Document:

Agreement between Wells Gardner and Local 1031 of IBEW

    

    AGREEMENT

    

    BETWEEN

    

    

    

    WELLS
      GARDNER

    electronics
      corporation

    AND

    

    LOCAL
      1031

    OF

    THE
      INTERNATIONAL BROTHERHOOD

    OF
      ELECTRICAL WORKERS,

    AFL-CIO

    

    

    

    

    

    July
      3,
      2006 to June 29, 2009

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              TABLE
                OF CONTENT'S

            
	 	 	 	
              PAGE

            
	
              ARTICLE
                I 

            	
              UNION
                AND MANAGEMENT

            
	
              Section

            	
              1.

            	
              Parties
                and Effective Date

            	
              1

            
	
              Section

            	
              2.

            	
              Expiration
                Date and Renewal

            	
              1

            
	
              Section

            	
              3.

            	
              Recognition

            	
              1

            
	
              Section

            	
              4.

            	
              Management

            	
              1-2

            
	
              Section

            	
              5.

            	
              Union
                Shop

            	
              2

            
	
              Section

            	
              6.

            	
              Check-off

            	
              2-3

            
	
              Section

            	
              7.

            	
              Non-Discrimination

            	
              3

            
	
              Section

            	
              8.

            	
              Trial
                Period Employees

            	
              3-4

            
	 
	
              ARTICLE
                II

            	
              REPRESENTATIVE,
                GRIEVANCES AND ARBITRATION

            
	
              Section

            	
              1.

            	
              Stewards

            	
              4

            
	
              Section

            	
              2.

            	
              Grievance
                Procedure

            	
              4-6
                

            
	
              Section

            	
              3.

            	
              Arbitration

            	
              6

            
	
              Section

            	
              4.

            	
              No
                Strike or Lockouts

            	
              6-7

            
	 
	
              ARTICLE
                III

            	
              HOURS
                OF WORK AND OVERTIME

            
	
              Section

            	
              1.

            	
              Regular
                Work Week

            	
              7

            
	
              Section

            	
              2.

            	
              No
                Staggering

            	
              7

            
	
              Section

            	
              3.

            	
              Changing
                Workweek

            	
              7

            
	
              Section
                

            	
              4.

            	
              Overtime

            	
              8

            
	
              Section

            	
              5.

            	
              Shift
                Premium

            	
              8

            
	
              Section

            	
              6.

            	
              Preference
                of Shift and Overtime

            	
              8

            
	
              Section

            	
              7.

            	
              Lunch
                Periods

            	
              8

            
	
              Section
                

            	
              8.

            	
              Rest
                Periods

            	
              9

            
	
              Section
                

            	
              9.

            	
              Reporting
                Pay

            	
              9

            
	
              Section
                

            	
              10.

            	
              Call-Back
                Pay

            	
              9

            
	
              Section
                

            	
              11.

            	
              No
                Pyramiding

            	
              9

            
	 
	
              ARTICLE
                IV

            	
              SENIORITY

            
	
              Section

            	
              1.

            	
              Basis
                of Seniority

            	
              9

            
	
              Section

            	
              2.

            	
              Effect
                of Seniority

            	
              9-10

            
	
              Section

            	
              3.

            	
              Seniority
                List

            	
              10

            
	
              Section

            	
              4.

            	
              Temporary
                Layoffs

            	
              10-11

            
	
              Section

            	
              5.

            	
              Temporary
                Transfers

            	
              11

            
	
              Section

            	
              6.

            	
              Options

            	
              11

            
	
              Section

            	
              7.

            	
              Demotion

            	
              11-12

            
	
              Section

            	
              8.

            	
              Rights
                on Recall

            	
              12-13
                

            
	
              Section

            	
              9.

            	
              Skill
                & Ability

            	
              13

            
	
              Section

            	
              10.

            	
              Vacancies

            	
              13-14

            
	
              Section

            	
              11.

            	
              On-the-Job-Training

            	
              14

            
	
              Section

            	
              12.

            	
              Leave
                of Absence

            	
              15

            
	
              Section

            	
              13

            	
              Loss
                of Seniority

            	
              15-16

            
	
              Section

            	
              14.

            	
              Promotion
                to Exempt Positions

            	
              16

            
	 

    

    

    i

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              TABLE
                OF CONTENT'S CONT'D

            
	 	 	 	
              PAGE

            
	 
	
              ARTICLE
                V 

            	
              VACATION
                AND HOLIDAYS

            
	
              Section

            	
              1.

            	
              Eligibility
                and Amount of Vacation

            	
              16-17

            
	
              Section

            	
              2.

            	
              Minimum
                Hours

            	
              17

            
	
              Section

            	
              3.

            	
              Computation
                of Vacation Pay

            	
              18

            
	
              Section

            	
              4.

            	
              Scheduling
                of Vacations

            	
              18

            
	
              Section

            	
              5.

            	
              Date
                Due

            	
              18

            
	
              Section

            	
              6.

            	
              Consecutive
                Days, etc

            	
              18

            
	
              Section

            	
              7.

            	
              Retiree
                Pro-Rata Vacation Pay

            	
              19

            
	
              Section

            	
              8.

            	
              Holidays
                and Holiday pay

            	
              19-20

            
	
              Section

            	
              9.

            	
              Floating
                Holiday

            	
              20

            
	 
	
              ARTICLE
                VI

            	
              WAGES

            
	
              Section

            	
              1.

            	
              Rates

            	
              20

            
	
              Section

            	
              2.

            	
              Cost
                Of Living

            	
              20-21

            
	
              Section

            	
              3.

            	
              New
                Classifications

            	
              21

            
	
              Section

            	
              4.

            	
              Upgrading

            	
              21

            
	
              Section

            	
              5.

            	
              New
                Experienced Employees

            	
              21

            
	
              Section

            	
              6.

            	
              Payday

            	
              22

            
	
              Section

            	
              7.

            	
              Piece
                Work

            	
              22

            
	
              Section

            	
              8.

            	
              Pension
                Plan

            	
              22

            
	 
	
              ARTICLE
                VII

            	
              INSURANCE

            	
              22-23

            
	 
	
              ARTICLE
                VIII

            	
              GENERAL
                PROVISIONS

            
	
              Section

            	
              1.

            	
              Saving
                Clause

            	
              23

            
	
              Section

            	
              2.

            	
              Bulletin
                Board

            	
              23

            
	
              Section

            	
              3.

            	
              Election
                Day

            	
              23

            
	
              Section

            	
              4.

            	
              Supervisors

            	
              24

            
	
              Section

            	
              5.

            	
              Right
                of Access

            	
              24

            
	
              Section

            	
              6.

            	
              Conflict
                with State & Federal Laws

            	
              24

            
	
              Section

            	
              7.

            	
              Female
                Employees

            	
              24

            
	
              Section

            	
              8.

            	
              Paid
                Leave of Absence

            	
              24-25

            
	
              Section

            	
              9.

            	
              Jury
                Service

            	
              25

            
	
              Section

            	
              10.

            	
              Safety
                and Health Provisions

            	
              25

            
	
              Section

            	
              11.

            	
              Union
                Employee Educational Assistance Program

            	
              26

            
	
              Section

            	
              12.

            	
              Call-In
                Sick / Personal Day

            	
              27

            
	
              Section

            	
              13.

            	
              Inventory
                Shutdown Scheduling

            	
              27

            
	
              Section

            	
              14.

            	
              Severance
                Plan

            	
              27

            
	
              Section

            	
              15.

            	
              401K
                Savings Plan

            	
              27

            
	
              APPENDIX
                "A"

            	
              Wage
                Scale - Effective 07-03-06

            	
              28-31

            
	 
	
              APPENDIX
                "B"

            	
              Insurance
                Coverage for Employees & Dependents

            	
              32-33
                

            
	 
	
              APPENDIX
                "C"

            	
              Piece
                Work / Incentive System

            	
              34

            

    

    

    

    ii

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
      I

    UNION
      AND MANAGEMENT

    

    Section
      1. Parties and Effective Date:
      The
      parties to this Agreement are: Wells-Gardner
      Electronics Corporation,
      its
      successors or assigns, hereinafter called the "Company"
      and
Local
      1031, International Brotherhood of Electrical Workers,
      AFL-CIO,
      hereinafter called the "Union".
      This
      Agreement shall become effective July 3, 2006

    

    Section
      2. Expiration Date and Renewal:
      This
      Agreement shall remain in full force and effect until June 29, 2009 and then
      shall automatically renew itself from year to year thereafter, unless the
      Company or the Union gives written notice to the other party to amend, modify
      or
      terminate within not less than sixty (60) days prior to any expiration date.
      The
      parties may by mutual agreement modify or amend this Agreement at any time
      hereafter.

    

    Section
      3. Recognition:
      The
      Company recognizes the Union as the sole and exclusive collective bargaining
      agent for all of the Company's production and maintenance employees located
      at
      9500 West 55th
      Street -
      Suite A, McCook, Illinois 60525-3605 excluding Wells-Gardner Electronics
      Corporation executives and non-working supervisors, office, clerical and sales
      employees, engineering and laboratory employees, supervisors, guards, outside
      truck drivers, journey & craft persons who are represented for purposes of
      collective bargaining by unions affiliated with the AFL-CIO.

    

    Section
      4. Management:
      The
      management of the Company and its operations, the direction of the work force,
      including the right to hire, assign, suspend, transfer, promote, discharge
      or
      discipline for just cause and to maintain discipline and efficiency of its
      employees and the right to relieve employees from duty because of lack of work
      or for other legitimate reasons not in conflict with the provisions of this
      Agreement; the right to determine the extent to which the plant shall be
      operated; the right to introduce new or improved production methods, processes
      or equipment; the right to decide the number and locations of plants, the nature
      of equipment or machinery, the products to be manufactured, the methods and
      processes of manufacturing, the scheduling of production, the method of training
      employees, the 

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    designing
      and engineering of products and the control of raw materials; the right to
      continue in accordance with past practice to assign work to outside contractors;
      and the right to enact Company policies, plant rules and regulations which
      are
      not in conflict with this Agreement, are vested exclusively in the
      Company.

    The
      Union
      recognizes that there are functions, powers, authorities and responsibilities
      belonging solely to the Company, prominent among which, but by no means
      inclusive, are those enumerated in the preceding paragraph. The management
      rights enumerated in said paragraph are not inclusive and shall not be deemed
      to
      exclude other functions not herein listed.

    The
      term
      "just cause" as used in this Agreement includes but is not limited to any
      violations of a published plant rule established pursuant to the provisions
      of
      Article I.

    

    Section
      5. Union Shop:
      All
      employees covered by the terms of this Agreement shall be required to become
      and
      remain members of the Union as a condition of employment from and after the
      sixty-first (61st) day following the date of their employment or the effective
      date of this Agreement, whichever is later.

    

    Section
      6. Check-Off:
      The
      Company agrees that it will make weekly deductions from each weekly pay check
      covering any and all amount of dues and initiation fees that may hereafter
      become due to the Union for any of its employees covered hereunder, provided
      that the Union requests such deductions and accompanies such requests with
      properly and legally executed assignments, in accordance with law, authorizing
      such deductions. The employer further agrees that once each week, it will remit
      promptly to the Union such collected amounts. At the end of each calendar month,
      the Company shall forward to the Union an alphabetical list of the names and
      the
      total amounts deducted during said month from each employee covered. In lieu
      of
      this monthly alphabetical list, the Company may, at its option, forward to
      the
      Union such an alphabetical list each week along with the weekly remittance
      of
      collected amounts.

    If
      through inadvertence or error, the Company fails or neglects to make a deduction
      which is properly due and owing from an employee's weekly pay check, such
      deduction shall be made from the next weekly pay check of the employee and
      promptly remitted to the Union. It is expressly agreed and 

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    understood
      that the Union assumes full responsibility for the validity and the legality
      of
      such employee's deductions as are made by the Company and hereby agrees to
      indemnify and save the Company harmless, by virtue of such collections and
      payments to the Union.

    No
      deduction shall be made from any employee for union dues in any week in which
      such employee receives a check representing a total of less than eight (8)
      hours
      at the employees regular rate of pay nor shall any deduction be made from any
      employee's pay check prior to the date on which, by the terms of this Agreement,
      he/she is required to become a member of the Union as a condition of
      employment.

    

    Section
      7. Non-Discrimination:
      It is
      agreed between the parties that in the policies and practices of the Company
      and
      in the membership policies and practices of the Union there shall continue
      to be
      no discrimination against any employee on account of race, creed, color,
      national origin or sex.

    

    Section
      8. Trial Period Employees:

    
      	 	
              (a)

            	
              Trial
                Period:
                New employees shall be on trial until they have been employed for
                a period
                of sixty (60) calendar days and during such period the Company shall
                have
                the right to dismiss or retain the employee at its own discretion.
                Upon
                completion of such sixty (60) calendar days of employment, the employee
                shall be deemed to be a regular employee. In all instances where
                a trial
                period employee is laid off for lack of work or granted a leave of
                absence
                for illness or other good cause, such reduction from active employment
                shall be deemed to be a layoff, unless at the date it occurs, the
                employee
                is given a written notice stating that he/she is
                terminated.

            

    

    

    
      	 	
              (b)

            	
              Return
                from Leave or Recall of Laid Off Trial Period
                Employee: Trial
                period employees who are laid off and by election of the Company
                subsequently recalled or who are granted a leave of absence and
                subsequently return to work, must complete sixty (60) calendar days
                of
                trial period active employment within six (6) months of the date
                of their
                original hire date in order to become a regular employee. Periods
                of trial
                period active employment, as referred to above, shall include any
                week in
                which the employee works at least one full day. At such time as the
                employee completes sixty (60) calendar day trial period active employment,
                his/her "original hiring date", for the purpose of determining his/her
                length of service (in accordance with Article IV, Section 3(b)) shall
                be
                established as that date sixty (60) calendar days prior to the date
                of
                completion of the trial period employment
                requirement.

            

    

    

    
      	 	
              (c)

            	
              Trial
                Period Employee Recalled Before Expiration of Six-Month
                Period:
                Trial period employees who have not completed sixty (60) calendar
                days of
                trial period employment within six (6) months from their original
                date of
                hire, but who are recalled or return from a leave of absence prior
                to the
                expiration of such six-month period will be permitted to complete
                the
                trial period requirement, although the six-month period elapses before
                such 

            

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    trial
      period is completed, provided the employee is not laid off before he/she
      completes his/her trial period employment. If such a layoff occurs before the
      employee bas completed his/her trial period and the six-month period has
      expired, said employee will be considered to have been terminated rather than
      laid off.

    

    
      	 	
              (d)

            	
              Extension
                of Trial Period:
                The Company shall have the right to extend the trial period to ninety
                (90)
                calendar days upon written notice to the Union and the employee prior
                to
                completion of the normal sixty (60) day trial period and shall retain
                the
                right to dismiss such employee during this extension period without
                being
                subject to review. In all instances where the trial period of a new
                employee is so extended, such employee's responsibility to become
                and
                remain a member of the Union in good standing as a condition of employment
                after sixty (60) days shall not be affected; and any benefits of
                the
                contract such as holiday pay and insurance coverage shall accrue
                to such-
                employee at the end of the initial sixty day
                period.

            

    

    

    ARTICLE
      II

    REPRESENTATION,
      GRIEVANCES AND ARBITRATION

    

    Section
      1. Stewards:
      The
      Company agrees to recognize the Chief Steward and Shop Stewards selected by
      the
      Union in accordance with the Union rules and regulations. Such Chief Steward
      and
      Stewards may act as a grievance committee at the request of, and with, the
      Business Manager of the Union, or his/her representative. The Union will notify
      the Company as to the identity of such Chief Steward or Stewards and the Company
      shall not be required to recognize any other employees in the adjustment of
      complaints than those whose names are furnished to the Company as aforesaid.
      Such Chief Steward and Stewards shall be granted a reasonable amount of time
      during working hours for the purpose of investigating and adjusting complaints,
      provided however, that such Chief Steward and Stewards shall not leave their
      work without the permission of the immediate supervisor. Such permission,
      however, shall not be arbitrarily withheld. The Chief Steward and Stewards
      shall
      be granted top seniority in their respective departments for the purpose of
      layoffs and recalls.

    

    Section
      2. Grievance Procedure:
      Any
      grievance arising during the life of this contract pertaining to wages, hours
      of
      work and working conditions of employees in the bargaining unit shall be subject
      to the procedures outlined below:

    Either
      the Company or the Union or any employee (or Steward, Chief Steward or Business
      Representative in his/her behalf) may file grievances. Grievances of the Company
      or Union shall be 

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    presented
      directly to the other in writing. Grievances of the employees shall be reduced
      to writing on grievance forms provided by the Union. All answers by the Company
      shall likewise be in writing. Grievances will be handled as
      follows:

    

    
      	 	
              Step
                1.

            	 	
              The
                employee, his/her Steward or both, shall present the matter in dispute
                for
                settlement to his/her Supervisor. If the Supervisor's decision is
                not
                satisfactory or is not given within three (3) working days, Step
                2 will be
                followed.

            

    

    

    
      	 	
              Step
                2.

            	 	
              Such
                grievance shall then be presented by the Chief Steward within three
                (3)
                working days after the Supervisor's unsatisfactory decision or failure
                to
                give a decision, whichever is applicable, to the Department Head.
                If the
                Department Head's decision is not satisfactory or is not given within
                three (3) working days, Step 3 will be
                followed.

            

    

    

    
      	 	
              Step
                3.

            	 	
              Such
                grievance shall then be presented by the Business Representative
                of the
                Union within five (5) working days from receipt of the Department
                Head's
                unsatisfactory decision or failure to give a decision, whichever
                is
                applicable, to the Human Resources Director who shall give his/her
                answer
                not later than five (5) working days after the presentation of the
                grievance to him/her.

            

    

    

    If
      the
      decision of the Human Resources Director is not satisfactory, such grievance
      will be discussed by the Business Manager of the Union and the Human Resources
      Director within five (5) working days after receipt by the Business Manager
      of
      the unsatisfactory answer by the Human Resources Director. In the event the
      Company and the Union are unable to settle any grievance under the procedures
      outlined above, the grievance shall be further processed under Section 3 -
      Arbitration - of this Article.

    A
      grievance must be filed no later than five (5) working days after the occurrence
      of the event in which it is predicated, except in instances where the employee,
      or his/her Steward or Chief Steward, could not reasonably have been expected
      to
      be aware of the occurrence of the grievance. A failure to file a grievance
      within the period specified shall be deemed a waiver of such matter. In all
      cases of grievances relating to time not worked, the Company shall be
      responsible only for the actual loss sustained by an employee. Any settlement
      of
      any grievance between the Company and a Steward, Chief Steward, or Business
      Representative in Steps 1, 2, and 3 above will not be final until reviewed
      and
      approved by the Business Manager of the Union or his/her designated
      representative. The Company may consider the matter closed unless it has been
      otherwise notified by the Business Manager of the Union or his/her

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    delegated
      representative within ten (10) days after notice bas been given him/her of
      the
      terms and conditions of the proposed grievance settlement.

    An
      employee may be discharged or disciplined for cause. However, in case any
      employee, or the Union in his/her behalf, claims that he/she has been
      unjustifiably discharged or disciplined, a written complaint shall be filed
      within five (5) working days from the date of his/her discharge or discipline.
      Such complaint or grievance shall start under Step 2 above. Prior to the
      discharge or disciplining of an employee (except in cases of an employee under
      the influence of alcohol, drugs, etc., or theft or sabotage), the Chief Steward
      shall be notified and given the opportunity to discuss the discharge or
      discipline. In case of discharge or discipline for being under the influence
      of
      alcohol, drugs, etc., or for theft or sabotage, the Chief Steward shall be
      notified Immediately after the discharge.

    

    Section
      3. Arbitration:
      In the
      event that the grievance or complaint cannot be adjusted in any of the foregoing
      steps, the matter may, at the request of either party, be submitted for final
      and binding arbitration by an impartial arbitrator who shall be chosen by mutual
      agreement of the Company and the Union. In the event that the Company and the
      Union are unable to agree upon an arbitrator, the parties will request the
      Federal- Mediation and Conciliation Service to submit a panel of nine (9)
      qualified arbitrators. Both the Company and the Union shall have the right
      to
      strike four (4) names from the panel submitted to the parties. The remaining
      name on the panel shall then become the impartial arbitrator. In the
      consideration of discipline or discharge cases, the arbitrator shall have
      authority and jurisdiction to direct the payment of back pay for lost time
      resulting from discharge. The arbitrator's decision shall be final and binding
      upon all parties. However, an arbitrator shall have no power or authority to
      add
      to, alter, or modify the terms of this Agreement or any supplementary agreement
      made between the parties hereto. The expenses of arbitration (except those
      of
      the respective parties) shall be borne equally between the Company and the
      Union.

    

    Section
      4. No Strikes or Lockouts:
      There
      shall be no strikes, refusal to work or slowdown by the Union during the life
      of
      this Agreement, and there shall be no lockout on the part of the Company, unless
      either the Company or the Union should refuse to participate in arbitration
      proceedings or abide by the decision of an arbitrator, in accordance with
      Section 3 of this Article. Should there be such refusal by 

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    either
      the Company or the Union, this Section, at the option of the other party, shall
      be deemed inapplicable. There shall be no liability on the part of the Union
      for
      unauthorized strikes, stoppages or slowdowns, by any of the employees, but
      the
      Company shall have the right to discipline or discharge any employee who
      initiates, instigates, or participates in such unauthorized strikes, stoppages,
      or slowdowns. In consideration of this Agreement, the Union agrees not to sue
      the Company, its officers or representatives, and the Company agrees not to
      sue
      the Union, its officers, agents, or members in connection with any labor
      relations matters in any court of law or equity. The parties agree that the
      sole
      procedure for settlement of any disputes concerning labor relations matters
      between the Company and the Union shall be the grievance and arbitration
      procedure hereof.

    

    ARTICLE
      III

    HOURS
      OF WORK AND OVERTIME

    

    Section
      1. Regular Workweek:
      The
      regular workweek shall consist of forty (40) hours on a schedule of eight (8)
      hours per day Monday through Friday.

    

    Section
      2. No Staggering:
      The
      working day shall be continuous and employees shall not be compelled to lay
      off
      work for any period of time during the day and to resume work thereafter during
      the same day except in the case of lunch period or rest period.

    

    Section
      3. Changing Workweek:
      Any
      changes in the regular workweek shall be by mutual agreement between the Company
      and the Union. The Company reserves the right to change regularly scheduled
      starting and quitting hours under emergency conditions, in which event the
      time
      worked before normal starting time or after the normal quitting time will not
      be
      considered overtime work payable at one and one-half (11⁄2) time the employee's
      straight-time rate unless more than eight (8) hours of work are performed in
      a
      day or unless an employee is prevented from performing eight (8) hours of work
      for reasons of the Company's convenience rather than for circumstances beyond
      the control of the Company.

    Section
      4. Overtime:
      All work
      performed in excess of eight (8) hours in any one (1) day, and all work
      performed on Saturday, and all work performed prior to the employee's regular
      hour for starting or 

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    after
      the
      employee's regular hour for quitting shall be considered overtime and shall
      be
      compensated for on the basis of one and one-half (11/2) times the employees
      straight time rate. All work performed on Sunday shall be compensated for at
      two
      (2) times the employees straight time rate.

    

    Section
      5. Shift Premiums:
      Work
      performed on the second (or afternoon) shift shall be paid for at the rate
      of
      ten (10%) percent more than the rate paid for similar work on the first (or
      day)
      shift. Work performed on the third (or night) shift shall be paid for at the
      rate of fifteen (15%) percent more than the rate paid for similar work on the
      first (or day) shift. In ascertaining the vacation or holiday benefits to which
      an employee may be entitled, the shift premium shall be included in the
      computations.

    

    Section
      6. Preference of Shifts and Overtime:
      When a
      preference of shifts is available on account of the occurrence of a vacancy,
      preference will be given on the basis of seniority and preference in the
      assignment of overtime should be based on the following formula:

    

    
      	 	
              (a)

            	
              Overtime
                on a job shall be assigned to those regularly doing that job in their
                respective departments pursuant to the principle of "line
                intact".

            

    

    

    
      	 	
              (b)

            	
              If
                additional help is required, employees with the greatest seniority
                in
                their classification in the department concerned and capable of doing
                the
                job in that department will be
                selected.

            

    

    

    
      	 	
              (c)

            	
              In
                the event no qualified employees wish the overtime assignment, it
                shall be
                assigned to and worked by the junior
                employee.

            

    

    

    
      	 	
              (d)

            	
              If
                necessary to go outside of that particular department, plant wide
                seniority will prevail if capable of doing the
                job.

            

    

    

    
      	 	
              (e)

            	
              In
                the event an employee is requested by the Company to work overtime,
                daily
                or Saturday, and he/she agrees to perform the overtime work but:
                (1) fails
                to notify the Company of his/her inability to report to work; or
                (ii)
                fails to give good cause explaining his/her inability to report for
                work;
                or (iii) fails to report for work, the employee shall not be permitted
                to
                work any overtime in any department for a period not to exceed thirty
                (30)
                days following the time the employee was requested to perform the
                overtime
                work.

            

    

    

    Section
      7. Lunch Period:
      There
      shall be an allowance of a lunch period near the middle of a work shift of
      thirty (30) consecutive minutes.

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    Section
      8. Rest Periods:
      On each
      shift of the day there shall be a ten (10) minute rest period for each four
      (4)
      hours worked without deduction in pay.

    

    Section
      9. Reporting Pay:
      Employees who report for work in person and have not been previously notified
      not to report shall receive four (4) hours' work or the equivalent in pay,
      based
      upon their regular straight time hourly rate of pay, except in case of an
      emergency beyond the control of the Company.

    

    Section
      10. Call-Back Pay:
      An
      employee who has left the plant and is called back to work shall work and
      receive no less than four (4) hours of overtime pay at his/her regular straight
      time rate of pay, or the applicable straight time rate of pay for the job
      performed, whichever is greater.

    

    Section
      11. No Pyramiding:
      In no
      event shall overtime or premium pay provided for in this Article be pyramided
      or
      duplicated. Only the applicable provision yielding the largest amount of pay
      shall be applied and such payment shall satisfy the requirements of all other
      applicable provisions. This limitation, however, does not apply to shift
      premiums.

    

    ARTICLE
      IV

    SENIORITY

    

    Section
      1. Basis of Seniority:
      Each
      employee will have seniority standing in the plant equal to the employee's
      total
      length of service with the Company in the bargaining unit, dated from his/her
      first day of last continuous employment therein except as provided in Sections
      3, 11, and 12 of this Article.

    

    Section
      2. Effect of Seniority:
      Except
      as provided in Section 6 of Article III and Section 7 of this Article, in all
      cases of increase or decrease of forces, transfer, promotion, or demotion of
      employees and preference in the selection of shifts, plant-wide seniority shall
      prevail, provided the employees possess sufficient skill and ability to
      satisfactorily perform the work to be done.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    Where
      new
      equipment or added responsibilities are added to existing job classifications,
      the Company, in the event of a reduction in force, shall go strictly by
      seniority, regardless of the lack of experience of the senior employee. The
      Company shall train as needed to retain the senior employees.

    

    Section
      3. Seniority Lists:
      The
      Company will furnish to the Union immediately after the signing of this
      Agreement, a Seniority List and will post copies of such list on the bulletin
      boards in the plant. The list is to be revised at six (6) month
      intervals.

    The
      Company will also furnish to the Union monthly a list of additions to and
      deletions from the Seniority List.

    
      	 	
              (a)

            	
              Except
                as otherwise provided in this Agreement, the Seniority List is to
                be used
                to determine an employee's seniority as to layoffs, recalls, promotions
                and demotions. An employee shall have his/her seniority date computed
                from
                his/her original date of employment in the bargaining unit, in determining
                the employee's seniority in cases of layoffs, recalls, promotions
                and
                demotions.

            

    

    

    
      	 	
              (b)

            	
              The
                Seniority List is to be used to determine which bracket in the vacation
                schedule is applicable. Since an employee's vacation is based on
                his/her
                length of service with the Company, his/her original hiring date
                or date
                of rehire will determine the length of his/her vacation. The amount
                of
                vacation pay for any one (1) year may be adjusted to comply with
                the
                minimum hours provision in this Agreement, but such adjustment shall
                not
                affect a succeeding year or years.

            

    

    

    
      	 	
              (c)

            	
              Employees
                having the same seniority (hired on the same date) will, if necessary,
                be
                rated by the Company based on their attendance and tardiness record.
                The
                employee with the least number of day absences in the contract year
                would
                be rated as having the most seniority. If no seniority can be determined
                by attendance, then the employee with the least amount of tardiness
                in the
                contract year will be rated as having the most
                seniority.

            

    

    

    Section
      4. Temporary Layoffs:
      The
      parties recognize the necessity of temporary layoffs caused by shortage of
      materials or other reasons. It is, therefore, mutually agreed that such
      temporary layoffs may be made from time to time without regard to plant-wide
      seniority programs embodied in the contract. It is further agreed, however,
      that
      the number of hours each such employee may be laid off on such temporary layoff
      shall be recorded and no individual employee may be laid off on such temporary
      layoff without regard to seniority in excess of sixty (60) hours in each six
      month period of a contract year without any carry over from one six-month period
      to the next. When an individual employee would exceed that amount, then the
      Company is obligated to place him/her on another job in accordance with
      plant-wide 

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    seniority,
      provided such employee possesses sufficient ability, skill and experience to
      satisfactorily perform the work available.

    

    Section
      5. Temporary Transfers:
      For
      periods of work not exceeding eighty (80) hours the Company may transfer or
      assign employees temporarily, on a voluntary basis, but subject to plant
      seniority in the class from which they are being transferred, to work in job
      classifications in which they do not hold a regular job assignment, but have
      sufficient skill and ability to satisfactorily perform the work. Such employees
      shall be paid as follows:

    

    
      	 	
              (a)

            	
              If
                temporarily assigned to a job in a higher labor grade, the employee
                shall
                be paid, for the time involved, the next higher rate above his/her
                regular
                job rate in the progression scale for the higher
                grade.

            

    

    

    
      	 	
              (b)

            	
              If
                temporarily assigned to a job in a lower labor grade, the employee
                shall
                be paid his/her regular job rate.

            

    

    Section
      6. Option:
      Any
      employee who is subject to demotion or transfer because of material shortage,
      curtailment of work or similar reasons, may have the option of accepting such
      demotion or taking a layoff until there is sufficient work in his/her regular
      classification. An employee who accepts such demotion or transfer may exercise
      such option up to four (4) weeks after the transfer or demotion, but he/she
      must
      give four (4) days' notice to the Company before he/she may exercise the option
      to take a voluntary layoff under this provision.

    

    Section
      7. Demotion:

    

    
      	 	
              (a)

            	
              In
                the event of a reduction in force, or reduction in the work force
                of a job
                classification, all probationary employees in the classification
                shall
                first be removed from the classification or laid off. If further
                reduction
                is required;

            

    

    

    
      	 	
              (b)

            	
              Employees
                below the maximum rate in their respective classification shall be
                removed
                beginning with the lowest wage group in such classification based
                upon
                their plant seniority.

            

    

    

    
      	 	
              (c)

            	
              Employees
                effected by a reduction in force of job classifications five (5)
                or above
                first shall be offered a position which they bad previously held
                provided
                that they have sufficient seniority to displace an existing employee
                in
                the particular job classification and they have not previously "signed
                off" during the life of this agreement on that job classification.
                If an
                employee does not have the seniority to be transferred to a previously
                held job classification in a higher classification, the employee
                shall be
                offered a previously held job 

            

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    classification
      in a lower classification. If the employee does not have sufficient seniority
      for any previously held job classification, the employee shall be given an
      option to be transferred to a position in classification four (4) or below,
      provided that the employee has sufficient seniority to displace an individual
      currently working in the particular job classification. Employees not having
      sufficient seniority for a previously held job classification or any position
      in
      job classification four (4) or below shall be laid off in accordance with
      contractual requirements.

    

    
      	 	
              (d)

            	
              Employees
                working in job classification four (4) or below during a reduction
                in
                force in those classifications shall first be offered a previously
                held
                position if they have sufficient seniority to displace an individual
                from
                the particular job classification. Otherwise, the employee shall
                be
                transferred to another job classification within classifications
                four (4)
                or below for which the employee has sufficient seniority to displace
                an
                employee of lesser plant seniority. If the employee does not have
                seniority to displace any individual in job classification four (4)
                or
                below, the employee shall be laid off in accordance with contractual
                requirements.

            

    

    

    
      	 	
              (e)

            	
              All
                employees transferred during a reduction in force to another job
                classification which they have not previously performed shall be
                subject
                to a three (3) day qualifying period. During this time, the employee
                may
                elect to relinquish the position for any reason and/or "sign-off"
                the job
                classification. An employee who voluntarily elects to relinquish
                a
                position by signing off the job classification shall be laid off.
                During
                this three (3) day qualifying period the Company reserves the right
                to
                determine in its sole discretion whether an employee can adequately
                perform a particular job within the three (3) day qualifying period
                and
                the Company may then decide to lay off the employee. An employee
                who
                signed off voluntarily shall not be permitted to transfer to that
                job
                classification in the event of a future reduction in force for the
                life of
                this Agreement. An employee laid-off by the Company for being unable
                to
                adequately perform the job classification shall not be permitted
                to
                transfer to that job classification in the event of a future reduction
                in
                force until the employee provides that he/she possesses sufficient
                skill
                and ability to satisfactorily perform the work to be done.
                

            

    

    

    
      	 	
              (f)

            	
              All
                recalls during an increase in the work force shall be made in reverse
                order of seniority and pursuant to the applicable subsections of
                Article
                IV, Section 7 and 8. If there are vacancies in job classifications
                which
                they have previously performed, unless they have sufficient seniority
                to
                return to the classification from which they were originally removed
                as
                the need for additional employees in such job classifications presents
                itself, they will be given an opportunity to fill such vacancies.
                An
                employee with seniority may be recalled to Code 4 or lower even though
                he/she has not previously performed the work in such
                classification.

            

    

    

    Section
      8. Rights on Recall:
      Any
      employee being recalled after a layoff shall be assured at least two (2)
      straight weeks of employment at the regular workweek schedule. In the event
      the
      Company has recalled an employee with such assurance, and then because of
      conditions over which the Company has no control (such as, but not limited
      to,
      power failure inability to acquire machinery and equipment to replace

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    worn
      out
      machinery and equipment, bona fide material shortages over which the Company
      has
      no control), the Company is unable to furnish such two (2) weeks of employment,
      the Company shall not be bound by this provision. In the event the Company
      does
      not assure such two (2) weeks of employment at the normal scheduled number
      of
      hours per week, the employee may elect to not return until such time as the
      Company does assure two (2) such consecutive weeks of employment at the normal
      scheduled number of hours per week without loss of seniority status. In the
      event the employee does elect not to return, that employee shall notify the
      Company by telegraphic message or registered mail or in person to that effect
      so
      that the Company may keep an accurate record of the employees who still wish
      to
      retain seniority status. In the event the employee fails to notify the Company
      of his/her election not to return as herein provided, and fails to report as
      specified under Section 13(h) of this Article IV, the employee shall be regarded
      as having resigned.

    

    Section
      9. Skill and Ability:
      Every
      employee who has completed his/her trial period shall, for the purpose of this
      Article, be deemed to have sufficient skill and ability to perform any common
      labor or common assembly job - Code 4 and below.

    

    Section
      10. Vacancies:
      In the
      event that a permanent job vacancy develops in a classification covered by
      this
      Agreement, other than common labor or assembly, a notice of such vacancy shall
      be bulletined for a period of two (2) working days.

    The
      bulletin shall contain the job title, the maximum rate to be paid for the job,
      and a brief description of the job to be performed. Should additional personnel
      be required for a job within thirty (30) days of the time the job was last
      posted, the Company shall not be required to bulletin again such job until
      expiration of the thirty (30) day period. It is understood that within such
      thirty (30) day period the Company may take such steps as are necessary to
      fill
      such open jobs, provided no qualified employees have bid or are available.
      However, if an employee is not currently working on the days the open job is
      posted, but returns to work within the thirty (30) day period referred to above,
      he/she may apply for such posted job and will be considered for such posted
      job
      vacancies still remaining open. Employees with seniority who desire promotions
      to posted higher rated classifications shall, during the period that such
      vacancy is bulletined, file a form provided by their Supervisor for this
      purpose. If applicants with 

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    qualifications
      sufficient to perform the work satisfactorily have made application for the
      bulletined job, the qualified applicant with the greatest plant seniority shall
      be selected. It is intended that whenever possible promotions shall be made
      within the ranks and according to seniority. The Company may fill a posted
      vacancy until it has been determined by the Company that there are applicants
      who possess the qualifications required. The Company may offer a posted vacancy
      to a new employee who did not apply, or may hire a new employee for such vacancy
      in the event the applicants for the posted vacancy do not possess sufficient
      qualifications to satisfactorily perform the job.

    It
      is
      understood that employees who have bid upon, have been accepted, and are working
      on the posted job will not be eligible to bid on an additional posted job for
      a
      period of three (3) months following the time the job for which they were
      accepted was posted.

    The
      successful bidder for a posted job opening shall have the option to return
      to
      his/her former job within a period of two (2) weeks following the first day
      worked in the posted job opening. The Company shall have the option, within
      the
      same two (2) week period to return such successful employee to his/her former
      job in the event such employee cannot satisfactorily perform the work required
      to be done. The successful bidder for a posted job opening shall receive
      retroactive pay from the first day worked in the posted job opening who
      successfully completes the two (2) week trial period.

    

    Section
      11. On-the-Job Training:
      Employees who bid on posted jobs, but do not possess sufficient qualifications
      to be selected, may be considered for training under the following
      procedures:

    

    
      	 	
              (a)

            	
              The
                number to be considered for training will be in relation to the number
                needed to fill the posting at the time of
                posting.

            

    

    

    
      	 	
              (b)

            	
              Selection
                for training will be on the basis of related education, prior employment
                experience, current employment experience as related to the training
                to be
                given. Qualifications being comparable, seniority will
                govern.

            

    

    

    
      	 	
              (c)

            	
              Evaluation
                of qualifications for training, as well as the progress of the trainee,
                will be determined by the Company.

            

    

    

    
      	 	
              (d)

            	
              A
                trainee who is unable to progress satisfactorily will be returned
                to
                his/her prior classification without loss of
                seniority.

            

    

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    Section
      12. Leaves of Absence:

    

    
      	 	
              (a)

            	
              The
                Company may grant leaves of absence without pay to all regular employees
                of the Company for good cause, taking into consideration not only
                the
                personal problems of the employee but also the Company's operational
                needs
                for production. Such leaves for good cause other than for medical
                reasons
                shall not exceed ninety (90) days except for Union activity, which
                may be
                indefinite. Leaves of absence for illness will be granted for such
                periods
                as have been recommended by competent medical authority but not to
                exceed
                one (1) year. In the event an employee is hospitalized in excess
                of seven
                (7) days, an automatic leave of absence shall be granted up to thirty
                (30)days, provided that the Human Resources Director of the Company
                is
                notified of the hospitalization within three (3) working days from
                the
                last day worked. Any other request for leave of absence for illness
                must
                be made by an employee on forms provided by the Company and must
                be
                accompanied by a report from the employee's doctor recommending the
                time
                required for leave of absence.

            

    

    

    
      	 	
              (b)

            	
              Because
                pregnancy by itself is not a disabling condition for any fixed period
                of
                time, the Company agrees to grant maternity leaves of absence based
                upon
                the medical opinion of the employee's physician. The leave of absence
                shall begin when it is determined by the employee's physician that
                the
                employee is no longer able to perform those duties characteristic
                of her
                position. The leave shall continue until, and only until, the employee,
                on
                the basis of her physician's opinion, is able to return to work,
                not to
                exceed one (1) year.

            

    

    

    
      	 	
              (c)

            	
              Employees
                on a bona fide leave of absence, when returning to work, shall return
                to
                their former classification if such work is being performed. Application
                forms of all leaves of absence must be completed and be submitted
                to the
                Company within five (5) working days from their last day worked or
                their
                date of recall, and such application for leaves shall be required
                for any
                period of seven (7) or more consecutive calendar days in which the
                employee is out of the service of the
                Company.

            

    

    

    
      	 	
              d)

            	
              Employees
                granted a leave of absence will not be asked or required to use their
                remaining vacation days left before granting said
                leave.

            

    

    

    

    

    

    Section
      13. Loss of Seniority:
      An
      employee shall lose his/her seniority when any of the following
      occur:

    

    
      	 	
              (a)

            	
              Discharge
                for cause.

            

    

    

    
      	 	
              (b)

            	
              Quitting.

            

    

    

    
      	 	
              (c)

            	
              Absence
                from work for three (3) working days without notifying the Human
                Resources
                Department of the Company.

            

    

    

    
      	 	
              (d)

            	
              Failure
                to apply for a leave of absence as
                required.

            

    

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    

    
      	 	
              (e)

            	
              Exceeding
                leave of absence without notification to the Human Resources Department
                presenting good cause.

            

    

    

    
      	 	
              (f)

            	
              Working
                for another employer for wages while on leave of absence (this does
                not
                apply to leaves of absence for Union activity or
                layoffs).

            

    

    

    
      	 	
              (g)

            	
              Layoff
                or sick leave for a continuous period in excess of one (1) year for
                purposes of seniority only.

            

    

    

    
      	 	
              (h)

            	
              Failure
                to report for work on recall or to notify the Human Resources Department
                of intention to report within three (3) regularly scheduled working
                days
                following the date notification is sent by mailgram or certified
                letter to
                the employee's last known address registered with the Human Resources
                Department.

            

    

    

    Section
      14. Promotion to Exempt Positions:
      Any
      employee covered by this Agreement who is transferred to a supervisory position
      outside of the bargaining unit, shall retain his/her seniority as of the date
      of
      transfer. Any employee who is, or has been, employed in a supervisory position
      outside of the bargaining unit, shall not accumulate seniority in the bargaining
      unit while so employed.

    

    ARTICLE
      V

    VACATIONS
      AND HOLIDAYS

    

    Section
      1. Eligibility and Amount of Vacation:
      The
      Company will grant vacation with pay to each employee in accordance with the
      following schedule:

    

    
      	 	
              (a)

            	
              All
                employees who on June 1st have been employed by the Company (in or
                out of
                the bargaining unit) six (6) months or more but less than twelve
                (12)
                months, shall be granted one-half (1/2) week's vacation with
                pay;

            

    

    

    
      	 	
              (b)

            	
              All
                employees who on June 1st have been employed by the Company (in or
                out of
                the bargaining unit) for a period of twelve (12) or more months,
                but less
                than two (2) years, shall be granted one (1) week's vacation with
                pay;

            

    

    

    
      	 	
              (c)

            	
              All
                employees who on June 1st have been employed by the Company (in or
                out of
                the bargaining unit) for two (2) years or more, but less than ten
                (10)
                years, shall be granted two (2) weeks' vacation with
                pay;

            

    

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    

    
      	 	
              (d)

            	
              All
                employees who on June 1st have been employed by the Company (in or
                out of
                the bargaining unit) ten (10) years or more, but less than fifteen
                (15)
                years, shall be granted three (3) weeks' vacation with
                pay;

            

    

    

    
      	 	
              (e)

            	
              All
                employees who on June 1st have been employed by the Company, (in
                or out of
                the bargaining unit), fifteen (15) years, but less than twenty-five
                (25)
                years, shall be granted four (4) weeks vacation with
                pay;

            

    

    

    
      	 	
              (f)

            	
              All
                employees who on June 1st have been employed by the Company (in or
                out of
                the bargaining unit) twenty-five (25) years or more, shall be granted
                five
                (5) week's vacation with pay;

            

    

    

    
      	 	
              (g)

            	
              Additional
                vacation with pay shall be granted to those employees who as of December
                31, have accrued seniority which would entitle them to additional
                vacation
                benefits over those to which they were entitled on the preceding
                June 1.
                The same limitations and requirements as prescribed for in Article
                V
                shall- also apply and the date, June 1, shall be replaced by the
                date
                December 31, where appropriate.

            

    

    

    Section
      2. Minimum Hours:

    
      	 	
              (a)

            	
              Employees
                with seniority (in or out of the bargaining unit). One (1) year or
                more.
                To qualify for full vacation benefits, the employee, as of June 1st
                with
                seniority, must have worked, or have been available for work eighty
                (80%)
                percent of the work year prior to June 1st. Time off due to occupational
                injury, jury duty or layoff shall be considered as time available
                for
                work. No vacation benefits shall be paid to an employee who has worked
                less than thirty (30%) percent of the work year prior to June 1st.
                An
                employee who has worked more than thirty (30%) percent of the work
                year,
                but has worked or been available for work less than eighty (80%)
                percent
                of the work year prior to June 1st, will be granted a vacation which
                will
                be equal to his/her vacation bracket multiplied by the percentage
                of time
                worked and time available for work.

            

    

    If
      an
      employee is on layoff, in military service, or bona fide leave of absence as
      of
      June 1st, he/she shall be paid at vacation time, the same portion of his/her
      vacation as the time actually worked bears to the work year, When he/she is
      recalled he/she must return within three (3) working days and work at least
      two
      (2) weeks. If he/she does so, he/she shall then receive the unpaid balance
      of
      his/her vacation benefit to which he/she is entitled.

    

    
      	 	
              (b)

            	
              Employees
                with seniority (in or out of the bargaining unit) of at least six
                (6)
                months, but less than one (1) year. To qualify for full vacation
                benefits
                the employee, as of June 1st with seniority, must have worked
                (availability for work does not apply) eighty (80%) percent of the
                time
                from date of employment to June 1st. An employee who has worked more
                than
                thirty (30%) percent but less than eighty (80%) percent of the time
                from
                date of employment to June 1st, will be granted a vacation equal
                to twenty
                (20) hours multiplied by the percentage of time actually worked.
                No
                vacation benefits will be paid to an employee who has worked less
                than
                thirty (30%) percent of the time from date of employment to June
                1st.

            

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    Section
      3. Computation of Vacation Pay:
      In
      computing vacation benefits, one (1) week's vacation with pay shall be
      equivalent to five (5) working days, and eight (8) hours' pay shall be
      equivalent to one (1) working day. If the employee is paid at a flat hourly
      rate, the vacation pay shall be at the highest rate earned for at least thirty
      (30) consecutive days during the year prior to June 1st, including shift
      premiums, if any.

    

    Section
      4. Scheduling of Vacations:
      Prior to
      May 1st of each calendar year, departmental heads will consult with all
      employees entitled to vacations and from such consultations the Company shall
      establish a working schedule agreeable to the Union for the vacation period.
      In
      determining vacation schedules, the Company will respect the seniority and
      wishes of the employee to the extent that its needs will permit. (a) The
      vacation season for those employees eligible for more than two (2) weeks
      vacation with pay, shall be during the twelve (12) month period beginning on
      January 1st. (b) The vacation season, for those employees hired between June
      2
      and prior to December 31, eligible for additional vacation with pay, shall
      be
      taken between their hire date and December 31. The Company may elect to close
      the plant for a specified vacation period.

    

    Section
      5. Date Due:
      Vacation
      pay which bas been earned, in accordance with this Article, shall be paid to
      the
      employee on the payday immediately preceding the start of each employee's
      vacation.

    

    Section
      6. Consecutive Days, Etc.:
      All
      vacations of two (2) weeks or less shall be taken on consecutive days unless
      the
      Company and the employee agree on a different division of the vacation time.
      If
      an employee is eligible for a vacation in excess of two (2) weeks, or additional
      vacation, his/her vacation schedule for such an additional vacation, if any,
      shall be determined pursuant to Section 4 of this Article. Vacations shall
      not
      be changed without thirty (30) days notice, or the consent of the employee
      involved. If any employee voluntarily responds to a Company request to return
      from his/her vacation prior to its expiration date, he/she shall be reimbursed
      for all out-of-pocket expense in connection with such recall and allotted an
      additional vacation period for the untaken vacation time.

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    Section
      7. Retiree Pro-rata Vacation Pay:
      Any
      employee who retires prior to June 1st of any calendar year at the retirement
      age prescribed by the Social Security laws of the United States and who has
      given to the Company a two (2) month notice in writing in advance of his/her
      intention to do so shall be paid the pro-rata vacation pay earned by such
      employee, the amount of which is to be determined by provisions of Section
      1, 2,
      and 3 of Article V.

    

    Section
      8. Holidays and Holiday Pay:
      Employees who qualify hereunder shall be paid for eight (8) hours straight-time
      pay for each of the following holidays or the dates on which they are observed,
      though no work shall be performed on such days:

    

    
      	
              New
                Years' Day 

            	
              Fourth
                of July

            
	
              Dr.
                Martin Luther King's Birthday

            	
              Labor
                Day

            
	
              Washington's
                Birthday

            	
              Thanksgiving
                Day

            
	
              Good
                Friday

            	
              Friday
                after Thanksgiving Day

            
	
              Memorial
                Day

            	
              One
                Floating Holiday - See Section 9 below

            
	
              Christmas
                Eve Day

            	 
	
              Christmas
                Day

            	 

    

    

    Employees
      who work on said holidays shall be paid, in addition to eight (8) hours holiday
      pay, double time for all time worked. An employee shall be eligible for holiday
      pay who shall have been employed for a period of sixty (60) calendar days before
      such holiday and has met one of the following additional
      conditions:

    

    
      	 	
              (a)

            	
              Worked
                the regularly scheduled workday preceding and the regularly scheduled
                workday succeeding the holiday, unless an absence for one of such
                days
                shall be excused for good cause, substantiated by the employee,
                or

            

    

    

    
      	 	
              (b)

            	
              Been
                at work in the two (2) weeks preceding said holiday and laid off
                during
                such preceding two (2) weeks, or

            

    

    

    
      	 	
              (c)

            	
              Is
                on a bona fide leave of absence starting within the two (2) weeks
                immediately preceding such holiday, or on the workday immediately
                following such holiday, or

            

    

    

    
      	 	
              (d)

            	
              If
                no work is scheduled between two (2) holidays, to be eligible for
                pay for
                both holidays, an employee must work his/her preceding scheduled
                workday
                and his/her scheduled workday succeeding such holidays. To be eligible
                for
                pay for one (1) of the holidays, an employee must work either his/her
                scheduled workday preceding the first holiday or his/her scheduled
                workday
                succeeding the second holiday.

            

    

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    
      	 	
              (e)

            	
              An
                employee who fails to work any portion of the last hour on the regularly
                scheduled workday preceding and the regularly scheduled workday succeeding
                a holiday or holidays, shall not lose holiday pay for such holidays
                if
                excused by the Company for good
                cause.

            

    

    

    Section
      9. Floating Holiday:
      Subject
      to the eligibility requirements for holiday pay, the recognized holidays
      hereunder shall include one (1) additional holiday, designated as a "floating
      holiday". The Company shall select the day on which such holiday will be
      observed and shall give not less than two (2) weeks notice prior to the date
      on
      which such floating holiday will be celebrated.

    

    ARTICLE
      VI

    WAGES

    

     Section
      1. Rates:
      Effective July 3, 2006 each employee shall receive an immediate bonus of one
      hundred and fifty dollars ($150). Effective July 2, 2007 each employee shall
      receive an additional two percent (2%) increase in his/her straight time hourly
      rate of pay plus any cost of living adjustment. Effective June 30, 2008 each
      employee shall receive an additional two percent (2%) increase in his/her
      straight time hourly rate of pay plus any cost of living adjustment. The wage
      rate, to be paid under the terms of this Agreement to employees in each
      occupational classification, are those appearing in Appendix "A" which reflect
      said wage increase and is attached hereto and made a part hereof. Such rates
      are
      minimum rates of pay only. The Company may not pay less than those rates, but
      nothing in this Agreement shall prevent the payment of rates higher than those
      listed in said schedule.

    

    Section
      2. Cost of Living: If
      for
      the month of May 2007, the Revised Consumer Price Index for Urban Wage Earners
      and Clerical Workers, all items for Chicago published by the Bureau of Labor
      Statistics of the U.S. Department of Labor (or any successor agency thereto)
      (1967 = 100) has increased by more than four (4) points above said Index for
      the
      month of May 2006, then one (1¢) cent shall be added to the hourly wage rates as
      set forth in Appendix "A" hereof and which are in effect from July 1, 2007
      until
      July 1, 2008 for each full four-tenths (.4) of a point which said Index has
      risen above said four (4) points up to a maximum of fifteen (15¢)
      cents.

    If
      for
      the month of May 2008 said Index has increased by more than four (4) points
      above said Index for the month of May 2007, then one (1¢) cent shall be added to
      the hourly wage rates as set forth in 

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    Appendix
      "A" hereof and which are in effect from July 1, 2008 until July 1, 2009 for
      each
      full four-tenths (.4) of a point which said Index has risen above said four
      (4)
      points up to a maximum of fifteen (15¢) cents.

    

    Section
      3. New Classifications:
      Prior to
      establishing a new classification, the Union shall be advised of the Company's
      intention and the rate which the Company wishes to apply. After thirty (30)
      days
      of operation but before sixty (60) days, either party may request negotiations
      on the rate for the new classification. The rate resulting from these
      negotiations shall become the permanent rate. In the event no request is made
      to
      negotiate a change in the rate as to the new classification, it is understood
      that the established rate shall be the effective rate.

    

    Section
      4. Upgrading:.
      An
      employee being upgraded, who has not previously worked in the classification
      to
      which he/she is upgraded, shall be placed in the next higher rate in the
      progression plan of the new classification above the rate being paid to such
      employee prior to the upgrading. If the employee has previously worked in the
      classification to which he/she is upgraded, he/she shall receive the rate to
      which the amount of his/her previous experience entitles him/her. Such changes
      in the rate shall be paid retroactive from the first day worked following such
      transfer who successfully completes the two (2) week trial period. To be
      eligible for a rate change, an employee must have worked at least four hundred
      (400) hours and a period of at least thirteen (13) weeks shall have elapsed
      since his/her first employment or his/her last classification
      change.

    

    Section
      5. New Experienced Employees:
      New
      employees who have worked during the last eighteen (18) months in the type
      of
      work available and whose previous experience can be verified shall be placed
      on
      two (2) weeks trial period at the starting rate of pay in their respective
      classifications and at the expiration of such trial period, if retained in
      the
      employ of the Company, shall be given credit in the automatic progression plan,
      as outlined in Appendix "A" hereof for their proved experience in similar
      work.

    

    Section
      6. Payday:
      Wages
      shall be paid on Friday of each week and shall include all work performed up
      until twelve (12) midnight of the previous Sunday.

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    Section
      7. Piece Work:
      If the
      Company utilizes a piece work incentive or bonus plan, the operations of such
      a
      plan shall be covered by the provisions of Appendix "C" hereof.

    

    Section
      8. Pension Plan:
      During
      the term of this Agreement, the Company shall maintain for each of the employees
      covered by this Agreement a Pension Benefits Plan. The Company and the Union
      have agreed to a pension benefits plan named the National Integrated Group
      Pension Plan.

    The
      employee pension plan is funded solely by the Company and the contribution
      rate
      is based on cents per hour paid as follows:

    Effective
      July 3, 2006
      - fifty
      cents (50¢) per hour will be contributed for each employee based upon hours paid
      of this Agreement.

    Effective
      July 2, 2007
      - an
      additional five cents (5¢) per hour will be contributed for a new total of
      fifty-five cents (55¢) based upon all hours paid during the second year of this
      Agreement.

    Effective
      June 30, 2008 -
      an
      additional five cents (5¢) per hour will be contributed for a new total of sixty
      cents (60¢) based upon all hours paid during the third year of this
      Agreement.

    

    ARTICLE
      VII

    INSURANCE

    

    During
      the term of this Agreement, the Company will maintain for the employees covered
      by this Agreement, an insurance policy with a responsible insurance company
      with
      coverages and provisions set forth in Appendix "B" of this Agreement. The
      premium per week per employee, one (1) dependent and family coverage is
      guaranteed for the first year of this contract. 

    

    
      	
              Effective
                July 31, 2006:

            
	
              HMO
                Plan:

            	
              Employee

            	
              -

            	
              $12.48
                per week

            
	 	
              Employee
                + 1 Dependent

            	
              -

            	
              $24.68
                per week

            
	 	
              Family

            	
              -

            	
              $37.17
                per week

            
	 
	
              PPO
                Plan:

            	
              Employee

            	
              -

            	
              $35.33
                per week

            
	 	
              Employee
                + 1 Dependent

            	
              -

            	
              $77.54
                per week

            
	 	
              Family

            	
              -

            	
              $127.91
                per week

            

    

    

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    For
      the
      second and third years of the contract, any premium increase over seven percent
      (7%) will be shared on a 50/50 basis.

    This
      article applies only to employees with sixty (60) days or more of seniority
      but
      does not apply to part-time employees.

    

    ARTICLE
      VIII

    GENERAL
      PROVISIONS

    

    Section
      1. Saving Clause:
      All
      benefits affecting the employees covered by this Agreement presently in effect
      and which are not definitely referred to or changed herein, shall remain in
      effect during the life of this contract.

    

    Section
      2. Bulletin Board:
      A
      bulletin board will be provided by the Company for the Union's use. The Union
      shall have the privilege of posting notices concerning its official business
      and
      social activities upon such bulletin board. Where the size of the plant requires
      it, more than one (1) bulletin board will be furnished by the
      Company.

    

    Section
      3. Election Day: In conformity with the laws of the State of Illinois, employees
      who are legitimate registered voters will be given time off not to exceed two
      (2) hours for voting at general elections. At the time of an election in which
      a
      President of the United States will be selected, employees will be given paid
      time off not to exceed two (2) hours.

    

    Section
      4. Supervisors:
      Departmental production supervisors shall not engage in production work, except
      such production work may be undertaken when instructing new employees, breaking
      in a new job, correcting faults of production procedures and dealing with
      emergencies.

    

    Section
      5. Right of Access:
      Authorized Union officers or representatives shall have access to the factory
      during business hours upon reasonable notification to the Company for
      investigation and adjustment of matters covered by or arising under this
      Agreement.

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    Section
      6. Conflict with State and Federal Law:
      Should
      any provision of this Agreement be declared illegal by any court of competent
      jurisdiction such provision shall immediately become null and void leaving
      the
      remainder of the Agreement in full force and effect and the parties shall
      thereupon seek to negotiate substitute provisions which are in conformity with
      the applicable law.

    

    Section
      7. Female Employees:
      There
      shall be equal pay for equal work performed regardless of the sex of the
      employee. There shall be no discrimination in wages, hours, or other terms
      or
      conditions of employment, or in training or upgrading, on account of the sex
      or
      marital status of the employee.

    

    Section
      8. Paid Leave of Absence:
      In
      instances of the death of a member of the immediate family of a regular
      employee, the Company will, where required, grant a paid leave of up to three
      (3) regular working days to enable such employee to attend the funeral and
      otherwise assist in arrangements pertaining to the burial of such member of
      the
      family. An employee who travels a long distance to attend a funeral or services
      shall be authorized one (1) additional day following the funeral or services,
      but not to exceed three (3) days pay. Each day's pay shall consist of the
      employee's regular rate of eight (8) hours. The term "immediate family", as
      used
      herein, is defined as consisting of the following members only: Mother, Father,
      Husband, Wife, Children, Brother, Sister, Mother-in-law, Father-in-law,
      Grandparents, Grandparents-in-law and Grandchildren. Where a death occurs to
      any
      such member of the employee's family, he/she shall make application to the
      Human
      Resources Director for such paid leave. Such paid leave will not be granted
      in
      instances when the employee, otherwise eligible, does not attend the funeral.
      The employee absent on a paid leave shall not be eligible for, or notified
      of,
      any overtime which is scheduled during the period of such employee's
      leave.

    This
      provision is not applicable if you are on a formal leave of absence, on a
      company designated holiday or during periods of vacation.

    

    Section
      9. Jury Service:
      An
      employee who shall have been employed sixty (60) calendar days immediately
      prior
      to reporting for jury duty and who performs jury service shall be paid an amount
      for each day of the regular workweek that such employee performs jury service
      as
      shall equal eight (8) hours of 

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    straight-time
      pay at the employee's regular hourly rate less the jury fee legally payable
      to
      such employee for that day of jury service. An employee shall have performed
      jury service on any day that such employee reports to Court for jury service
      pursuant to an Order of Court. The payments as provided herein shall be for
      the
      entire period of service on a jury pursuant to an Order of Court. To be entitled
      to receive such jury service pay differential, such employee shall furnish
      the
      Human Resources Director of the Company a voucher from the Court wherein such
      jury service is performed setting forth the number of days of jury service
      and
      the jury fees paid to such employee for jury service.

    In
      the
      event an employee performs jury service on a day for which such employee
      receives a vacation and/or holiday pay, such employee shall not be paid jury
      service pay differential for that day. An employee who is on leave of absence,
      layoff, paid death leave, or who is accruing Workers' Compensation benefits
      shall not be paid jury service pay differential while on such status. An
      employee performing jury service shall return to work on his/her first regular
      workday after being excused from such jury service.

    

    Section
      10. Safety and Health Provisions:
      The
      Company shall make reasonable provisions for the safety and health of employees
      during working hours and shall provide all reasonable protective devices and
      other equipment to protect them from injury.

    

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    Section
      11. Union Employee Educational Assistance Program:

    

    (A)  Education
      Eligibility Requirements:

    

    
      	 	
              1.

            	
              Educational
                courses must be related to the classification of work being or to
                be
                performed by the employee.

            

    

    

    
      	 	
              2.

            	
              Such
                courses and institutions must be approved by the Company prior to
                enrollment.

            

    

    

    
      	 	
              3.

            	
              Courses
                are to be taken during non-scheduled working
                hours.

            

    

    

    (B)  Amount
      of Reimbursement:

    

    
      	 	
              1.

            	
              For
                employees who complete specialized courses, the Company will pay
                up to
                100% of the tuition charges per semester at the satisfactory (grade
                "C" or
                better) completion of the course material in an approved
                school.

            

    

    

    
      	 	
              2.

            	
              When
                education expenses are partially paid by assistant-ships, scholarships,
                fellowships, or G.I. Bill Benefits, tuition reimbursements is based
                on the
                net amount actually paid by the employee, excluding amounts paid
                through
                assistantship, scholarships, fellowships, or G.I. Bill
                Benefits.

            

    

    

    (C)  Method
      of Reimbursement:

    

    
      	 	
              1.

            	
              To
                be eligible for tuition refund, the employee must, prior to the time
                of
                enrollment, fill out an application form per semester, for course(s)
                contemplated.

            

    

    

    
      	 	
              2.

            	
              Obtain
                the approval of the employee's supervisor who in turn will get the
                Company
                approval through Human Resources.

            

    

    

    
      	 	
              3.

            	
              Upon
                completion of course(s), submit to the employees supervisor a written
                statement from the school stating that the course(s) have been
                satisfactorily completed. This is usually a copy of the grade
                statement.

            

    

    

    
      	 	
              4.

            	
              A
                tuition receipt. 

            

    

    
      	 	 	
              The
                supervisor will forward this information to the Human Resources Director
                and within two (2) weeks the employee will receive a check containing
                the
                proper tuition refund as well as his/her tuition receipt and grade
                statement.

            

    

    

    
      	 	
              5.

            	
              If
                for any reason employment is terminated before completion of the
                program,
                then the Company's obligation
                ceases.

            

    

    

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    Section
      12. Call-in Sick / Personal Day:
      Each
      regular employee of the Company shall be eligible for a call-in sick/personal
      day of one (1) each contract year. Such day is not cumulative from year to
      year
      but the Company will pay the employee by July 1 of each contract year for the
      day not taken. One (1) such day shall equal eight (8) hours pay at the
      employee's regular hourly rate of pay.

    

    Section
      13. Inventory Shutdown Scheduling:
      The
      Company will schedule inventory by departmental seniority, and shall, in the
      event that additional employees are required in the stock room area, first
      ask
      former stock room area employees to work.

    

    Section
      14. Severance Plan: 
      The
      Company will agree to negotiate a severance plan if the plant operations were
      to
      move beyond a radius of more than twenty (20) miles from the McCook
      plant.

    

    Section
      15. 401K Savings Plan:
      The
      Company agrees to start up and administer a 401K Savings Plan if thirty percent
      (30%) or more participation is achieved.

    

    Signed
      this 31stday
      of
January,
      2007.

    

    
      	 	
              Local
                1031,

            
	 	
              International
                Brotherhood

            
	
              Wells
                Gardner

            	
              Of
                Electrical Workers,

            
	
              Electronics
                Corporation

            	
              AFL-CIO

            

    

    

    

    

    
      	
               

              /s/
                Anthony Spier

            	 	
              /s/
                José
                A. Caez

            
	
              Anthony
                Spier

            	 	
              José
                A. Caez

            
	
              President

            	 	
              Business
                Manager/Financial Sec’y

            

    

    

    

    

    

    

    

    

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    ATTACHED
      TO AND MADE PART OF AGREEMENT BETWEEN WELLS-GARDNER ELECTRONICS CORPORATION
      AND
      LOCAL 1031, INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, AFL-CIO, FOR PERIOD
      JULY 3,2006 UNTIL JUNE 29,2009.

    

    APPENDIX
      "A"

    
      	
              WAGE
                SCALE EFFECTIVE 07/03/2006 THROUGH 06/29/2009

            
	 	
              JOB
                CLASSIFICATION

            	
              START

            	
              2MO

            	
              3MO

            	 	 
	
              2-8

            	
              Sweeper

            	 	 	 	 	 	 
	 	 	
              Effective
                07/03/06

            	
              8.53

            	
              12.27

            	
              12.38

            	 	 
	 	 	
              Effective
                07/02/07

            	 	 	 	 	 
	 	 	
              Effective
                06/30/08

            	 	 	 	 	 
	
              3-2

            	
              Assy.,
                Wirer-Solderer

            	 	 	 	 	 	 
	
              3-5

            	
              Riveter

            	 	 	 	 	 	 
	 	 	
              Effective
                07/03/06

            	
              8.53

            	
              12.38

            	
              12.48

            	 	 
	 	 	
              Effective
                07/02/07

            	 	 	 	 	 
	 	 	
              Effective
                06/30/08

            	 	 	 	 	 
	 	 	 	 	 	 	 	 

    

    

    
      	 	 	 	
              START

            	
              2MO

            	
              12MO

            	
              24MO

            	
              36MO

            
	 
	 	
              Hired
                After 7/1/97

            	 	
              7.58

            	
              8.26

            	
              8.94

            	
              10.30

            	
              Top
                Rate

            
	 
	
              G.L.
                Specialist

            
	 	 	
              Effective
                07/03/06

            	 	 	
              13.06

            	 	 
	 	 	
              Effective
                07/02/07

            	 	 	 	 	 
	 	 	
              Effective
                06/30/08

            	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 

    

    

    
      	 	
              JOB
                CLASSIFICATION

            	
              START

            	
              2MO

            	
              3MO

            	 	 
	 
	
              4-1

            	
              Wire
                Cutting Machine Operator

            	 	 	 	 	 
	
              4-3

            	
              Bailer-Sweeper

            	 	 	 	 	 
	
              4-5

            	
              Packer-Final
                Assembly

            	 	 	 	 	 
	 	 	
              Effective
                07/03/06

            	
              8.55

            	
              12.39

            	
              12.61

            	 	 
	 	 	
              Effective
                07/02/07

            	 	 	 	 	 
	 	 	
              Effective
                06/30/08

            	 	 	 	 	 

    

    

    
      	 	 	 	
              START

            	
              2MO

            	
              12MO

            	
              24MO

            	
              36MO

            
	 
	 	
              Hired
                After 7/1/97

            	 	
              7.67

            	
              8.39

            	
              9.11

            	
              10.55

            	
              12.61

            
	 
	
              G.L.
                Specialist

            	 	 	 	
              3MO

            	 	 
	 	 	
              Effective
                07/03/06

            	 	 	
              13.06

            	 	 
	 	 	
              Effective
                07/02/07

            	 	 	 	 	 
	 	 	
              Effective
                06/30/08

            	 	 	 	 	 

    

    

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    ATTACHED
      TO AND MADE PART OF AGREEMENT BETWEEN WELLS-GARDNER ELECTRONICS CORPORATION
      AND
      LOCAL 1031, INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, AFL-CIO, FOR PERIOD
      JULY 3, 2006 UNTIL JUNE 29, 2009.

    

    APPENDIX
      "A" CONT’D

    

    
      	
              WAGE
                SCALE EFFECTIVE 07/03/2006 THROUGH 06/29/2009

            
	 	
              JOB
                CLASSIFICATION

            	
              START

            	
              2MO

            	
              6MO

            	 	 
	 
	
              5-1

            	
              Heavy
                Packer

            	 	 	 	 	 
	
              5-2

            	
              Stockkeeper,
                Stock Delivery

            	 	 	 	 	 
	
              5-5

            	
              Rivet/Pems
                Set-Up Oper.

            	 	 	 	 	 
	
              5-6

            	
              Prepare
                & Operate Insertion Machine

            	 	 	 	 	 
	
              5-7

            	
              Automatic
                Checking Machine Operator

            	 	 	 	 	 
	 	 	
              Effective
                07/03/06

            	
              8.64

            	
              12.47

            	
              12.71

            	 	 
	 	 	
              Effective
                07/02/07

            	 	 	 	 	 
	 	 	
              Effective
                06/30/08

            	 	 	 	 	 
	 	 	 	 	 	 	 	 

    

     

    
      	 	 	
              START

            	
              2MO

            	
              12MO

            	
              24MO

            	
              36MO

            
	 
	 	
              Hired
                After 7/1/97

            	
              7.67

            	
              8.39

            	
              9.11

            	
              10.55

            	
              12.71

            
	 
	
              G.L. Specialist

            	 	 	
              6MO

            	 	 
	 	 	
              Effective
                07/03/06

            	 	 	
              13.12

            	 	 
	 	 	
              Effective
                07/02/07

            	 	 	 	 	 
	 	 	
              Effective
                06/30/08

            	 	 	 	 	 
	 	 	 	 	 	 	 	 

    

    

    

    
      	 	
              JOB
                CLASSIFICATION

            	
              START

            	
              2MO

            	
              6MO

            	 	 
	 
	
              7-2

            	
              Wire
                Cutting Mac, Set-Up & Oper.

            	 	 	 	 	 
	
              7-3

            	
              Inventory
                Expeditor

            	 	 	 	 	 
	
              7-5

            	
              Riding
                Power Vehicle Operator

            	 	 	 	 	 
	
              7-7

            	
              Assy.
                Inspector

            	 	 	 	 	 
	
              7-8

            	
              Relief
                & Repair Operator

            	 	 	 	 	 
	 	 	
              Effective
                07/03/06

            	
              8.82

            	
              12.71

            	
              13.05

            	 	 
	 	 	
              Effective
                07/02/07

            	 	 	 	 	 
	 	 	
              Effective
                06/30/08

            	 	 	 	 	 

    

    

    

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    ATTACHED
      TO AND MADE PART OF AGREEMENT BETWEEN WELLS-GARDNER ELECTRONICS CORPORATION
      AND
      LOCAL 1031, INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, AFL-CIO, FOR PERIOD
      JULY 3, 2006 UNTIL JUNE 29,2009.

    

    APPENDIX
      "A" CONT’D

    
      	
              WAGE
                SCALE EFFECTIVE 07/03/2006 THROUGH 06/29/2009

            
	 	
              JOB
                CLASSIFICATION

            	
              START

            	
              2MO

            	
              6MO

            	 	 
	 
	
              7-11

            	
              Building
                Fireperson

            	 	 	 	 	 
	 	 	
              Effective
                07/03/06

            	
              8.94

            	
              12.85

            	
              13.14

            	 	 
	 	 	
              Effective
                07/02/07

            	 	 	 	 	 
	 	 	
              Effective
                06/30/08

            	 	 	 	 	 
	
              G.L. Specialist

            	 	 	 	 	 	 
	 	
              Effective
                07/03/06

            	 	 	
              13.48

            	 	 
	 	
              Effective
                07/02/07

            	 	 	 	 	 
	 	
              Effective
                06/30/08

            	 	 	 	 	 

    

    

    
      	 	
              JOB
                CLASSIFICATION

            	
              START

            	
              2MO

            	
              6MO

            	
              9MO

            	 
	 
	
              8-2

            	
              Tester-Phaser
                "B" (Printed Boards)

            	 	 	 	 	 
	
              8-3

            	
              Bonding
                Machine Operator

            	 	 	 	 	 
	
              8-4

            	
              Fine
                Patcher

            	 	 	 	 	 
	 	 	
              Effective
                07/03/06

            	
              9.06

            	
              12.90

            	
              13.06

            	
              13.31

            	 
	 	 	
              Effective
                07/02/07

            	 	 	 	 	 
	 	 	
              Effective
                06/30/08

            	 	 	 	 	 
	
              G.L.
                Specialist

            	 	 	 	
              6MO

            	 	 
	 	
              Effective
                07/03/06

            	 	 	
              13.74

            	 	 
	 	
              Effective
                07/02/07

            	 	 	 	 	 
	 	
              Effective
                06/30/08

            	 	 	 	 	 

    

    

    
      	 	
              JOB
                CLASSIFICATION

            	
              START

            	
              2MO

            	
              6MO

            	
              9MO

            	
              12MO

            
	 	 	 	 	 	 
	
              10-2

            	
              Tool
                Crib Worke r

            	 	 	 	 	 	 
	 	 	
              Effective
                07/03/06

            	
              9.36

            	
              13.13

            	
              13.24

            	
              13.43

            	
              13.57

            
	 	 	
              Effective
                07/02/07

            	 	 	 	 	 
	 	 	
              Effective
                06/30/08

            	 	 	 	 	 
	
              11-2

            	
              Tester

            	 	 	 	 	 	 
	
              11-6

            	
              Cabinet
                Finisher

            	 	 	 	 	 	 
	 	 	
              Effective
                07/03/06

            	
              9.27

            	
              13.19

            	
              13.33

            	
              13.48

            	
              13.67

            
	 	 	
              Effective
                07/02/07

            	 	 	 	 	 
	 	 	
              Effective
                06/30/08

            	 	 	 	 	 
	
              G.L.Specialist

            	 	 	 	 	 	
              12MO

            
	 	 	
              Effective
                07/03/06

            	 	 	 	 	
              14.17

            
	 	 	
              Effective
                07/02/07

            	 	 	 	 	 
	 	 	
              Effective
                06/30/08

            	 	 	 	 	 

    

    

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    ATTACHED
      TO AND MADE PART OF AGREEMENT BETWEEN WELLS-GARDNER ELECTRONICS CORPORATION
      AND
      LOCAL 1031, INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, AFL-CIO, FOR PERIOD
      JULY 3, 2006 UNTIL JUNE 29, 2009.

    
      	
              APPENDIX
                "A" CONT’D

            
	
              WAGE
                SCALE EFFECTIVE 07/03/2006 THROUGH 06/29/2009

            
	 
	
              JOB
                CLASSIFICATION

            	 	
              START

            	 	
              2MO

            	 	
              6MO

            	 	
              9MO

            	 	
              12MO

            
	 
	
              12-4
                Precision Mechanical Assembler

            
	
              12-9
                Final Line Inspector(Comp.Prod.)

            
	 	
              Effective
                07/03/06

            	
              9.42

            	 	
              13.43

            	 	
              13.51

            	 	
              13.68

            	 	
              13.88

            
	 	
              Effective
                07/02/07

            	 	 	 	 	 	 	 	 	 
	 	
              Effective
                06/30/08

            	 	 	 	 	 	 	 	 	 
	
              12-10
                Master Cabinet Finisher

            
	
               

            	
              Effective
                07/03/06

            	
              9.50

            	 	
              13.48

            	 	
              13.61

            	 	
              13.73

            	 	
              13.95

            
	 	
              Effective
                07/02/07

            	 	 	 	 	 	 	 	 	 
	 	
              Effective
                06/30/08

            	 	 	 	 	 	 	 	 	 
	
              *12-12
                Maintenance "B"

            
	 	
              Effective
                07/03/06

            	
              9.89

            	 	
              13.73

            	 	
              13.93

            	 	
              14.17

            	 	
              14.69

            
	 	
              Effective
                07/02/07 

            	 	 	 	 	 	 	 	 	 
	 	
              Effective
                06/30/08

            	 	 	 	 	 	 	 	 	 
	
              G.L. Specialist

            
	 	
              Effective
                07/03/06

            	 	 	 	 	 	 	 	 	
              14.42

            
	 	
              Effective
                07/02/07 

            	 	 	 	 	 	 	 	 	 
	 	
              Effective
                06/30/08

            	 	 	 	 	 	 	 	 	 
	
              13-1 Analyzer
                

            
	 	
              Effective
                07/03/06

            	
              10.31

            	 	
              14.25

            	 	
              14.35

            	 	
              14.50

            	 	
              14.69

            
	 	
              Effective
                07/02/07

            	 	 	 	 	 	 	 	 	 
	 	
              Effective
                06/30/08

            	 	 	 	 	 	 	 	 	 
	
              14-1 Master
                Analyzer

            	 	
              15.36

            
	
              14-2 Maintenance
                "A"

            
	 	
              Effective
                07/03/06

            	
              10.94

            	 	
              15.00

            	 	
              15.36

            	 	 	 	 
	 	
              Effective
                07/02/07

            	 	 	 	 	 	 	 	 	 
	 	
              Effective
                06/30/08

            	 	 	 	 	 	 	 	 	 
	
              G.L. Specialist

            
	 	
              Effective
                07/03/06

            	
               

            	 	
               

            	 	 	 	 	 	
              16.01
                

            
	 	
              Effective
                07/02/07

            	
               

            	 	
               

            	 	
               

            	 	 	 	 
	 	
              Effective
                06/30/08

            	
               

            	 	
               

            	 	
               

            	 	 	 	 
	
              15-1 Senior
                Master Analyzer

            
	 	
              Effective
                07/03/06

            	 	 	 	 	 	 	 	 	
              18.78

            
	 	
              Effective
                07/02/07

            	 	 	 	 	 	 	 	 	 
	 	
              Effective
                06/30/08

            	 	 	 	 	 	 	 	 	 
	
              16.1 Technical
                Specialist

            
	 	
              Effective
                07/03/06

            	
               

            	 	
               

            	 	 	 	 	 	
              19.64
                

            
	 	
              Effective
                07/02/07

            	
               

            	 	
               

            	 	
               

            	 	 	 	 
	 	
              Effective
                06/30/08

            	 	 	 	 	 	 	 	 	 
	
              16.2 Maintenance
                Administrator

            	 
	 	
              Effective
                07/03/06

            	 	 	 	 	 	 	 	 	
              20.69

            
	 	
              Effective
                07/02/07

            	 	 	 	 	 	 	 	 	 
	 	
              Effective
                06/30/08

            	 	 	 	 	 	 	 	 	 
	
              17.2 Production
                Administrator

            
	 	
              Effective
                07/03/06

            	 	 	 	 	 	 	 	 	
              17.21

            
	 	
              Effective
                07/02/07

            	 	 	 	 	 	 	 	 	 
	 	
              Effective
                06/30/08

            	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
              *
                Education
                Bonus

            	 	
              1
                Course

            	 	
              10¢
                per hour

            	 
	
              (after
                maximum rate) 2 or more Courses 10¢ per hour
                (additional)

            

    

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    ATTACHED
      TO AND MADE PART OF AGREEMENT BETWEEN WELLS-GARDNER ELECTRONICS CORPORATION
      AND
      LOCAL 1031, INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, AFL-CIO, FOR PERIOD
      JULY 3, 2006 UNTIL JUNE 29, 2009.

    

    APPENDIX
      "B"

    

    THE
      INSURANCE COVERAGE FOR EMPLOYEES AND DEPENDENTS

    COVERED
      BY THIS AGREEMENT

    

    NON-OCCUPATIONAL
      - WEEKLY DISABILITY BENEFITS:

    (EMPLOYEES
      ONLY)

    

      Benefits
      are payable for accident from the first (1st) day and for sickness from the
      eighth (8th) day for a period up to thirteen (13) weeks for any one (1)
      disability.

    

    The
      weekly benefits are:

     

    
      	
              Effective
                07/01/2006 

            	
              $230.00

            
	
              Effective
                07/01/2007 

            	
              $235.00

            
	
              Effective
                07/01/2008

            	
              $240.00

            

    

    

    LIFE
      INSURANCE: (Employees Only)

    

    
      	
              Effective
                07/01/2006 

            	
              $21,000
                (AD&D 

            	
              $21,000)

            
	
              Effective
                07/01/2007 

            	
              $22,000
                (AD&D 

            	
              $22,000)

            
	
              Effective
                07/01/2008 

            	
              $23,000
                (AD&D 

            	
              $23,000)

            

    

    

    DENTAL
      INSURANCE PLAN:

      Effective
      the first year of this Agreement, Olympia Plan 1500. The premium cost of this
      plan shall be $10.00 per month for the employee coverage to be paid entirely
      by
      the Company for the three (3) year term of this Agreement. The premium cost
      of
      this plan for single plus one coverage shall be $17.00 and family coverage
      shall
      be $20.00 per month. An employee may elect to secure this coverage for his/her
      dependents at a premium cost of $1.79 per week to be paid for by the employee
      for the three (3) year term of this Agreement.

    

    OPTICAL
      PLAN OFFERED BY MID AMERICA VISION:

      Covers
      employee and dependents. Entire premium cost to be paid for by the Company
      for
      the three (3) year term of this Agreement.

    

    CONTINUATION
      OF INSURANCE COVERAGE:

    

    Temporary
      Lay-off:

    

      An
      insured, temporarily laid-off employee will be covered by insurance benefits
      at
      no cost until the end of the month in which the layoff occurs.

    

    

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    ATTACHED
      TO AND MADE PART OF AGREEMENT BETWEEN WELLS-GARDNER ELECTRONICS CORPORATION
      AND
      LOCAL 1031, INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, AFL-CIO, FOR PERIOD
      JULY 3, 2006 UNTIL JUNE 29, 2009.

    

    APPENDIX
      "B" (CONT'D)

    

    If
      a
      temporarily laid-off employee desires to continue the insurance, all coverages,
      except weekly disability benefits, may be continued for a period not to exceed
      six (6) months, providing the laid-off employee makes the first premium payment
      in full for the following month within seven (7) days from the date of the
      layoff, or the first of the following month, whichever occurs
      first.

    

    Sick
      Leave:

    

      The
      insurance for an employee on sick leave will be paid by Wells-Gardner
      Electronics Corporation for three (3) months. If the employee wishes to continue
      his/her insurance after this period, he/she may do so for an additional three
      (3) months, provided the required monthly premium is paid by the employee to
      Wells-Gardner Electronics Corporation before the end of the third month of
      sick
      leave and monthly thereafter.

      All
      employees shall be provided together with their dependents all rights under
      COBRA.

    

    Total
      Disability of Employee:

    

      In
      the
      event an employee becomes totally disabled, as determined by the provisions
      and
      regulations of the Social Security laws, the Company will pay the entire premium
      cost for the continuation of such employee's medical insurance coverage for
      a
      period of up to two (2) years or until such employee reaches age sixty-five
      (65), whichever occurs first.

    

    Death
      of Employee:

    

    In
      the
      event an employee dies while in the active employ of the Company, the Company
      will pay the entire premium cost for the continuation of the medical insurance
      coverage for the spouse and dependent children for a period up to
      one

    (1)
      year;
      provided however that:

    

    
      	 	
              (1)

            	
              Such
                medical insurance coverage shall cease upon the remarriage of the
                spouse
                and provided also that,

            

    

    

    
      	 	
              (2)

            	
              The
                spouse or dependent children shall not be eligible for coverage under
                any
                other employer paid insurance plan.

            

    

    

    

    

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    ATTACHED
      TO AND MADE PART OF AGREEMENT BETWEEN WELLS-GARDNER ELECTRONICS CORPORATION
      AND
      LOCAL 1031, INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, AFL-CIO, FOR PERIOD
      JULY 3, 2006 UNTIL JUNE 29, 2009.

    

    

    APPENDIX
      "C"

    

    

    It
      is
      understood and agreed by the parties hereto that the Company may continue and/or
      install a piece work or incentive system in its plant. Such incentive plan
      must
      be mutually agreed to between the parties. In the event it does so, piece work
      or incentive rates shall be established by the time studies made by the Company
      and same may be revised. Employees shall have the right to question the time
      study on any job which they believe to be improperly timed. In such event the
      Company shall cause an investigation to be made and if it believes that an
      error
      may have been committed, it shall cause such job to be re-timed. In the event
      such re-timing is still questioned or in the event the Company fails to re-time
      such job, the matter may be handled according to the grievance procedure
      provided for in this Agreement. It is understood and agreed that incentive
      rates
      will be so adjusted as to compensate employees working on the incentive basis
      for the rest periods without additional pay thereafter.

    
      
        
        

      

      
        34Audited Financial Statements of Wells-Eastern Asia Displays

    

    
 

    
      

      

      

      

      

      

      

      

      

      

      WELLS
        EASTERN ASIA DISPLAYS (M) SDN. BHD.

      (Incorporated
        in Malaysia)

      Company
        No: 501396-U

      

      Financial
        Statements and Supplementary Data

      for
        the financial year ended 31 December 2006

      

      

      

      

      

      

      Table
        of Contents

      

      

      
        	
                 

              	
                Page

              
	
                 

              	
                 

              
	
                Report
                  of Independent Registered Public Accounting Firm

              	
                1

              
	
                 

              	
                 

              
	
                Balance
                  Sheets as of 31 December 2006 and 2005

              	
                2

              
	
                 

              	
                 

              
	
                Income
                  Statements for the Years Ended 31 December 2006, 2005 and
                  2004

              	
                3

              
	
                 

              	
                 

              
	
                Statements
                  of Changes in Equity for the Years Ended 31 December 2006, 2005
                  and
                  2004

              	
                4

              
	
                 

              	
                 

              
	
                Cash
                  Flows Statements for the Years Ended 31 December 2006, 2005 and
                  2004

              	
                5

              
	
                 

              	
                 

              
	
                Notes
                  to Financial Statements.

              	
                6-15

              
	
                 

              	
                 

              
	
                 

              	
                 

              

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        TABLE
          OF CONTENTS

      

       

      Report
        Of Independent Registered Public Accounting Firm 

      To
        The Members of 

      WELLS
        EASTERN ASIA DISPLAYS (M) SDN. BHD.

      (Incorporated
        in Malaysia)

      

      

      We
        have
        audited the accompanying balance sheets of Wells Eastern Asia Displays (M)
        Sdn.
        Bhd. as of December 31, 2006 and 2005 and the related income statements,
        statements of changes in equity and cash flows statement for each of two
        years
        ended December 31, 2006. 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 the standards of the Public Company
        Accounting Oversight Board (United States). 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 statements presentation. We believe that our audit 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 Wells Eastern Asia Displays
        (M)
        Sdn. Bhd. as of December 31, 2006 and 2005 and the results of its operations
        and
        its cash flows for each of the two years in the period ended December 31,
        2006
        in conformity with accounting principles generally accepted in the United
        States
        of America.

      

      

      Without
        qualifying our opinion, we draw attention to Note 12 to the financial statements
        pertaining to the ongoing discussions on the future plan and direction of
        the
        Company. 

      

      

      

      

      

      
        	
                Horwath
                  

              	
                 

              
	
                Penang,
                  Malaysia

              	
                 

              
	
                 

              	
                 

              

      

      

      Dated:
        March 6, 2007

      

      

      
        
          
             

          

          
          

        

        
          1

          
            

          

        

        
          
          

        

        
          TABLE
            OF CONTENTS

        

        WELLS
          EASTERN ASIA DISPLAYS (M) SDN. BHD.

        (Incorporated
          in Malaysia)

        Company
          No: 501396-U

      

       

      
        
          	 BALANCE
                  SHEETS
	 
	
                   

                	
                   

                	
                   

                	
                   

                	
                  As
                    of December 31,

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                  2006

                	
                   

                	
                  2005

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                  USD

                	
                   

                	
                  USD

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                  ASSETS

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                  Current
                    Assets

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                  Cash
                    and cash equivalents

                	
                  2,115,164
                    

                	
                   

                	
                  285,467
                    

                
	
                   

                	
                   

                	
                  Trade
                    accounts receivable

                	
                  0
                    

                	
                   

                	
                  22,801
                    

                
	
                   

                	
                   

                	
                  Trade
                    accounts receivable, related party

                	
                  2,258,493
                    

                	
                   

                	
                  4,198,586
                    

                
	
                   

                	
                   

                	
                  Inventories

                	
                  727,742
                    

                	
                   

                	
                  1,650,066
                    

                
	
                   

                	
                   

                	
                  Prepaid
                    and other current assets

                	
                  18,465
                    

                	
                   

                	
                  43,012
                    

                
	
                   

                	
                   

                	
                  Income
                    taxes receivable

                	
                  37,859
                    

                	
                   

                	
                  0
                    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                  Total
                    Current Assets

                	
                  5,157,723
                    

                	
                   

                	
                  6,199,932
                    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                  Property
                    and equipment, net

                	
                  184,920
                    

                	
                   

                	
                  262,423
                    

                
	
                   

                	
                  Deferred
                    tax assets

                	
                  0
                    

                	
                   

                	
                  25,618
                    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                  Total
                    Assets

                	
                  5,342,643
                    

                	
                   

                	
                  6,487,973
                    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                  LIABILITIES
                    AND SHAREHOLDERS' EQUITY

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                  Current
                    Liabilities

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                  Trade
                    accounts payable

                	
                  123,095
                    

                	
                   

                	
                  205,491
                    

                
	
                   

                	
                   

                	
                  Trade
                    accounts payable, related party

                	
                  314,984
                    

                	
                   

                	
                  990,637
                    

                
	
                   

                	
                   

                	
                  Other
                    accounts payable, related party

                	
                  427,316
                    

                	
                   

                	
                  790,837
                    

                
	
                   

                	
                   

                	
                  Accrued
                    expenses and others

                	
                  188,704
                    

                	
                   

                	
                  292,615
                    

                
	
                   

                	
                   

                	
                  Bank
                    borrowings

                	
                  1,377,602
                    

                	
                   

                	
                  1,361,905
                    

                
	
                   

                	
                   

                	
                  Income
                    taxes payable

                	
                  0
                    

                	
                   

                	
                  49,495
                    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                  Total
                    Current Liabilities

                	
                  2,431,701
                    

                	
                   

                	
                  3,690,980
                    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                  Stockholders'
                    equity:

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                  Common
                    stock, RM1.00

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                  (equivalent
                    to USD 0.2632) par value

                	
                  1,315,789
                    

                	
                   

                	
                  1,315,789
                    

                
	
                   

                	
                   

                	
                  (10,000,000
                    shares authorized,

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                  5,000,000
                    shares issued and outstanding 

                  2006
                    and 2005, respectively)

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                  Exchange
                    translation reserve

                	
                  185,927
                    

                	
                   

                	
                  0
                    

                
	
                   

                	
                   

                	
                  Retained
                    earnings

                	
                  1,409,226
                    

                	
                   

                	
                  1,481,204
                    

                
	
                   

                	
                  Total
                    Stockholders' Equity

                	
                  2,910,942
                    

                	
                   

                	
                  2,796,993
                    

                
	 	 	 	 	 
	 	 Total
                  Liabilities and Stockholders'
                  Equity                                	
                  5,342,643
                    

                	 	
                  6,487,973 

                
	 	 	 	 	 

        
    

      

       

      
        
          The
            annexed notes form an integral part of these financial statements

          
          

        

        
          2

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      

       

      
        	 Income
                Statements 
	 	 	 	 
	
                 

              	
                 

              	
                 

              	
                For
                  the Years Ended December 31,

              
	
                 

              	
                 

              	
                 

              	
                2006

              	
                 

              	
                2005

              	
                 

              	
                2004

              
	
                 

              	
                 

              	
                 

              	
                USD

              	
                 

              	
                USD

              	
                 

              	
                USD

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                REVENUE

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Net
                  related party revenue

              	
                6,278,848
                  

              	
                 

              	
                16,549,707
                  

              	
                 

              	
                19,319,539

              
	
                 

              	
                Net
                  third party revenue

              	
                4,210
                  

              	
                 

              	
                38,697
                  

              	
                 

              	
                503,134
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Net
                  revenue

              	
                6,283,058
                  

              	
                 

              	
                16,588,404
                  

              	
                 

              	
                19,822,673
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                COST
                  OF REVENUE

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Related
                  party cost of revenue

              	
                1,184,812
                  

              	
                 

              	
                8,523,179
                  

              	
                 

              	
                9,408,104
                  

              
	
                 

              	
                Third
                  party cost of revenue

              	
                4,555,820
                  

              	
                 

              	
                6,698,545
                  

              	
                 

              	
                8,939,091
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Cost
                  of revenue

              	
                5,740,632
                  

              	
                 

              	
                15,221,724
                  

              	
                 

              	
                18,347,195
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Gross
                  profit

              	
                542,426
                  

              	
                 

              	
                1,366,680
                  

              	
                 

              	
                1,475,478
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                OPERATING
                  EXPENSE

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Selling,
                  general and administrative

              	
                295,556
                  

              	
                 

              	
                566,814
                  

              	
                 

              	
                476,353
                  

              
	
                 

              	
                Research
                  and development

              	
                0
                  

              	
                 

              	
                165,401
                  

              	
                 

              	
                120,848
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Total
                  operating expense

              	
                295,556
                  

              	
                 

              	
                732,215
                  

              	
                 

              	
                597,201
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Profit
                  from operations

              	
                246,870
                  

              	
                 

              	
                634,465
                  

              	
                 

              	
                878,277
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Interest
                  income

              	
                7,699
                  

              	
                 

              	
                6,481
                  

              	
                 

              	
                3,044
                  

              
	
                 

              	
                Interest
                  expense

              	
                (105,338)

              	
                 

              	
                (183,644)

              	
                 

              	
                (95,511)

              
	
                 

              	
                Other
                  income

              	
                49,427
                  

              	
                 

              	
                77,774
                  

              	
                 

              	
                21,348
                  

              
	
                 

              	
                Loss
                  on foreign exchange

              	
                (254,755)

              	
                 

              	
                0
                  

              	
                 

              	
                0
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                (Loss)/Profit
                  before income taxes

              	
                (56,097)

              	
                 

              	
                535,076
                  

              	
                 

              	
                807,158
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Tax
                  expense

              	
                (15,881)

              	
                 

              	
                (71,978)

              	
                 

              	
                (90,837)

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Net
                  (loss)/profit

              	
                (71,978)

              	
                 

              	
                463,098
                  

              	
                 

              	
                716,321
                  

              

      

      

      

       

      

      

      

      

      

      

      

      

      

      
        
          The
            annexed notes form an integral part of these financial statements

          
          

        

        
          3

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      

       

      
        	 Statements
                Of Changes in Equity
	 	 	 	 	 	 	 	 	 
	
                 

              	
                 

              	
                Common
                  Stock

              	
                 

              	
                Exchange

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                translation

              	
                 

              	
                Retained

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                Shares

              	
                 

              	
                Amount

              	
                 

              	
                reserve

              	
                 

              	
                earnings

              	
                 

              	
                Total

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                USD

              	
                 

              	
                USD

              	
                 

              	
                USD

              	
                 

              	
                USD

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Balance
                  at December 31, 2003

              	
                2,508,000
                  

              	
                 

              	
                660,000
                  

              	
                 

              	
                0
                  

              	
                 

              	
                957,574
                  

              	
                 

              	
                1,617,574
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Net
                  profit for the year

              	
                0
                  

              	
                 

              	
                0
                  

              	
                 

              	
                0
                  

              	
                 

              	
                716,321
                  

              	
                 

              	
                716,321
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Issuance
                  of bonus stock

              	
                2,492,000
                  

              	
                 

              	
                655,789
                  

              	
                 

              	
                0
                  

              	
                 

              	
                (655,789)

              	
                 

              	
                0
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Balance
                  at December 31, 2004

              	
                5,000,000
                  

              	
                 

              	
                1,315,789
                  

              	
                 

              	
                0
                  

              	
                 

              	
                1,018,106
                  

              	
                 

              	
                2,333,895
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Net
                  profit for the year

              	
                0
                  

              	
                 

              	
                0
                  

              	
                 

              	
                0
                  

              	
                 

              	
                463,098
                  

              	
                 

              	
                463,098
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Balance
                  at December 31, 2005

              	
                5,000,000
                  

              	
                 

              	
                1,315,789
                  

              	
                 

              	
                0
                  

              	
                 

              	
                1,481,204
                  

              	
                 

              	
                2,796,993
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Exchange
                  translation differences recognised directly in equity

              	
                0
                  

              	
                 

              	
                0
                  

              	
                 

              	
                185,927
                  

              	
                 

              	
                0
                  

              	
                 

              	
                185,927
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Net
                  loss for the year

              	
                0
                  

              	
                 

              	
                0
                  

              	
                 

              	
                0
                  

              	
                 

              	
                (71,978)

              	
                 

              	
                (71,978)

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Total
                  recognised income and expenses

              	
                0
                  

              	
                 

              	
                0
                  

              	
                 

              	
                185,927
                  

              	
                 

              	
                (71,978)

              	
                 

              	
                113,949
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Balance
                  at December 31, 2006

              	
                5,000,000
                  

              	
                 

              	
                1,315,789
                  

              	
                 

              	
                185,927
                  

              	
                 

              	
                1,409,226
                  

              	
                 

              	
                2,910,942
                  

              

      

      

      

       

      

      

      

      

      

      

      
        
          The
            annexed notes form an integral part of these financial statements

          
          

        

        
          4

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      

       

      
        	 Cash
                Flows Statements
	 	 	 	 
	
                 

              	
                 

              	
                 

              	
                For
                  the Years Ended December 31,

              
	
                 

              	
                 

              	
                 

              	
                2006

              	
                 

              	
                2005

              	
                 

              	
                2004

              
	
                 

              	
                 

              	
                 

              	
                USD

              	
                 

              	
                USD

              	
                 

              	
                USD

              
	
                CASH
                  FLOWS FROM OPERATING ACTIVITIES

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Net
                  (loss)/profit

              	
                (71,978)

              	
                 

              	
                463,098
                  

              	
                 

              	
                716,321

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Adjustments
                  for:-

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Depreciation
                  

              	
                63,628
                  

              	
                 

              	
                78,793
                  

              	
                 

              	
                78,955
                  

              
	
                Loss
                  on sale of property, plant and equipment

              	
                0
                  

              	
                 

              	
                1,667
                  

              	
                 

              	
                0
                  

              
	
                Property,
                  plant and equipment written-off

              	
                1,274
                  

              	
                 

              	
                0
                  

              	
                 

              	
                0
                  

              
	
                Changes
                  in net assets and liabilities

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                Trade
                  accounts receivable

              	
                22,801
                  

              	
                 

              	
                91,791
                  

              	
                 

              	
                (114,592)

              
	
                 

              	
                Trade
                  accounts receivable - related party

              	
                1,940,093
                  

              	
                 

              	
                3,005,322
                  

              	
                 

              	
                (2,813,946)

              
	
                 

              	
                Inventories

              	
                922,324
                  

              	
                 

              	
                361,038
                  

              	
                 

              	
                (537,331)

              
	
                 

              	
                Prepaid
                  and other current assets

              	
                24,547
                  

              	
                 

              	
                (21,673)

              	
                 

              	
                (7,019)

              
	
                 

              	
                Income
                  tax receivable

              	
                (37,859)

              	
                 

              	
                0
                  

              	
                 

              	
                0
                  

              
	
                 

              	
                Deferred
                  tax assets

              	
                25,618
                  

              	
                 

              	
                (25,618)

              	
                 

              	
                30,789
                  

              
	
                 

              	
                Trade
                  accounts payable

              	
                (82,396)

              	
                 

              	
                (1,000,515)

              	
                 

              	
                661,612
                  

              
	
                 

              	
                Trade
                  accounts payable - related party

              	
                (675,653)

              	
                 

              	
                (1,596,866)

              	
                 

              	
                167,471
                  

              
	
                 

              	
                Accrued
                  expenses and others

              	
                (467,432)

              	
                 

              	
                674,449
                  

              	
                 

              	
                178,554
                  

              
	
                 

              	
                Income
                  taxes payable

              	
                (49,495)

              	
                 

              	
                37,899
                  

              	
                 

              	
                1,201
                  

              
	
                Net
                  cash from/(used in) operating activities

              	
                1,615,472
                  

              	
                 

              	
                2,069,385
                  

              	
                 

              	
                (1,637,985)

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                CASH
                  FLOWS FROM INVESTING ACTIVITIES

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Proceeds
                  from sale of property, plant and equipment

              	
                30,835
                  

              	
                 

              	
                5,789
                  

              	
                 

              	
                0
                  

              
	
                Purchase
                  of property, plant and equipment

              	
                (1,644)

              	
                 

              	
                (15,070)

              	
                 

              	
                (18,952)

              
	
                Net
                  cash from/(used in) investing activities

              	
                29,191
                  

              	
                 

              	
                (9,281)

              	
                 

              	
                (18,952)

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                CASH
                  FLOW S FROM FINANCING ACTIVITIES

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Increase/(Decrease)
                  in bank borrowings

              	
                15,697
                  

              	
                 

              	
                (2,042,864)

              	
                 

              	
                1,531,085
                  

              
	
                Net
                  cash from/(used in) financing activities

              	
                15,697
                  

              	
                 

              	
                (2,042,864)

              	
                 

              	
                1,531,085
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Net
                  increase/(decrease) in cash and cash equivalents

              	
                1,660,360
                  

              	
                 

              	
                17,240
                  

              	
                 

              	
                (125,852)

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Effect
                  of exchange rate changes

              	
                169,337
                  

              	
                 

              	
                0
                  

              	
                 

              	
                0
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Cash
                  and cash equivalents brought forward

              	
                285,467
                  

              	
                 

              	
                268,227
                  

              	
                 

              	
                394,079
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Cash
                  and cash equivalents carried forward

              	
                2,115,164
                  

              	
                 

              	
                285,467
                  

              	
                 

              	
                268,227
                  

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Supplemental
                  cash flow information

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                Cash
                  paid for interest 

              	
                105,338
                  

              	
                 

              	
                183,644
                  

              	
                 

              	
                95,511

              
	
                Cash
                  paid for income tax

              	
                77,492
                  

              	
                 

              	
                59,697
                  

              	
                 

              	
                58,847

              

      

      

      

      

      

      

      

      
        
          
            The
              annexed notes form an integral part of these financial
              statements

          

          
          

        

        
          5

          
            

          

        

        
          TABLE
            OF CONTENTS

          
            WELLS
              EASTERN ASIA DISPLAYS (M) SDN. BHD.

            (Incorporated
              in Malaysia)

            Company
              No: 501396-U

          

        

      

      

      Notes
        To The Financial Statements

      For
        The Financial Year Ended December 31, 2006

      

      1. General
        Information

      

      The
        Company was incorporated in year 2000, principally engaged in the manufacture
        of
        colour video monitors. There are two major stockholders, Wells-Gardner
        Electronics Corporation and Eastech Electronics (M) Sdn. Bhd., each holding
        50%
        of the paid up capital of the Company.

      

      The
        registered office of the Company is located at 57-2, Persiaran Bayan Indah,
        Bayan Bay, Sungai Nibong, 11900 Penang, Malaysia and the principal place
        of
        business of the Company is located at Lot 316 & 317, Jalan PKNK 3/2, Kawasan
        Perindustrian Sungai Petani, 08000 Sungai Petani, Kedah, Malaysia.

      

      

      2. Summary
        of Significant Accounting Policies

      

      2.1 Basis
        of Preparation of Financial Statements

      

      The
        financial statements of the Company are prepared under the historical cost
        convention, modified to include other bases of measurement as disclosed in
        other
        sections of the significant accounting policies, and in compliance with the
        accounting principles generally accepted in the United States of
        America.

      

      
        
          2.2
            Property,
            Plant and Equipment

        

      

      

      Property,
        plant and equipment are stated at cost less accumulated depreciation and
        accumulated impairment losses, if any.

    

    
      Property,
        plant and equipment are depreciated on a straight-line method over the estimated
        useful lives of the assets using the following annual rates:

      

      
        	
                Plant
                  and machinery

              	
                10-20%

              
	
                Electrical
                  installation and renovation

              	
                10%

              
	
                Motor
                  vehicles

              	
                20%

              
	
                Office
                  equipment

              	
                20%

              
	
                Furniture
                  and fittings 

              	
                10%

              
	
                Computer

              	
                10-20%

              
	
                Factory
                  tools and equipment

              	
                20%

              
	
                Mould

              	
                10%

              

      

      

      

      

      

      

      

      

      

      
        
          
          

        

        
          6

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      

      

      Notes
        To The Financial Statements

      For
        The Financial Year Ended December 31, 2006

      

      2. Significant
        Accounting Policies (cont’d)

      

      2.3 Impairment
        of Assets

      

      The
        carrying amounts of assets, other than deferred tax assets, inventories and
        financial assets, are reviewed at each balance sheet date to determine whether
        there is any indication that an item of asset may be impaired. If any such
        indication exists, the recoverable amount of the asset is estimated. Any
        excess
        of the carrying amount of the asset over its recoverable amount represents
        an
        impairment loss and is recognised as an expense in the income
        statement.

      

      An
        impairment loss is reversed if there has been a change in the estimates used
        to
        determine the recoverable amount and it is reversed only to the extent that
        the
        increased carrying amount does not exceed the carrying amount that would
        have
        been determined, net of depreciation or amortisation, had no impairment loss
        been recognised. The reversal is recognised in the income
        statement.

      

      There
        were no impairment loss recognized in the income statements for the year
        ended
        December 31 2006, 2005 and 2004.

      

      2.4 Inventories

      Inventories
        are valued at the lower of cost (determined on the first-in, first-out basis)
        and net realisable value after making due allowance for any obsolete or
        slow-moving items. Cost consists of all costs of purchase, costs of conversion
        and other costs incurred in bringing the inventories to their present location
        and condition.

      

      2.5 Receivables

      

      Receivables
        are carried at anticipated realisable values. Bad debts are written off when
        identified. An estimate is made for doubtful debts based on a review of all
        outstanding amounts as at the balance sheet date.

      

      2.6 Payables

      

      Payables
        are recognised at cost which is the fair value of the consideration to be
        paid
        in the future for goods and services received.

      

      2.7 Loans
        and Borrowings

      

      All
        loans and borrowings are initially recognised at cost which is the fair value
        of
        the proceeds received. The loans and borrowings are subsequently stated at
        amortised cost using the effective yield method. The effective interest rate
        is
        the historical rate for a fixed rate instrument and the current market rate
        for
        a floating rate instrument. 

      

      All
        borrowing costs are recognised as an expense in the period in which they
        are
        incurred.

      

      
        
          
          

        

        
          7

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      

      Notes
        To The Financial Statements

      For
        The Financial Year Ended December 31, 2006

      

      2. Significant
        Accounting Policies (cont’d)

      

      2.8 Provisions

      

      A
        provision is recognised when it is probable that an outflow of resources
        embodying economic benefits will be required to settle a present obligation
        (legal or constructive) as a result of a past event and a reliable estimate
        can
        be made of the amount.

      

      2.9 Foreign
        Currency Transactions and Translation

      

      Transactions
        in foreign currencies are converted into the functional currency at the rates
        of
        exchange ruling at the transaction dates. Monetary assets and liabilities
        denominated in foreign currencies at the balance sheet date are translated
        into
        the functional currency at the rates of exchange ruling at that date.
        Non-monetary assets and liabilities which are stated at cost denominated
        in
        foreign currencies are translated into the functional currency at the rates
        of
        exchange ruling at the transaction dates. Exchange gains and losses arising
        on
        foreign currency transactions and translation are recognised in the income
        statement.

      

      2.10 Share
        Capital

      

      The
        Company has only one class of share capital, i.e. ordinary shares of RM1.00
        (equivalent to USD0.2632) each, which is classified as equity. External costs
        directly attributable to the issue of new shares are written-off to the share
        premium account or, where there is no such account, charged to the income
        statement.

      

      2.11 Income
        Recognition

      

      Income
        from the sale of goods is recognised upon delivery of goods and customer’s
        acceptance. Interest income is recognised on an accrual basis.

      

      2.12 Income
        Taxes

      

      Income
        taxes for the year comprise current tax and deferred tax.

      

      Current
        tax represents the expected amount of income taxes payable in respect of
        the
        taxable profit for the year and is measured using the tax rates that have
        been
        enacted or substantially enacted by the balance sheet date.

      

      Deferred
        tax is provided for under the balance sheet liability method in respect of
        all
        temporary differences between the carrying amount of an asset or liability
        in
        the balance sheet and its tax base except for those temporary differences
        associated with goodwill, negative goodwill or the initial recognition of
        an
        asset or liability in a transaction which is not a business combination and
        affects neither accounting nor taxable results at the time of the
        transaction.

      
        
          
          

        

        
          8

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      

      

      Notes
        To The Financial Statements

      For
        The Financial Year Ended December 31, 2006

      

      2. Significant
        Accounting Policies (cont’d)

      

      2.12 Income
        Taxes (cont’d)

      

      A
        deferred tax liability is recognised for all taxable temporary differences
        whereas a deferred tax asset is recognised for all deductible temporary
        differences, unused tax losses and unused tax credits to the extent that
        it is
        probable that future taxable profit will be available against which the
        deductible temporary differences, unused tax losses and unused tax credits
        can
        be utilised. Deferred
        tax assets and liabilities are measured at the tax rates that are expected
        to
        apply to the period when the asset is realised or the liability is settled,
        based on the tax rates that have been enacted or substantially enacted by
        the
        balance sheet date.

      

      2.13 Research
        and Development Expenditure

      

      Research
        and development expenditure is recognised as an expense in the period in
        which
        the expenditure is incurred unless the development expenditure meets the
        asset
        recognition criteria in which case the expenditure will be
        capitalised.

      

      2.14 Employee
        Benefits

      

      Short-term
        Employee Benefits

      

      Short-term
        employee benefits such as wages, salaries, bonuses and social security
        contributions are recognised as an expense in the period in which the associated
        services are rendered by the employees.

      

      Defined
        Contribution Plans

      

      As
        required by law, employers in Malaysia make contributions to the state pension
        scheme, Employees Provident Fund (“EPF”). Such contributions are recognised as
        an expense in the period in which the associated services are rendered by
        the
        employees.

      

      2.15 Cash
        and Cash Equivalents

      

      Cash
        and cash equivalents comprise cash in hand, bank balances, demand deposits,
        deposits pledged with financial institutions, bank overdrafts and short-term,
        highly liquid investments that are readily convertible to known amounts of
        cash
        and which are subject to an insignificant risk of changes in value.

      

      

      

      

      

      

      
        
          
          

        

        
          9

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      

      

      Notes
        To The Financial Statements

      For
        The Financial Year Ended December 31, 2006

      

      2. Significant
        Accounting Policies (cont’d)

      

      2.16 Financial
        Instruments

      

      Recognised
        and Unrecognised

      

      The
        accounting policies for recognised financial instruments are disclosed in
        the
        individual policies associated with each item. The Company does not have
        any
        unrecognised financial instruments.

      

      Fair
        Values

      

      The
        carrying amounts of financial assets and liabilities with short maturity
        periods
        are assumed to approximate their fair values due to the short term nature
        of the
        instruments. The fair value of related party accounts receivable and payable
        are
        not practical to estimate based upon the related party nature of the underlying
        transactions.

      

      2.17 Estimates

      

      The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States of America requires management to
        make
        estimates and assumptions that affect the reported amounts of assets and
        liabilities and disclosures of contingent assets and liabilities at the date
        of
        the financial statements and reported amounts of revenues and expenses during
        the reporting period. Actual results could differ from those
        estimates.

      

       

      3. Financial
        Risk Management

      

      The
        activities of the Company expose it to certain financial risks, including
        currency risk, interest rate risk, credit risk, liquidity risk and cash flow
        risk. The overall financial risk management objective of the Company is to
        maximise shareholders’ value by minimising the potential adverse impacts of
        these risks on its financial position, performance and cash flows.

      

      The
        Board of Directors explicitly assumes the responsibilities of financial risk
        management which is carried out mainly through risk reviews and internal
        control
        systems.

      

      Currency
        Risk

      

      The
        Company’s exposure to currency risk arises mainly from normal trading
        transactions denominated in foreign currencies.

      

      The
        Company does not use any derivative financial instruments to manage its exposure
        to currency risk as the directors are of the opinion that the net exposure
        is
        not significant.

      

      
        
          
          

        

        
          10

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      

      

      

      Notes
        To The Financial Statements

      For
        The Financial Year Ended December 31, 2006

      

      3. Financial
        Risk Management (cont’d)

      

      Interest
        Rate Risk

      

      The
        Company’s exposure to interest rate risk arises mainly from
        borrowings.

      

      The
        Company manages its exposure to interest rate risk by seeking to obtain the
        most
        favourable interest rates available without increasing its other financial
        risk
        exposures.

      

      Credit
        Risk

      

      The
        Company’s exposure to credit risk arises mainly from receivables. The maximum
        credit risk exposure is best represented by the total carrying amount of
        these
        financial assets in the balance sheet.

      

      The
        Company manages its exposure to credit risk by assessing counter parties’
financial standings on an ongoing basis, setting and monitoring counter parties’
limits and credit terms. The Company does not have any major concentration
        of
        credit risk other than the significant amount owing by a related party as
        disclosed in the financial statements.

      

      Liquidity
        and Cash Flow Risks

      

      The
        Company’s exposure to liquidity and cash flow risks arises mainly from general
        funding and business activities.

      

      The
        Company practises prudent liquidity risk management by maintaining sufficient
        cash and the availability of funding through certain committed credit
        facilities. 

      

      

      4. Property
        and Equipment

      

      Property
        and equipment consist of the following as of December 31, 2006 and 2005
        :-

      

      
        	
                 

              	
                2006

              	 	
                2005

              
	 	
                USD

              	 	
                USD

              
	 	 	 	 
	
                Plant
                  and machinery, factory tools and equipment

              	
                572,565

              	 	
                570,837

              
	
                Electrical
                  installation and renovation

              	
                15,013

              	 	
                13,952

              
	
                Motor
                  vehicles

              	
                14,974

              	 	
                13,916

              
	
                Office
                  equipment, furniture and fittings and computers

              	
                34,553

              	 	
                44,776

              
	 	 	 	 
	
                Total

              	
                637,105

              	 	
                643,481

              
	
                Less
                  : Accumulated depreciation

              	
                (452,185)

              	 	
                (381,058)

              
	 	 	 	 
	
                Property
                  and equipment, net

              	
                184,920

              	 	
                262,423

              

      

      

      
        
          
          

        

        
          11

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      

      

      

      Notes
        To The Financial Statements

      For
        The Financial Year Ended December 31, 2006

      

      5. Inventories

       

      Inventories
        consist of the following as of December 31, 2006 and 2005: 

      

      
        	 	
                2006

              	 	
                2005

              
	 	
                USD

              	 	
                USD

              
	 	 	 	 
	
                Raw
                  materials

              	
                586,548

              	 	
                        1,417,906

              
	
                Work-in-progress

              	
                163,548

              	 	
                157,848

              
	
                Finished
                  goods

              	
                22,661

              	 	
                124,734

              
	
                Goods-in-transit

              	
                1,133

              	 	
                0

              
	 	 	 	 
	
                Total

              	
                773,890

              	 	
                1,700,488

              
	
                Inventory
                  obsolescence reserve

              	
                (46,148)

              	 	
                (50,422)

              
	 	 	 	 
	 	
                727,742

              	 	
                1,650,066

              

      

      

      

      6. Prepaid
        and Other Current Assets

       

      Prepaid
        and other current assets consists of the following as of December 31, 2006
        and
        2005:

      

      
        	 	
                2006

              	 	
                2005

              
	 	
                USD

              	 	
                USD

              
	 	 	 	 
	
                Sundry
                  deposits

              	
                953

              	 	
                361

              
	
                Advance
                  to suppliers 

              	
                974

              	 	
                34,624

              
	
                Prepaid
                  expenses

              	
                15,481

              	 	
                7,629

              
	
                Other

              	
                1,057

              	 	
                398

              
	 	 	 	 
	
                Total

              	
                18,465

              	 	
                43,012

              

      

      

      7. Accrued
        Expenses and Other

       

      Accrued
        expenses and other consists of the following as of December 31, 2006 and
        2005:

      

      
        	 	
                2006

              	 	
                2005

              
	 	
                USD

              	 	
                USD

              
	 	 	 	 
	
                Accrued
                  expenses

              	
                47,981

              	 	
                4,762

              
	
                Employee
                  payables

              	
                0

              	 	
                73,824

              
	
                Other
                  payables

              	
                52,346

              	 	
                139,466

              
	
                Provisions

              	
                88,377

              	 	
                74,563

              
	 	 	 	 
	
                Total

              	
                188,704

              	 	
                292,615

              

      

      

      
        
          
          

        

        
          12

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      

      

      

      Notes
        To The Financial Statements

      For
        The Financial Year Ended December 31, 2006

      

      8. Bank
        Borrowings - Secured

      

      
        	 	
                2006

              	 	
                2005

              
	 	
                USD

              	 	
                USD

              
	 	 	 	 
	
                Banker
                  acceptance I

              	
                434,376

              	 	
                239,683

              
	
                Banker
                  acceptance II

              	
                0

              	 	
                352,381

              
	
                Banker
                  acceptance III

              	
                0

              	 	
                401,852

              
	
                Banker
                  acceptance IV

              	
                81,269

              	 	
                47,355

              
	
                Export
                  credit refinancing I

              	
                379,442

              	 	
                160,317

              
	
                Export
                  credit refinancing II

              	
                482,515

              	 	
                160,317

              
	 	
                1,377,602

              	 	
                1,361,905

              

      

      

      The
        details of bank borrowings are as follows:

      

      
        	
                Facility

              	
                Bank

              	
                Maturity

              	
                Interest

              
	 	 	 	 
	
                Banker
                  acceptance I

              	
                Affin
                  Bank Berhad

              	
                January
                  - April 2007

              	
                3.75%
                  - 3.80%

              
	 	 	 	 
	
                Banker
                  acceptance IV

              	
                Malayan
                  Banking Berhad

              	
                January
                  2007

              	
                3.47%

              
	 	 	 	 
	
                Export
                  Credit Refinancing I

              	
                Malayan
                  Banking Berhad

              	
                January
                  - April 2007

              	
                4.25%

              
	 	 	 	 
	
                Export
                  Credit Refinancing II

              	
                Southern
                  Bank Berhad

              	
                February
                  - March 2007

              	
                4.25%

              

      

      

      Banker
        acceptance I is secured by one of the fixed deposits of the Company and
        guaranteed by Eastern Asia Technology Limited, which is the holding corporation
        of a substantial shareholder of the Company. All other bank borrowing are
        secured by the fixed deposits of the Company. The bank borrowings have been
        settled when payments are due.

      

      

      9. Tax
        Expense

      

      
        	 	
                2006

              	 	
                2005

              	 	
                2004

              
	 	
                USD

              	 	
                USD

              	 	
                USD

              
	
                Tax
                  based on results for the year:

              	 	 	 	 	 
	
                Malaysian
                  income tax

              	
                1,379

              	 	
                97,596

              	 	
                60,281

              
	
                Deferred
                  tax

              	
                0

              	 	
                (25,367)

              	 	
                30,789

              
	 	
                1,379

              	 	
                72,229

              	 	
                91,070

              
	
                Tax
                  (over)/underprovided in prior year:-

              	 	 	 	 	 
	
                Malaysian
                  income tax

              	
                (12,132)

              	 	
                0

              	 	
                (233)

              
	
                Deferred
                  tax

              	
                26,634

              	 	
                (251)

              	 	
                0

              
	 	
                15,881

              	 	
                71,978

              	 	
                90,837

              

      

      

      

      

      
        
          
          

        

        
          13

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      

      

      

      

      Notes
        To The Financial Statements

      For
        The Financial Year Ended December 31, 2006

      

      9. Tax
        Expense
        (cont’d)

       

      The
        numerical reconciliation between the applicable tax rate, which is the statutory
        income tax rate, and the average effective tax rate is as follows:

      

      
        	 	
                2006

              	 	
                2005

              	 	
                2004

              
	 	
                %

              	 	
                %

              	 	
                %

              
	 	 	 	 	 	 
	 Applicable
                tax rate	
                (28.00)

              	 	
                28.00

              	 	
                28.00

              
	 Non-deductible
                expenses	
                8.77

              	 	
                1.75

              	 	
                0.46

              
	 Tax
                exempt income from pioneer status	
                0.00

              	 	
                (15.88)

              	 	
                (17.18)

              
	 Unrecognised
                in deferred tax assets	
                21.57

              	 	
                0.00

              	 	
                0.00

              
	 Average
                effective tax rate 	
                2.34

              	 	
                13.87

              	 	
                11.28

              

      

      

      As
        at
        31 December 2006, the Company has sufficient tax credits and tax exempt accounts
        to frank its retained profits in full if paid out as dividends. 

      

      

      10. Deferred
        Tax Assets

      

      
        	 	
                2006

              	 	
                2005

              
	 	
                USD

              	 	
                USD

              
	 	 	 	 
	
                Balance
                  at 1 January

              	
                25,618

              	 	
                0

              
	
                Deferred
                  tax relating to origination and reversal of temporary
                  differences

              	
                0

              	 	
                25,367

              
	
                Deferred
                  tax - prior year

              	
                (25,618)

              	 	
                251

              
	
                Balance
                  at 31 December

              	
                0

              	 	
                25,618

              
	 
	
                The
                  deferred tax assets are in respect of the deductible/(taxable)
                  temporary
                  differences at December 31, 2006 and 2005 as follows:

              
	 	
                2006

              	 	
                2005

              
	 	
                USD

              	 	
                USD

              
	 	 	 	 
	
                Basis
                  difference in property and equipment

              	
                0

              	 	
                (35,710)

              
	
                Inventory
                  obsolescence reserve

              	
                0

              	 	
                14,193

              
	
                Accrued
                  expenses and other

              	
                0

              	 	
                47,135

              
	 	
                0

              	 	
                25,618

              

      

      

      

      

      

      

      

      
        
          
          

        

        
          14

          
            

          

        

        
          TABLE
            OF CONTENTS

          WELLS
            EASTERN ASIA DISPLAYS (M) SDN. BHD.

          (Incorporated
            in Malaysia)

          Company
            No: 501396-U

        

      

      

      

      

      

      Notes
        To The Financial Statements

      For
        The Financial Year Ended December 31, 2006

      

      11. Significant
        Transactions With Related Parties

       

      The
        following represent related party transactions for each of the financial
        years
        ended December 31 :-

      

      
        	 	
                2006

                USD

              	 	
                2005

                USD

              	 	
                2004

                USD

              
	
                Sale
                  of goods to Wells-Gardner Electronics Corporation *

              	
                6,278,848

              	 	
                16,549,707

              	 	
                19,319,539

              
	
                Purchase
                  of goods from Wells-Gardner Electronics Corporation *

              	
                765,240

              	 	
                4,481,625

              	 	
                4,365,523

              
	
                Management
                  fee charged by Eastech Electronics (M) Sdn. Bhd. **

              	
                63,468

              	 	
                132,740

              	 	
                149,114

              
	
                Purchase
                  of goods from Eastech Electronics (M) Sdn. Bhd. **

              	
                419,572

              	 	
                4,041,554

              	 	
                5,042,581

              
	
                Rental
                  of premises charged by Eastech Electronics (M) Sdn. Bhd.
                  **

              	
                53,337

              	 	
                51,340

              	 	
                51,340

              

      

      

      * A
        substantial shareholder which holds 50% of the equity interest in the
        Company.

      ** A
        substantial shareholder which holds 50% of the equity interest in the
        Company.

      

      

      12. Significant
        Development

       

      The
        shareholders of the Company are in the midst of discussions on the future
        plan
        and direction of the Company. A possible outcome of the final decision is
        to
        transfer the operations of the Company to Eastech Electronics (M) Sdn. Bhd.,
        a
        substantial shareholder. The shareholders expect the ultimate outcome of
        the
        plan to be determined by the second half of 2007 or early 2008. The associated
        costs for the possible transfer of operations cannot be presently determined
        and
        are not expected to have a material effect on the Company’s financial position
        and operations.

      
        
          
          

        

        
          15

          
            

          

        

        
          TABLE
            OF CONTENTS

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00119-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00119-of-00352.parquet"}]]