs from within the bargaining unit.

                  5.    Provide relief when no other employee is available to
                        provide relief.

                  6.    Performing tasks of short duration unrelated to regular
                        production.

                  7.    In other instances of incidental work where the
                        performance of such duties does not deprive bargaining
                        unit employees of earning opportunities.

            The Company agrees that foremen and other supervisory employees are
employed for purposes of supervision. They are not employed to work in place of
bargaining unit employees or so as to diminish the size of the bargaining unit.
Accordingly as used above:

            "Instruction" means communicating to the employee how to do the
task;

            "Training" means teaching the employee how to do the job;

            "Assisting" means helping if there is a production or operating
problem, but does not mean performing the work of the employee because the
employee is behind in production.

                                    ARTICLE 9
                                  RATES OF PAY

                                       9
<PAGE>
            SECTION 9.1. RATES OF EXISTING JOBS. The minimum starting and
established rates of pay for employees in the various job classifications are as
set forth in Appendix A attached hereto and made a part hereof. Incentive
employees shall receive their established base rates of pay in increments of at
least five cents following each successive two weeks of employment, but they
shall be entitled to the full bonus following completion of their probationary
period or at such earlier time as the Company determines them qualified. General
labor employees will receive their established rate after completion of their
probationary period. Maintenance department employees will receive periodic
increases up to their established rate, as determined by the Company, during a
period not to exceed six months. The regular hourly rate of incentive employees,
as that term is used in this Agreement, shall include both their base rate and
their average hourly incentive rate as computed by the Company in accordance
with its existing practice.

            SECTION 9.2. RATES OF NEW JOBS. If a new job is created, the Company
and the Union shall meet and attempt to agree what job classification and wage
rate shall apply. If no agreement is reached, the Company will determine the job
classification and wage rate which shall apply. At any time within thirty (30)
days after the actual operation of the job commences, the Union or the affected
employee may initiate a grievance covering the propriety of the wage rate
established. If as a result of a grievance the wage rate is changed, such change
will be retroactive to the date that operation of the job first commenced. This
same procedure shall be applicable to any shift premium which may appropriately
be paid to employees in event the Company determines to schedule an additional
shift or shifts.

            SECTION 9.3. SHIFT DIFFERENTIAL. The Company will pay a shift
differential as follows:

                            2nd shift - $.30 per hour
                            3rd shift - $.35 per hour

                                   ARTICLE 10
                                  INCENTIVE PAY

            SECTION 10.1. PRODUCTION LINE. Employees assigned to the assembly
department may receive during each regular workweek a group incentive bonus
computed as follows:

                  (a) The total number of hours worked by all employees
regularly assigned to the department during such week shall first be divided by
four to arrive at the minimum number of casket shell units required to be
produced before incentive pay is required to be paid.

                  (b) The required minimum derived from the computation in
paragraph (a) shall then be subtracted from the total number of casket shell
units satisfactorily produced by the department during such workweek to arrive
at the number of units to which the group allowance bonus shall be applied.

                  (c) GROUP BONUS PAYMENT:

                                       10
<PAGE>
                  The number of units to which the group allowance bonus shall
be applied as derived from the computation in paragraph (b) shall be multiplied
by $6.60 ($8.10 for 18 gauge) to arrive at the total amount of group incentive
pay to be received by all employees regularly assigned to the department during
said workweek.

                  (d) The total amount of group incentive pay to be received by
all department employees during such workweek, as derived from the computation
in paragraph (c), shall then be divided by the total number of hours worked
during such workweek by all employees regularly assigned to the production line
during that week. The resulting quotient will be the incentive rate per hour
that each such employee shall be entitled to receive that week (in addition to
his base rate) for each hour worked.

            SECTION 10.2. PAINT DEPARTMENT. Employees assigned to the paint
department may receive during each regular workweek a group incentive bonus
computed as follows:

                  (a) The total number of hours worked by all employees
regularly assigned to the department during such week shall first be divided by
four to arrive at the minimum number of casket shell units required to be
produced before incentive pay is required to be paid.

                  (b) The required minimum derived from the computation in
paragraph (a) shall then be subtracted from the total number of casket shell
units satisfactorily produced by the department during such workweek to arrive
at the number of units to which the group allowance bonus shall be applied.

                  (c) GROUP BONUS PAYMENT:

                  The number of units to which the group allowance bonus shall
be applied as derived from the computation in paragraph (b) shall be multiplied
by $6.60 ($8.10 for 18 gauge) to arrive at the total amount of group incentive
pay to be received by all employees regularly assigned to the department during
said workweek.

                  (d) The total amount of group incentive pay to be received by
all department employees during such workweek, as derived from the computation
in paragraph (c), shall then be divided by the total number of hours worked
during such workweek by all employees regularly assigned to the paint line
during that week. The resulting quotient will be the incentive rate per hour
that each such employee shall be entitled to receive that week (in addition to
his base rate) for each hour worked.

            SECTION 10.3. INTERIOR DEPARTMENT. Employees assigned to the
interior department may receive during each regular workweek a group incentive
bonus computed as follows:

                                       11
<PAGE>
                  (a) The total number of hours worked by all employees
regularly assigned to the department during such week shall first be divided by
four to arrive at the minimum number of casket shell units required to be
produced before incentive pay is required to be paid.

                  (b) The required minimum derived from the computation in
paragraph (a) shall then be subtracted from the total number of casket shell
units satisfactorily produced by the department during such workweek to arrive
at the number of units to which the group allowance bonus shall be applied.

                  (c) GROUP BONUS PAYMENT:

                  The number of units to which the group allowance bonus shall
be applied as derived from the computation in paragraph (b) shall be multiplied
by $5.50 ($7.00 for 18 gauge) to arrive at the total amount of group incentive
pay to be received by all employees regularly assigned to the department during
said workweek.

                  (d) The total amount of group incentive pay to be received by
all department employees during such workweek, as derived from the computation
in paragraph (c), shall then be divided by the total number of hours worked
during such workweek by all employees regularly assigned to the interior line
during that week. The resulting quotient will be the incentive rate per hour
that each such employee shall be entitled to receive that week (in addition to
his base rate) for each hour worked.

            SECTION 10.4. ADMINISTRATION OF INCENTIVE PROGRAMS. Except as may
otherwise be provided in this Article, the Company will continue to administer
its incentive pay program on substantially the same basis as has heretofore
existed. When the Company requires temporary or regular assignments outside of
his normal department the hours of the employee transferred will be charged to
the incentive program of the department to where the employee was transferred.
Probationary employees will receive one-half the normal incentive bonus until
the Company determines them qualified or until the successful completion of
their probationary period, whichever is earlier, and the full bonus thereafter.
Until determined qualified by the Company during or at the completion of
probation, hours worked by probationary employees shall not be charged to their
group's bonus.

            When a new employee or temporarily transferred employee is being
trained, the training time will not be counted for purposes of calculating the
bonus for the department.

            SECTION 10.5. CHANGES IN INCENTIVE RATES. All incentive rates now in
effect, and incentive rates hereafter agreed upon, shall be designed to enable
the normal qualified employee working with continued incentive effort to have
the opportunity to receive incentive earnings on substantially the same basis as
now in effect. Such incentive rates shall be subject to revision if there are
changes in material, method, equipment, or personnel so as to materially affect
such earnings opportunity; however, no such revision shall be made until a
reasonable period of time has elapsed

                                       12
<PAGE>
to enable the parties to evaluate the effect of any such changes. Disputed
incentive rates shall be subject to the grievance procedure.

            Effective January 1, 2000, the incentive multipliers for all jobs
participating in the incentive program will be increased from the rates in
effect on December 31, 1999, to reflect a $.50 increase in bonus earnings.

            SECTION 10.6. Overtime hours worked in a department at times when
there is no general production which are in excess of the product of the number
of employees regularly assigned to the department times 40 for the week will not
be counted for bonus calculation purposes.

                                   ARTICLE 11
                           REPORT PAY AND CALL-IN PAY

            SECTION 11.1. REPORT PAY. Employees who report for work at their
regular starting time and have not been given at least two (2) hours' notice not
to report shall be guaranteed at least four hours' pay during the scheduled work
period, except in cases of labor disputes, power failure or other external
failure of utilities, or other conditions clearly beyond the control of the
Company. Straight time employees shall be paid their regular hourly rate
(including their average incentive pay). The Company shall have the right to
assign such employees to other available work for four consecutive hours. This
right shall not be applicable to employees who do not have on file with the
Company a telephone number at which they can be notified.

            SECTION 11.2. CALL-IN PAY. Employees who are called in to work
outside of their regular shifts or schedules shall be paid at the rate of time
and one-half for all time worked in excess of eight (8) hours in any one (l)
day. A minimum of four (4) hours will be allowed, except that an employee may,
if the call-in work is completed prior to the expiration of four (4) hours,
leave work and receive pay for the time which he actually worked. If the
employee elects not to leave work when the call-in work is completed the Company
may assign him to any other work it determines during the remainder of the four
hours. This four-hour guarantee shall not apply to maintenance employees who
work for short periods of time at irregular hours for their own convenience.

                                   ARTICLE 12
                                 BEREAVEMENT PAY

            An employee who is absent from work due to the death of a member of
his immediate family will be paid eight hours' pay at his regular hourly rate
for a period not to exceed three (3) consecutive scheduled working days, which
the employee would otherwise have worked, ending the day of the funeral,
provided prompt notice of his or her intention to be absent is given to his or
her foreman.

                                       13
<PAGE>
            "Immediate family" shall include the employee's spouse, child,
step-child, foster child (if living in the employee's home) parent, grandparent,
brother, sister, mother-in-law, father-in-law, step-father or step-mother,
grandchild.

            Employees who have a death in the family not covered under the
bargaining agreement for time off, will receive one day off for the funeral and
will be excused from work.

            If there is a death in the immediate family and the funeral is not
held until after three bereavement leave days, the employee will be excused for
the additional time off through the day of the funeral.

            Employees who have a death of a brother-in-law or sister-in-law and
the funeral is held on a regularly scheduled workday for the employee, the
employee will be excused from work for the entire day and not suffer a loss of
pay, provided the employee attends the funeral.

                                   ARTICLE 13
                                  JURY DUTY PAY

            An employee who has completed his probationary period and who is
required to perform jury service or to serve as a witness as prescribed by law,
will receive, for each day of such service on which he would otherwise have
worked for the Company, the difference between eight (8) times his regular
straight time hourly rate and the payment he receives for such service up to a
maximum of 40 hours in any one week.

            An employee shall work on any day or part of a day when he is not
required to appear in court.

            The Company's obligation to pay an employee for jury and witness
service shall be limited to a maximum of thirty (30) days.

            In order to receive payment, an employee must give the Company as
much prior notice that he has been summoned for jury duty or subpoenaed as a
witness as reasonably possible and must furnish satisfactory evidence that he
performed these services on the days for which he claims such payment from the
Company.

            The employee shall also furnish evidence as to the pay received by
him for the performance of such services.

            The provisions of this Article shall not apply to an employee who,
without being summoned or subpoenaed, volunteers for such jury service or
service as a witness.

                                      114
<PAGE>
                                   ARTICLE 14
                                    INSURANCE

            During the term of this Agreement, the Company shall keep in full
force and effect a group insurance plan. Employees will pay $2.00 per week
(effective 1/1/00 this shall be$10.00 per week) toward their insurance coverage
and the Company will pay the balance. Employees desiring coverage for their
dependents will pay $4.00 per week (effective 1/1/00 this shall be $20.00 per
week) toward the amount of the premium for dependent coverage, and the Company
will pay the balance. The terms and provisions of the group insurance plan are
set forth in the policies of insurance, which are incorporated herein by
reference. The policies of insurance shall contain, at a minimum, the terms set
forth in the letter of insurance attached hereto. The Company and Union agree
that their rights and obligations, and those of the employees, respecting
insurance shall be governed solely by the terms and provisions of such insurance
policies and that in event of any conflict between the terms and provisions of
such insurance policies and the provisions of this Agreement or any
interpretation heretofore made by the parties or any custom or practice
heretofore made or observed by the parties, the terms and provisions of the
policies shall be controlling and shall supersede any such conflicting terms,
provisions, interpretations, customs, or practices.

                                   ARTICLE 15
                          PROFIT SHARING AND 401K PLAN

            Through December 31, 1995, the Company shall keep in full force and
effect its existing profit sharing plan upon the same terms and conditions. The
terms and provisions of this plan are contained in a separate document which is
incorporated herein by reference. The Company and Union agree that their rights
and those of the employees respecting such plan shall be governed solely by its
terms and provisions and that in event of conflict between the terms and
provisions of such plan and the provisions of this Agreement or any
interpretation heretofore made by the parties, the terms and provisions of the
plan shall be controlling and shall supersede any such conflicting terms,
provisions, interpretations, customs, or practices. Employees will be furnished
information as to the status of their interest in the profit sharing plan
annually.

            A 401K plan will be established effective January 1, 1996; the
current retirement plan will be terminated and the assets put into individual
employee 401K accounts according to the shares of the employees in those assets
or, at the employee's option, will be paid to the employee (minus any applicable
penalties and taxes required by law); the Plan shall provide that each employee
may contribute into his 401K account as much of his pre-tax income per year as
may be permitted by law; the Company will match the employee's contribution at
the rate of $.50 per $1 of employee contribution, to a maximum of $100/year.

                                   ARTICLE 16
                                  PAID HOLIDAYS

                                       15
<PAGE>
            All employees who have completed their probationary period shall
receive eight hours' pay at their regular hourly rate, although no work is
performed, for the following holidays:

                  l.    New Year's Day

                  2.    Memorial Day

                  3.    Fourth of July

                  4.    Labor Day

                  5.    Thanksgiving Day

                  6.    Day after Thanksgiving Day

                  7.    Christmas Day

                  8.    Day before or day after Christmas Day

                  9.    One additional day during week between Christmas Day and
                        New Year's Day

                  10.   Good Friday

                  11.   Effective January 1, 1996, one personal day per calendar
                        year

            Each general holiday will be observed on the day it occurs or on any
other day fixed by law or appropriate governmental proclamation. The eighth paid
holiday listed above will be observed on the day before Christmas when Christmas
falls on a Tuesday, Friday or Saturday, and on the day after Christmas when
Christmas falls on a Sunday, Monday, or Thursday. With respect to the ninth paid
holiday listed above, and/or when Christmas falls on a Wednesday, the Company
will notify the employees as to which day such holiday or holidays will be
observed not later than the preceding December 1.

            Personal holidays must be scheduled and approved by the employee's
supervisor at least one week in advance. The Company reserves the right to deny
an employee's request due to operational necessity. Where too many employees
request a particular day off, the employee(s) with the greatest seniority shall
be given preference. A personal day may be combined with any other leave (e.g.,
holiday or vacation), provided that all other terms of this Article are complied
with. An employees who does not use his personal day will be paid eight hours at
his regular hourly rate in lieu of the time off at the end of the calendar year.

                                       16
<PAGE>
            The regular hourly rate for an incentive worker shall be computed on
the basis of his incentive pay during the week in which the holiday occurred, or
in event no incentive pay was earned during that week, during the last preceding
week in which such incentive pay was earned. To be eligible for a paid holiday,
an employee must have worked at some time during five (5) days preceding the
holiday and must work all hours scheduled for him (excluding overtime) on the
regularly scheduled workday immediately preceding and following the holiday
unless absence on either or both of such days is due to:

                  (a)   The employee's scheduled vacation;

                  (b)   Illness or injury supported by a doctor's certification
                        if requested;

                  (c)   Death in the family as defined in Article 12; or

                  (d)   Personal or family emergency.

                                   ARTICLE 17
                                  VACATION PAY

            SECTION 17.1. AMOUNT OF VACATION.

                  (a) Eligible employees who as of July l of such year have
acquired at least one year's seniority shall be eligible for a paid vacation in
accordance with the following schedule:

            Seniority   Vacation Pay

One year but less than three years                One week
Three years but less than eight years             Two weeks
Eight years but less than Fifteen years           Three weeks
Fifteen years or more                             Four weeks

                  (b) Each employee's vacation pay shall he computed on the
basis of his gross earnings paid the employee in the calendar year immediately
preceding January 1st, provided he has worked at least 1,000 hours from July l
of the preceding year to July l of the vacation year.

            SECTION 17.2. It is understood that no vacation pay will be made to
employees who terminate or are discharged by the Company.

            The Company will pay vacation pay upon death, retirement, absence
due to a work-related injury, voluntary quit following a notice of at least two
weeks, or permanent disability of an employee on a prorated basis.

            SECTION 17.3. TIME FOR VACATIONS. A vacation shutdown will normally
take place during the first week, or the first two weeks, of July of each year.
If the Company determines to

                                       17
<PAGE>
schedule employees for maintenance work during such vacation shutdown, employees
not eligible for a paid vacation will be given preference for such maintenance
work in order of seniority. Employees entitled to one and two weeks' vacation
will take their vacation during the shutdown period. Employees entitled to more
than two weeks' vacation will advise the Company not later than the preceding
May 15 when they wish to schedule their additional week or weeks of vacation
after July l. If an excessive number of employees wish to take vacation at any
particular time, preference will be given on the basis of seniority. The Company
shall be entitled to determine the number of employees who may be on vacation at
any one time. Employees entitled to more than one week's vacation may receive
pay for all vacation in excess of one week in lieu of vacation if they so
desire. All vacation shall be taken in the year in which it is earned and may
not be accumulated from one year to another. If at any time the Company
determines there will be no vacation shutdown, it will notify employees by April
l. Vacations may then be scheduled at any time during the year following June l.
The Company shall have the right to determine the number of employees who may be
absent on vacation at any one time. In case excessive requests are made for any
one period, preference shall be given on the basis of seniority.

            Any employee with more than two (2) weeks' vacation can take one
(1)week one (1)day at a time, subject to mutual agreement between the Company
and the employee.

            SECTION 17.4. TIME OF PAYMENT. Vacation pay will be paid on the last
working day before the planned vacation shutdown. If an employee has received
special permission to take his vacation earlier than the planned shutdown,
payment will be made on his last working day preceding his vacation only for the
vacation being taken, and the balance of his vacation pay will be paid on the
last working day before the planned vacation shutdown. Employees who take a
vacation day one at a time will be paid for the vacation day in the week the day
is taken, provided the employee schedules the vacation day in writing at least
two weeks in advance. If the employee gives less than two weeks written notice
of intent to take a single vacation day, the day will be paid in the payroll of
the week following the vacation day.

            Any employee who works in the Maintenance Department during any
shutdown, the Company will hold his or her vacation pay if the employee wishes
until they take their vacation.

                                   ARTICLE 18
                                  HOURS OF WORK

            SECTION 18.1. PAYROLL WEEK AND DAY DEFINED. For payroll computation
purposes, the payroll workweek begins at 12:01 am. Monday and continues until
midnight Sunday, and the payroll day begins at 12:01 am. and continues until the
following midnight.

            SECTION 18.2. REGULAR WORKDAY AND REGULAR WORKWEEK. The regular
workday and workweek for the first shift shall be from 6:00AM Monday until
2:30PM Friday with a thirty (30) minute unpaid lunch period each shift. As of
June 11, 1995, the second shift (including the employees assigned to that shift)
shall become the third shift with a regular workday and workweek from 9:00

                                       18
<PAGE>
PM Sunday until 5:30 AM Friday, with a thirty (30) minute unpaid lunch period
each shift. Maintenance employees assigned as of June 11, 1995 to the third
shift will have a regular workday from 2:00PM Monday until 10:30PM Friday, with
a thirty (30) minute unpaid lunch period each shift. The regular workweek shall
consist of forty (40) hours on a schedule of eight (8) hours per day. Nothing
contained herein shall be construed as a guarantee of hours of work per day or
per week nor as a restriction upon the right of the Company to schedule overtime
work or to schedule an additional shift or to change the hours of the regular
workday or the regular workweek for business reasons upon reasonable
notification to the employees and the Union.

            If the Company schedules any employee to come into work prior to
their regular starting time, and the employee is sent home before he has worked
eight (8) hours, the hours worked prior to regular starting time will be paid at
time and one half (1-1/2).

            If the Company changes the starting time of an employee to come in
later than his/her regular starting time, all time worked after the employee's
regular quitting time will be paid at time and one half.

            SECTION 18.3. BREAK PERIODS. All employees shall receive two (2)
ten-minute break periods each day with pay. As nearly as practicable, each break
period shall be scheduled in the middle of each half shift.

            SECTION 18.4. OVERTIME PAY.

                  (a) TIME AND ONE-HALF. Time and one-half will be paid for all
hours worked over eight (8) in any one workday; for all hours worked over forty
(40) in any workweek; and for all hours worked on Saturday, subject to Section
18.6.

                  (b) DOUBLE TIME. Double time shall be paid for all hours
worked on a Sunday or on any of the paid holidays; provided, however, that if an
employee elects to work on a Sunday or holiday for his own convenience, in
accordance with the practice now in existence, such employee shall be
compensated only at the rate of time and one-half provided that he has worked
all hours (excluding overtime) scheduled for him during that regular workweek,
subject to Section 18.6.

                  (c) LIMITATION. Overtime pay (premium rates) shall not be
duplicated or paid twice for or in respect of the same hours (pyramiding).

                  (d) Except in cases of an emergency, production work on
Sundays and holidays will only be on a voluntary basis.

            SECTION 18.5. OVERTIME DISTRIBUTION. Overtime shall be offered first
to the employee or employees who performed the work during regular shift on that
day or during that regular

                                       19
<PAGE>
workweek in case of weekend overtime. If less than all the employees who
performed such work during the applicable period are needed, the work will be
offered to such employees by seniority. If a sufficient number of employees
cannot be thus obtained, the work shall be offered by seniority to qualified
employees who regularly work in the same department. If the employees who are
offered overtime work by the Company pursuant to these provisions refuse such
overtime work or fail to perform it for any reason, the Company is not
restricted as to whom it may then offer the overtime. Overtime work shall be
voluntary, except that if the Company is unable to obtain the required number of
qualified employees by the procedures outlined above, it shall have the right to
require qualified employees normally assigned to the same department to perform
such work in reverse order of seniority. The Company shall not be required to
offer overtime to employees who regularly refuse overtime assignments or who
have otherwise made it known that they do not desire to perform overtime work.
The Company may utilize the employee or employees selected for any overtime, on
any job in the department or classification as may be necessary to keep him
industriously occupied to the scheduled period.

            SECTION 18.6. The Company will pay premium pay as specified in
Sections 18.4(a) and (b) above if the employee was absent from work on any of
the preceding days of the workweek due to paid holiday, jury duty, personal
illness or disability substantiated by a doctor's certificate or idleness caused
by the Company or idleness caused by the Company by temporary layoffs, or lack
of material or facilities, unless caused by legitimate reasons beyond the
Company's control.

            This Section is not intended to be used to deny overtime due to
working over eight hours in any one day.

                                   ARTICLE 19
                                LEAVES OF ABSENCE

                  SECTION 19.1. FOR PERSONAL REASONS. Any employee desiring a
leave of absence for personal reasons may apply for the same in writing. At the
discretion of the Company such leaves of absence for not more than sixty (60)
days may be approved. The Company will not discriminate against any employee in
the granting or denial of leaves of absence. Falsification of a request for a
leave of absence shall be cause for discharge or other appropriate discipline.

            SECTION 19.2. FOR ILLNESS. An employee who becomes ill, injured or
pregnant shall be granted a leave of absence for up to sixty (60) days and shall
be granted additional extensions of up to sixty (60) days each where the need
therefore is substantiated in writing by the employee's physician. In addition,
the Company at its expense may require physical, mental, or other examinations
in connection with an application for such a leave of absence, or at reasonable
intervals during such a leave of absence, or at the end of such leave of
absence, and such examination shall be promptly complied with by the employee.

            SECTION 19.3. UNION BUSINESS. An employee appointed or elected to a
full-time position in the Union shall be granted a leave of absence for the
duration of his service in such

                                       20
<PAGE>
position. During such leave of absence he shall retain and continue to
accumulate seniority, but shall not otherwise be entitled to any benefit under
this Agreement or as an employee. Upon the termination of his services with the
Union, he shall be entitled to be restored with full seniority to an available
position, designated by the Company, of comparable pay to the position
previously held by him, provided he makes application therefore in person within
thirty (30) days after the termination of his duties with the Union. No more
than one employee shall be on leave of absence for the purpose of service with
the Union at any one time.

            SECTION 19.4. ACCUMULATION OF SENIORITY. An employee on leave of
absence will not be entitled to any economic benefits but he shall continue to
accumulate seniority during the leave. At the end of a sickness or personal
leave, he shall be automatically returned to his former job if it still exists
and he is physically capable of performing it and the employee occupying the job
during the leave will return to the job from which he came, and so forth for all
employees displaced due to the return of the employee from the leave. If his
former job no longer exists or if he is physically not capable of performing it,
he may be placed on any job for which his seniority, ability, and physical
fitness qualified him. Prior to placing any employee, the Company will confer
with the Union Committee and seek to achieve their agreement.

            SECTION 19.5. The Company and Union agree to comply with the Family
and Medical Leave Act (FMLA) and that the requirements of that law will
supersede this Agreement.

                                   ARTICLE 20
                              UNION REPRESENTATION

                  SECTION 20.1. DESIGNATION OF REPRESENTATIVES. The Union shall
designate a Shop Committee consisting of three (3) members and may appoint one
steward for each department on each shift. All such representatives shall be
employees of the Company, and the Union will furnish to the Company from time to
time a written list of all members of the Shop Committee and stewards. In
addition to their duties with respect to the handling, adjusting and settlement
of grievances, members of the Shop Committee and stewards shall have the duty to
assist in the carrying out of the terms and provisions of this Agreement,
including the prevention of violation of the Agreement by members of the Union.

            SECTION 20.2. REPRESENTATION IN DISCIPLINE CASES. An employee who is
summoned to an interview involving discipline or discharge shall be entitled to
have his steward present unless he otherwise requests.

            SECTION 20.3. PAY FOR REPRESENTATIVES. Union representatives shall
be entitled to pay for time actually lost from work in the following
circumstances:

                  (a) NEGOTIATIONS. Members of the Shop Committee shall be
entitled to such pay for time spent in meeting with the Company for the
negotiation of contracts.

                                       21
<PAGE>
                  (b) GRIEVANCE PROCEDURE. Members of the Shop Committee and
stewards designated to participate in steps of the grievance procedure in
Section 4.2 shall be entitled to such pay while participating in such steps of
the grievance procedure with representatives of the Company and the time lost
from the line will not be charged against the employees in the Department.

                  (c) SAFETY COMMITTEE. Members of the Safety Committee shall be
entitled to such pay for time spent in the monthly inspection of the plant and
in meeting with Company representatives as specified in Article 21 and the time
lost from the line will not be charged against the employees in the Department.

            The monthly grievance and Safety Committee meetings will begin sixty
(60) minutes prior to the end of the employees' normal workday. The Company
shall not otherwise be obligated to hold any such meetings, or any negotiation
meetings, during normal working hours of the Company. No Shop Committee member
or steward shall leave his work without first obtaining permission from his
supervisor which shall not be unreasonably withheld, provided that his
supervisor is reasonably available at the time. The Union recognizes and agrees
that the business of the Company is of primary importance and that the Shop
Committee and stewards will not abuse the privileges granted by this Article.

                                   ARTICLE 21
                                SAFETY COMMITTEE

            A Safety Committee shall be established consisting of three (3)
members selected by the Union and three (3) members selected by the Company.

            The purpose of this Committee shall be to inspect the plant once
each month and to meet and jointly discuss means to correct any unsafe
conditions or to take any action which is incident to the safety and health of
the employees in the plant at any time other than the monthly meeting.

                                   ARTICLE 22
                            DISCRIMINATION PROHIBITED

            The Company and Union agrees that they will not discriminate against
any employee because of race, color, creed, religion, sex, age, national origin,
veterans, and handicapped (as defined by law).

            The Company agrees that it will not discriminate against any
employee because of his membership or non-membership in the union.

            All provisions of this Agreement shall be applied consistent with
the requirements of the Americans With Disabilities Act of 1990.

                                       22
<PAGE>
            To the extent these laws are amended during the term of this
Agreement, the parties agree to abide by those laws in preference to any
provision of this Agreement which might be inconsistent with them.

                                   ARTICLE 23
                                 SAVINGS CLAUSE

            Should any provision of this Agreement, or the application of such
provision to any person or circumstance, be in violation of any existing or
future law, then such provision or such application thereof shall be void and of
no force and effect, but all other provisions of this Agreement or the
application of such provisions of this Agreement to persons or circumstances
other than those as to which it is invalid, shall continue in full force and
effect and be binding upon the parties. It is the intention of the parties to
preserve the effectiveness of, and to be bound by, all provisions of this
Agreement not contrary to law.

                                   ARTICLE 24
                               COMPLETE AGREEMENT

            In this Agreement, the Company and the Union embody the entire
results of their negotiations which have covered all aspects of rates of pay,
wages, hours of employment and other conditions of employment and all such
subjects are settled. Each party voluntarily and unqualifiedly waives the right,
and each agrees that the other shall not be obligated, to bargain collectively
during the term of this Agreement or any extension or renewal thereof. This
Agreement supersedes and voids all prior agreements, written or oral, or
established by custom, practice or precedent. Future understandings or
interpretations of this Agreement shall not be binding unless they are reduced
to writing and signed by both parties.

            The Company agrees that as nearly as practicable it will continue to
operate the plant with the same general working conditions which existed prior
to execution of this Agreement. This shall not restrict the Company's right to
establish and enforce reasonable rules of conduct. Any such rules will not be
changed during the term of this Agreement without first giving the Union notice
and the opportunity to discuss such changes. The reasonableness of plant rules
will be subject to the grievance procedure.

                                   ARTICLE 25
                              DURATION OF AGREEMENT

            This Agreement will become effective on June 12,1999 and shall
remain in force thereafter until midnight, June 11, 2002, and from year to year
thereafter unless either party serves notice in writing upon the other party at
least sixty (60) days prior to the expiration of this Agreement that such party
desires to cancel, terminate or modify this Agreement.

                                       23
<PAGE>
            IN WITNESS WHEREOF, the parties hereto have affixed their signatures
on the day and in the year first above written.

YORK CASKET COMPANY - IN                  DISTRICT LODGE NO. 90,
                                          LOCAL LODGE NO. 2532 OF THE
                                          INTERNATIONAL ASSOCIATION OF
                                          MACHINSTS AND
                                          AEROSPACE WORKERS, AFL-CIO

By ____________________________        By ______________________________________
     Dan R. Mills                              John E. Silhavy

By ____________________________        By ______________________________________
    Larry Mills                                Ruben Cortes

By ____________________________        By ______________________________________
     M. Joyce Relly                            Beatrice Joy Weatherly

                                       By ______________________________________
                                               Julie Ward

Date Signed: November __, 1999

                                       24
<PAGE>
                                   APPENDIX A

                   SECTION A.1. Base rates for Incentive Work.

                                         6/12/99     6/12/00     6/12/01

      ASSEMBLY LINE
          Body Welder                      6.75        6.95        7.15
          Top Welder                       6.75        6.95        7.15
          Swing                            6.65        6.85        7.05
          Body Finisher                    6.65        6.85        7.05
          Top Finisher                     6.65        6.85        7.05
          Repair                           6.65        6.85        7.05
          Assemble                         6.55        6.75        6.95
          Fit-up                           6.55        6.75        6.95
          Seam Weld                        6.45        6.65        6.85
          J-Channel                        6.45        6.65        6.85
          Header Weld                      6.75        6.95        7.15
          Epoxy                            6.45        6.65        6.85
          Hinger                           6.45        6.65        6.85

          Starting Rate                    6.40        6.60        6.80

      PAINT LINE
          Swing                            6.35        6.55        6.75
          Touch up                         6.25        6.45        6.65
          Color Coat                       6.15        6.35        6.55
          Shade & Topcoat                  6.15        6.35        6.55
          Prime                            6.05        6.25        6.45
          Hardware Expedite                6.05        6.25        6.45
          Hardware Install                 6.05        6.25        6.45
          Gasket & Tips                    6.05        6.25        6.45
          Wet Sand                         6.05        6.25        6.45
          Paint Mix                        5.95        6.15        6.35
          Install Bed                      5.95        6.15        6.35
          Sand                             5.95        6.15        6.35
          Wash                             5.95        6.15        6.35
          Test                             5.95        6.15        6.35

          Starting Rate                    6.40        6.60        6.80

                                       25
<PAGE>
      INTERIOR LINE
          Swing                            6.05        6.25        6.45
          Panel Maker                      5.90        6.10        6.30
          Sew Interior                     5.90        6.10        6.30
          Sew Pillow                       5.90        6.10        6.30
          Shirr                            5.90        6.10        6.30
          Install Body                     5.90        6.10        6.30
          Install Top                      5.90        6.10        6.30
          Cut - Fold                       5.90        6.10        6.30
          Roll Assembly                    5.90        6.10        6.30
          Cap Assembly                     5.90        6.10        6.30
          Set-up                           5.90        6.10        6.30
          Close                            5.90        6.10        6.30
          Blow Pillows                     5.90        6.10        6.30
          Hang                             5.90        6.10        6.30
          Crush Panel                      5.90        6.10        6.30
          Test                             5.90        6.10        6.30
          Sew Blanket                      5.90        6.10        6.30

          Starting Rate                    6.40        6.60        6.80

Hourly Rates are as follows:

                                          1/1/00      6/12/00     6/12/01

      MAINTENANCE
          Starting Rate (6/12/99-$8.30)     8.80        9.10        9.30
          Maintenance (6/12/99-$11.35)     11.85       12.05       12.25
          Maintenance (Extra Help)
                    (6/12/99-$7.75)         8.25        8.45        8.65

      GENERAL LABOR
          Starting Rate (6/12/99-$6.40)     6.90        7.10        7.30
          Dock (6/12/99-$9.95)             10.45        10.65      10.85
          Dock Controller (6/12/99-$10.45) 10.95        11.15      11.35

          NOTE: Starting Rate does not receive incentive pay.

          MODIFIED DUTY RATE:       Equal to non-maintenance start rate for
                                    employees on workers' compensation and $8.75
                                    for employees not on workers' comp

                                       26
<PAGE>
                               LETTER ON INSURANCE

      The Company will maintain the present insurance benefits and contributions
except that:

      1.  Life insurance and AD&D:
          1st Year            2nd Year          3rd Year
          $12,000
          (Effective 1/1/00
          $13,000)            $14,000           $15,000

      2.  S & S
          1st Year            2nd Year          3rd Year
          $165.00
          (Effective 1/1/00
          $180.00             $180.00           $180.00

      3.  Precertification of all Hospital Stays Required. Deductible
          $300.00-Individual $600.00-Family Lifetime Maximum Benefit $1,000,000;
          Benefit Percentage after Deductible; All covered expenses except
          charges for treatment of mental and nervous disorders. (Including
          Alcoholism and Drug Abuse) 80%

      4.  When the covered persons share of expense subject to the 80% benefit
          level reaches $1000 Individual/ $2000 Family in a calendar year, the
          benefit level will change to 100% for the balance of the calendar
          year.

      5.  Mental and Nervous
          Outpatient  50%        $1,000 per year maximum
          In patient  80%
          The mental and nervous benefit is not subject to the 100% Benefit
          Level.

      6.  Co-payment on prescriptions of $3.00 per prescription for generic
          drugs and $5.00 per prescription for non-generic drugs.

          Effective 1/1/00, the following shall apply:

          Co-payment on prescriptions of $7.50 per prescription for generic
          drugs and $15 per prescription for non-generic drugs. If the employee
          obtains prescription drugs through the Company's mail order plan, the
          co-payment would be $10 for generic drugs and $20 for non-generic
          drugs. If a generic drug is not available, the employee co-pay will,
          nevertheless, be the generic drug amount.

      7.  A Preferred Provider Organization (PPO) system will be implemented
          which will have a co-pay of 90/10, if the PPO is used, and 80/20, if
          the employee chooses not to use a

                                       27
<PAGE>
          PPO. Currently, the Company has Reid Memorial in Richmond as a PPO.
          The Company will seek to increase the number of PPOs in an effort to
          include as many of the hospitals which are currently used by the
          employees as reasonably possible.

      8.  A Utilization Review system will be implemented which will require
          second opinions on and pre-approval of surgical procedures and
          hospital stays (pre-certification). If an employee chooses to have a
          surgical procedure or hospital stay which has not been pre-certified,
          the procedure or stay will not be covered by insurance, unless the
          employee has obtained a second medical opinion which confirms the
          initial opinion. Upon request, the doctor obtaining the
          pre-certification will be given a "pre-certification tracking number"
          as confirmation of the receipt of the certification and that number
          will be provided to the employee. Emergency procedures will not be
          delayed due to the need for pre-certification; an employee will have
          two working days after the procedure to obtain certification.

                             LETTER OF UNDERSTANDING

      When the Company goes down to a 3-day work week for more than 2 weeks in a
30-day period, then the Company will effectuate a layoff, provided, however,
this shall not apply if the 3-day week is caused by power failure, machinery
failure, Fire, snowstorm, flood or another act of God or any other unforeseen
circumstances beyond the Company's control.

                                       28

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