-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AEBKHcdTQ+TPVPlx/yx8XJuXm9j6J4MzsEyzu61cyoy2QUfDzkTOq6fbqfsoSpau PrHOy27g8KYzoE5N5t+4UA== 0000950132-96-000647.txt : 19961030 0000950132-96-000647.hdr.sgml : 19961030 ACCESSION NUMBER: 0000950132-96-000647 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 19960731 FILED AS OF DATE: 19961029 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARBIDE GRAPHITE GROUP INC /DE/ CENTRAL INDEX KEY: 0000888918 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRICAL INDUSTRIAL APPARATUS [3620] IRS NUMBER: 251575609 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20490 FILM NUMBER: 96649217 BUSINESS ADDRESS: STREET 1: ONE GATEWAY CTR STREET 2: 19TH FL CITY: PITTSBURGH STATE: PA ZIP: 15222 BUSINESS PHONE: 4125623700 MAIL ADDRESS: STREET 1: ONE GATEWAY CTR STREET 2: 19TH FL CITY: PITTSBURGH STATE: PA ZIP: 15222 10-K 1 FORM 10-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 --------------- FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JULY 31, 1996 [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER: 0-20490 THE CARBIDE/GRAPHITE GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 25-1575609 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Code) One Gateway Center, 19th Floor Pittsburgh, PA 15222 (Address of principal executive offices) Registrant's telephone number, including area code: (412) 562-3700 --------------- Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.01 per share --------------- Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [_] The aggregate market value of voting stock held by non-affiliates of the Registrant as of the close of business on September 27, 1996 was $90,082,642. As of the close of business on September 27, 1996 there were 8,320,522 shares of the Registrant's $.01 par value common stock outstanding. Documents incorporated by reference: Information required under Part I (Item 1) and Part II (Items 5, 6, 7 and 8) is, in part, incorporated by reference from the Registrant's Annual Report to Stockholders for fiscal 1996, which is filed as an exhibit hereto. The information required under Part III is incorporated by reference to the Registrant's Proxy Statement and Notice of the Annual Meeting of Stockholders for 1996, which is to be filed within 120 days after July 31, 1996. ================================================================================ PART I Item 1 Business - ------------------ Overview The Carbide/Graphite Group, Inc. (the Company or Registrant) is a major U.S. manufacturer of graphite electrode products and calcium carbide products. Graphite electrodes are used as conductors of electricity, and are consumed, in the EAF steel-making process common to all mini-mill steel producers. Calcium carbide and derivative products, primarily acetylene, are used in the manufacture of specialty chemicals, as a fuel in metal cutting and welding and for iron and steel desulfurization. The Company is the only manufacturer of graphite electrodes that produces its own requirements of needle coke, the principal raw material used in the manufacture of graphite electrodes, and the Company sells needle coke to other manufacturers of graphite products. Net sales for the Company's graphite electrode products segment and calcium carbide products segment represented 66.5% and 33.5%, respectively, of consolidated net sales for fiscal 1996. Refer to Note 12 of the Company's Annual Report to Stockholders for fiscal 1996 (incorporated by reference under Item 8 of this Form 10-K) for information regarding sales (including export sales), operating income and identifiable assets by business segment. In September 1995, the Company completed a successful initial public offering of its $0.01 par value common stock (the Common Stock). 5,375,750 shares of Common Stock were sold to the public by certain selling stockholders in a secondary underwritten public offering (the Initial Offering). The Initial Offering price was $15.00 per share. The underwriters also exercised an option to purchase 806,363 shares of Common Stock to cover over-allotments, which resulted in $11.1 million in net proceeds to the Company. In connection with the Initial Offering, 455,000 Common Stock options were exercised, resulting in $0.6 million in cash proceeds to the Company . In March 1996, the Company completed a secondary public offering of its Common Stock. 1,032,236 shares of Common Stock were sold to the public by certain management and former management stockholders in an underwritten offering (the Offering). In connection with the Offering, 590,000 Common Stock options were exercised by certain selling stockholders, resulting in $0.8 million in cash proceeds to the Company. During fiscal 1996, in open market transactions, the Company repurchased $19.2 million in aggregate principal amount of 11.5% Senior Notes due 2003 (the Senior Notes) (the Repurchase). In addition, the Company completed the redemption of $9.0 million in aggregate principal amount of Senior Notes (the Redemption). The Redemption was initiated pursuant to the Senior Note Indenture which permits the redemption of a limited amount of Senior Notes with proceeds obtained from the Initial Offering. Graphite Electrode Products Business Products and Markets The Company's graphite electrode products business segment includes electrodes, needle coke, bulk graphite, granular graphite (primarily from machine turnings) and processing services. The following table presents the Company's net sales and percentage of segment sales within its graphite electrode products segment for fiscal 1996, by principal product category: -1-
Fiscal 1996 ------------------------- Product Category Net Sales % of Net Sales - -------------------------------------------------------- --------- -------------- (dollars in thousands) Graphite electrodes................................. $133,956 74.5% Needle coke (third party sales)..................... 16,499 9.2 Bulk graphite....................................... 16,775 9.3 Granular graphite................................... 8,666 4.8 Other............................................... 4,029 2.2 -------- ----- Total graphite electrode products net sales.... $179,925 100.0% ======== =====
While the Company uses most of its needle coke production in its own electrode manufacturing operations, it sells additional quantities of needle coke to other graphite electrode producers. During fiscal 1996, the Company sold approximately 39,300 tons of needle coke to seven other graphite electrode producers. The Company believes that it will use an increasing proportion of its needle coke capacity of 110,000 tons per year for its own electrode production requirements as the Company pursues its strategy of increasing electrode manufacturing capacity. Through debottlenecking activities performed during fiscal 1995 and fiscal 1996, the Company increased its graphite electrode practical production capacity from 100 million pounds to 109 million pounds. In connection with the fiscal 1995 sale (the Specialty Products Sale) of the Company's graphite specialty products business to SGL Carbon Corporation (SGL Corp.), the Company agreed to continue to produce large graphite rods and plates, the majority of which are sold to SGL Corp. at prices approximating the Company's manufacturing cost under a 52 million pound supply agreement which expires in January 1998 (the SGL Supply Agreement). Sales to SGL Corp. under this contract in fiscal 1996 were $15.6 million. The Company also sells these bulk graphite rods and plates, and certain other graphite products, to other graphite customers. Granular graphite is primarily turnings from the machining of graphite electrodes and is used in a variety of industrial applications, including brake shoe materials and carbon additives for steel chemistry. In addition, the Company provides processing services, which include graphitizing baked rods. Domestic sales of graphite electrode products are made primarily by the Company's direct sales force, consisting of five salesmen for graphite electrodes and one salesman for other graphite products. This sales force is supported by five technical service personnel. International sales of electrodes are made through long-standing relationships with over twenty independent agents. Exports of graphite electrodes currently account for approximately 50% of the Company's annual shipments of graphite electrodes and subject the Company to risks associated with fluctuations in foreign currency exchange rates. The steel industry, which constitutes the market for the Company's graphite electrodes and a major market for its calcium carbide desulfurization products, is highly cyclical. As a result, the Company's steel industry-related products will face periods of reduced demand, which, because of the generally high fixed costs of the Company's business, could result in substantial downward pressure on profitability. Demand for and sales of graphite electrodes fluctuate from quarter to quarter due to such factors as scheduled plant shutdowns by customers, vacations, changes in customer production schedules in response to seasonal changes in energy costs, weather conditions, strikes and work stoppages at customer plants and changes in customer order patterns in response to the announcement of price increases. Generally, these factors tend to affect adversely the Company's results of operations. -2- Manufacturing and Modernization The Company's electrodes are manufactured at its facilities in Niagara Falls, New York and St. Marys, Pennsylvania. Both plants are equipped with facilities for milling, mixing, homogenizing and extruding; baking and rebaking; pitch impregnating; graphitizing; and machine finishing. The Company currently has the capacity to manufacture approximately 109 million pounds of electrodes annually at these two facilities. The Company manufactures all of its needle coke (the primary raw material for graphite electrodes) at its Seadrift, Texas plant. The Company currently has the capacity to manufacture approximately 110,000 tons of needle coke annually, 65% of which is used internally for the production of graphite electrodes. Needle coke is shipped from Seadrift largely by rail (and to a lesser extent by barge) to the Company's St. Marys facilities. The Company has initiated a program to modernize certain components of its electrode manufacturing process (the Modernization Program). The primary objectives of the Modernization Program, expected to cost approximately $34 million, are the automation of labor intensive processes and the replacement of older equipment with new, state-of-the-art technology in order to reduce costs while improving electrode quality and consistency. A major aspect of the Modernization Program will focus on the electrode forming processes, including the addition of equipment to automate the Company's sizing and weighing systems, and to enhance production capabilities by adding new needle coke preheaters, needle coke and pitch mixers as well as mix cooling/homogenization equipment. These improvements, which management expects to cost approximately $26 million, are designed to reduce total labor requirements and minimize variations in the critical initial forming of the electrodes, resulting in better and more consistent electrode quality. In addition, the Company will be adding three new computer-controlled machine tools used for electrode finishing in its Niagara Falls facility. With a capital cost of approximately $8 million, the machine tool system will meet the highest electrode machining standard. During fiscal 1996, the Company completed the engineering and design phases of the Modernization Program and began issuing equipment purchase orders. Site preparation and equipment installation will continue through fiscal 1997, with both projects expected to be commissioned in mid-fiscal 1998. Calcium Carbide Products Business Products and Markets The Company's primary products in this segment are acetylene, desulfurization products and calcium carbide. The following table presents the Company's net sales and percentage of segment sales within its calcium carbide products business for fiscal 1996, by principal product category:
Fiscal 1996 ------------------------- Product Category Net Sales % of Net Sales - -------------------------------------------------------- --------- -------------- (dollars in thousands) Acetylene.................................... $28,071 35.3% Desulfurization applications................. 24,695 31.1 Calcium carbide.............................. 20,902 26.3 Other........................................ 5,801 7.3 ------- ----- Total calcium carbide product sales..... $79,469 100.0% ======= =====
-3- The Company produces acetylene at its Louisville and Calvert City, Kentucky plants for pipeline delivery to three customers, International Specialty Products (ISP), Air Products and Chemicals, Inc. (Air Products) and E.I. duPont de Nemours & Company (DuPont), for use in the manufacture of specialty chemicals. Each of these customers, which together represented 35.3% of the Company's total calcium carbide product sales in fiscal 1996, has been supplied by the Company for over thirty years. Although relationships with these pipeline customers are longstanding, there can be no assurance that any of these customers will continue to operate its adjacent facility or require the Company's acetylene product. The Company sells calcium carbide to blast furnace steel mills and to ductile iron foundries as a material used to reduce the sulfur content in metals, a process known as desulfurization. Calcium carbide desulfurization products are finely ground to talcum powder size and, together with several additives, are injected into baths of molten iron to reduce the sulfur content of the material. Sales of desulfurization products represented 31.1% of total calcium carbide products net sales for fiscal 1996. Fiscal 1996 desulfurization products sales were lower as compared to fiscal 1995 due primarily to the entrant of a competitor, Elkem, into the desulfurization market. Calcium carbide is sold to industrial gas distributors as a raw material for the production of cylinder acetylene, which is primarily used in the metal fabrication and construction industries. For many years, there have been less expensive materials that competed with acetylene for these purposes. Acetylene has maintained its market position, however, by virtue of its ease of transport and use and because it burns hotter and cuts cleaner. The acetylene distribution market is comprised of several large, national distributors of industrial gases with numerous generating locations, and a large number of small companies that generate acetylene for distribution within their regional markets. The Company sells to both types of customers. The Company markets its calcium carbide products directly to end users and also sells to a major distributor, ESM Metallurgical Products, which in turn supplies carbide mixtures and a variety of ancillary services to steel mills. The Company markets calcium carbide products through a sales force of three, with technical service support from a staff of two, directly to industrial gas distributors, pipeline acetylene customers and steel mill and foundry customers. Sales to customers other than pipeline customers are generally made through purchase orders. The Company manufactures its calcium carbide products at facilities in Louisville and Calvert City. The Louisville facility includes a submerged electric arc furnace which has a capacity of approximately 120,000 net tons of calcium carbide per year and the Calvert City facility includes a submerged electric arc furnace with capacity of approximately 80,000 tons per year. Both plants include crushing, screening and packing equipment; acetylene generators; and ball mill blending facilities. The Louisville plant supplies pipeline acetylene to DuPont; the Calvert City plant supplies pipeline acetylene to ISP and Air Products. Competition Graphite electrode products The Company's competition in graphite electrodes includes two major producers, UCAR International Inc. (UCAR) and SGL Carbon AG (SGL), as well as a group of smaller, foreign producers, including Showa Denko KK (of Japan), Tokai Carbon Co., Ltd. (of Japan), Nippon Carbon Co. Ltd. (of Japan) and VAW Aluminum AG (of Germany). Participants in the graphite electrode industry compete on the basis of service and product quality, reliability, efficiency and price. UCAR and SGL are market and price leaders, each have world-wide market shares ranging between 25% and 35%, and each have greater financial resources than the Company. Both maintain operations in various international markets. The Company is one of a small group of graphite electrode producers each having a world-wide market share of 5% to 7%. While the Company markets its graphite electrodes world-wide, it has no -4- production facility outside of the United States and, accordingly, has significant transportation and duty cost disadvantages relative to its competitors located in foreign markets. From time to time, graphite electrode manufacturers, including the Company, experience temporary declines in the quality of their graphite electrodes, frequently resulting in customer credits and reimbursements. The Company continually evaluates and implements precedures to improve electrode quality and believes that its electrode performance meets the quality requirements of its customers. Moveover, the Modernization Program is intended to enhance further the Company's ability to consistently manufacture electrodes of acceptable quality. There can be no assurance, however, that temporary declines in electrode quality will not recur or that customers or potential customers will not perceive that there is a quality problem with the Company's electrodes. Outside of Japan, there are currently only three needle coke producers: Conoco, Inc. (Conoco), UNO-VEN Company (Uno-Ven) and the Company. Conoco is by far the largest needle coke producer, with annual capacity estimated to be 500,000-550,000 tons. Uno-Ven has a production capacity of approximately 80,000 tons per year and the Company's production capacity is approximately 110,000 tons per year. In Japan, there are four small producers, one of which is a Conoco affiliate, and two of which make a different type of needle coke from coal tar pitch and not known to be used outside of Japan. The Company believes the three Japanese producers (other than the Conoco affiliate) produce an aggregate of 150,000 tons per year. Participants in the needle coke industry compete primarily on price and quality. The Company has numerous competitors in the sale of granular graphite, including other electrode manufacturers and a variety of graphite scrap dealers. Fine grain graphite blocks and rods, graphite specialty products, are produced by a number of company's throughout the world, including UCAR and SGL. These materials are marketed on a world-wide basis by the Company. Calcium Carbide Products The Company's only competitors in the manufacture and marketing of calcium carbide in the United States and Canada are Elkem and Mid-West Carbide. Elkem is a significant competitor in the sale of calcium carbide to the industrial gas distributor market and desulfurization products to the steel industry. Participants in the calcium carbide market compete on the basis of service and product quality, reliability, efficiency and price. The Company sells all of its acetylene to the adjacent specialty chemical and products plants of its pipeline customers. These plants are not supplied with acetylene by any source other than the Company. See "--Calcium Carbide Products Business--Products and Markets." For many years, other, less expensive materials have competed with cylinder acetylene for use in the metal fabrication and construction industries. Acetylene has maintained its market position, however, by virtue of its ease of transport and use and because it burns hotter and cuts cleaner. Calcium carbide- based desulfurization products compete with magnesium-based desulfurization products and, with respect to ductile iron foundries, lime spar. The commodity price of magnesium and the resultant price of magnesium-based desulfurizers affects the demand for calcium carbide-based desulfurization products. Raw Materials and Costs Graphite Electrodes The significant raw material costs of production for all graphite electrode manufacturers are needle coke, coal tar pitch, natural gas for the heating of kilns and electricity for graphitizing. The Company has its own needle coke production facility. The Company uses low sulfur decant oil, a by-product of fluid catalytic cracking units in integrated oil refineries, in the manufacture of needle coke. Most of this feedstock is purchased from refineries along the U.S. Gulf Coast. Only a limited number of refineries on the U.S. Gulf Coast produce decant oil suitable for use by the Company. At times, due to restraints on local availability, the Company has purchased decant oil on the West Coast at a higher cost than if obtained from a local refinery. Conoco and Uno-Ven, the Company's two largest needle coke competitors, operate large, integrated refineries that have the ability to desulfurize decant oil. -5- The cost of refinery decant oil is pegged to the U.S. Gulf Coast spot cargo barge prices for heavy fuel oil. Fuel oil prices move with world-wide crude oil prices and, to some extent, with winter weather conditions in the United States. The Company hedges its oil costs from time to time by trading in futures contracts for crude oil and/or heating oil. There can be no assurance that the Company will be able to obtain an adequate quantity of suitable feedstocks at all times in the future or at acceptable prices. Electricity for graphitizing operations represents a major cost factor due to the immense quantities of electricity needed to graphitize electrodes. At the Company's plant at Niagara Falls, electricity is supplied by the Power Authority of the State of New York at favorable, pre-determined prices under a contract that expires in 2006. The St. Marys, Louisville and Calvert City plants are supplied electricity under conventional power contracts. Through a electricity co-generation process, the Seadrift facility is a net power producer, resulting in virtually no electrical power costs for that facility. Heating fuel for kilns is natural gas purchased by the Company from either interstate natural gas carriers or from local gas well operators. Calcium Carbide Products Raw materials required for calcium carbide manufacture are lime, metallurgical coke and lesser quantities of petroleum coke. The Company believes that these raw materials are widely available at satisfactory prices. Employees At July 31, 1996, the Company employed 887 people in its graphite electrode products segment, 30% of whom were salaried and 70% of whom were paid hourly, and 318 people in the calcium carbide segment, 21% of whom were salaried and 79% of whom were paid hourly. The Company's Seadrift needle coke plant is staffed entirely with salaried personnel. During fiscal 1996, the Company negotiated three labor contracts with unions representing its hourly employees at the St. Marys, Louisville and Calvert City facilities. The St. Marys labor agreement will expire in June 1999, while the Louisville and Calvert City agreements will expire in July 2001 and February 2001, respectively. The Company believes that the new labor agreements were settled on terms that were satisfactory. The labor contract covering the Company's hourly work force at its Niagara Falls, New York facility will expire in January 1999. The Company believes that its relationships with the unions are stable. However, there can be no assurance that new agreements will be reached without union action or will be on terms satisfactory to the Company. Patents and Trademarks The Company does not believe that any of its patents, patent applications or trademarks is material to its business or operations. Environmental Compliance In connection with the agreement under which the Company acquired its operating assets from The BOC Group, plc (BOC) (the Asset Acquisition), BOC, agreed to indemnify the Company, its successors and assigns, against certain liabilities, to the extent not disclosed and expressly excluded from the indemnity, arising from (i) pre-closing operations of its former divisions (regardless of whether such liabilities arose during or before BOC's ownership thereof); (ii) assets transferred to the Company pursuant to the Asset Acquisition; and (iii) pre-closing activities conducted at the real property and leased premises transferred to the Company pursuant to the Asset Acquisition. Such indemnification includes certain liabilities arising out of the use, generation, transportation, storage, treatment, release or disposal of hazardous materials; the violation of any environmental regulations; or -6- any claim or cause of action to the effect that the Company is responsible or liable for acts or omissions of BOC concerning hazardous materials. Under the indemnity, the Company is required to pay 20% of the first $2.5 million of costs relating to such environmental claims or liabilities. Thereafter, BOC is responsible for all of such liabilities. Since the Asset Acquisition and as of July 31, 1996, the total reimbursable claims submitted to BOC have approximated $0.4 million, all of which have been paid. The BOC indemnity survives for all covered claims brought within 15 years after closing of the Asset Acquisition, which occurred in July 1988. A number of identifiable costs at the time of the Asset Acquisition, such as the need for certain pollution control equipment, receipt of certain discharge permits and the need for continued operation and maintenance of a landfill used exclusively by the Company at its St. Marys facility, were disclosed by BOC and were excluded from the indemnification. The Company has installed much of the pollution control equipment and received the discharge permits excluded from the BOC indemnity. If any of the pollution control equipment excluded from the BOC indemnity is required in the future for reactivation of production equipment or increases in capacity, the costs related thereto are not believed by the Company to be material. In connection with the Specialty Products Sale, the Company agreed to indemnify SGL Corp. for 80% of all environment costs in excess of an aggregate $100,000 threshold up to a maximum exposure of $6.0 million. In addition, with respect to the Company's subsidiary, Speer Canada, Inc., sold pursuant to the Specialty Products Sale, the Company agreed to indemnify SGL Corp. for 80% of all environment costs, in excess of a $100,000 threshold, relating to such subsidiary's operations prior to the consummation of the Specialty Products Sale, up to a maximum exposure of $1.5 million. As of July 31, 1996, no environmental claims have been submitted for indemnification by SGL Corp. Since 1970, a wide variety of federal, state and local environmental laws, regulations and ordinances have been, and continue to be, adopted and amended. Some of these laws, regulations and ordinances hold current owners or operators of land liable for their own and previous owners' or operators' releases of hazardous substances. Because of its operations and the operations of its predecessors, and the use, production or discharge of certain substances by their plants, the Company is affected by these laws and regulations. Various Company facilities have experienced some level of regulatory scrutiny in the past and continue to be subject to regulatory inspections and requests for investigation or response action in connection with releases or threatened releases of hazardous substances. Lime hydrate generated as a by-product of acetylene production at the Louisville facility has been stored in ponds at the site. One twenty acre pond was also used in the past for disposal of various materials such as bag house dust and plant debris. In 1993, the Company notified the Kentucky Department of Environmental Protection of this pond's historic uses. It is not possible to determine what action, if any, may be required by the Kentucky Department of Environmental Protection, or the costs associated with any such action. In early 1995, the Company notified the New York Department of Environmental Conservation (NYDEC) of a release of automatic transmission fluid at its Niagara Falls facility. The Company investigated the extent of the release and proposed a remedial plan and clean-up levels to NYDEC. The Company's remedial plan was approved by NYDEC and the plan is currently being implemented. Total costs of the remedial plan are not expected to exceed $150,000. The Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Safe Drinking Water Act, each as amended, and similar state or local counterparts of these federal laws, regulate air emissions, water discharges and wastes. The Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, among others, provides for responses to and liability for releases or threatened releases of hazardous substances into the environment. The Company's current operations require compliance with the above laws as well as the Toxic Substances Control Act and related laws designed to assess the risk to health and the environment at early developmental stages of new products. In addition, the Company is subject to laws adopted or proposed in various states that impose various reporting or remediation requirements if operations cease or the property is transferred or sold. While the Company believes it is in substantial compliance with these regulations, from time to time it receives from various government agencies notification or complaints that allege violations of the requirements, which the Company then works with the agency to resolve. No such notice is outstanding which would be expected to have a material adverse effect on the Company's financial condition or results of operations. -7- The Clean Air Act was amended in 1990. While the Company believes that its facilities generally meet current regulatory standards applicable to air emissions, some of its facilities will be required to comply with new standards for hazardous emissions to be promulgated by the United States Environmental Protection Agency (USEPA) over the next several years. In addition, the Clean Air Act will result in revisions to state implementation plans which may necessitate the installation of additional controls for certain of the Company's emission sources. At this time, the Company cannot estimate when new standards will be imposed by USEPA or relevant state agencies or what control technologies or changes in processes the Company may be required to install or undertake in order to achieve compliance with any new requirements. Periodic upsets at the Niagara Falls facility, resulting in particulate air emissions from baking and graphitization furnaces, and odor complaints have led the Niagara County Health Department to recommend an aggressive program of preventive maintenance and evaluation of upgrade alternatives to reduce these incidents and the odor. The Company has made certain improvements and is evaluating further corrective actions which may, in future years, require expenditures for new production and air pollution control equipment, which expenditures the Company believes will not have a material adverse effect on its results of operations. The Company has submitted to the NYDEC a plan for compliance with restrictions on emissions of volatile organic compounds from its graphitization plant at Niagara Falls. The Company expects the plan to be approved. However, if it were not, no assurance can be given that compliance costs would not have a material effect on the Company's operations or financial conditions. The Company has applied for storm water discharge permits at its St. Marys and Louisville facilities. The Company's permit application for its St. Marys facility has been reviewed by the Pennsylvania Department of Environmental Resources and the Company is revising its application to comply with certain requests by this agency. The Company expects the permit to be issued in 1997. A storm water permit was issued to the Company in October 1994 for its Louisville facility by the Water Division of the Kentucky Natural Resources and Environmental Protection Cabinet. The Company is implementing measures to comply with its terms and expects to be in compliance in early 1997. The Company does not believe that the cost of compliance with these permits will be material. The St. Marys facility uses a permitted landfill for the disposal of residual waste. Based on the adoption of new residual waste regulations in Pennsylvania and the fact that the landfill is approaching the end of its useful life, the Company expects to cease use of this landfill in July 1997 and contract outside of the Company for disposal services. The Company's closure plan has been approved by the Pennsylvania Department of Environmental Resources. Closure and subsequent monitoring activities related to the landfill are expected to cover an 18 year period, and closure and monitoring costs are not expected to exceed $0.8 million. Estimated future closure costs not accrued as of July 31, 1996 are not material. The timing of payments related to these activities, including payments for disposal services, is not expected to materially impact the Company's cash flow in the future. During fiscal 1996, the Company spent approximately $1.1 million on capital expenditures in order to comply with environmental laws and regulations (which expenditures are included in the consolidated financial statements, including the notes thereto, appearing elsewhere in this Form 10-K as additions to property, plant, and equipment). During fiscal 1997, the Company expects to spend approximately $3.6 million for such projects. -8- Item 2 Properties - -------------------- The Company maintains its corporate headquarters at One Gateway Center, Pittsburgh, Pennsylvania under a lease with an initial term expiring on December 31, 1999. The Company has the following additional properties, which are owned or leased, as indicated:
Area (approximate Owned Location Use square feet) or Leased - --------------------------------------------------------------------------------------------- Graphite Electrode Products Facilities: Niagara Falls, New York........ Electrodes 1,000,000 Owned St. Marys, Pennsylvania........ Electrodes 742,000 Owned Seadrift, Texas................ Needle Coke 743,000 Owned Calcium Carbide Products Facilities: Calvert City, Kentucky......... Carbide Products 150,000 Owned Louisville, Kentucky........... Carbide Products 200,000 Owned Louisville, Kentucky........... Carbide Sales, Technical 6,000 Leased and Finance Offices
Pursuant to the Specialty Products Sale, SGL Corp. acquired a discrete portion of the Company's St. Marys facility. The Company and SGL Corp. share common services such as steam and compressed air in St. Marys. In addition, the Company leases to SGL Corp. a portion of a building and certain parking lot space at its facility in Niagara Falls pursuant to a lease expiring in January 2000 (subject to optional renewals by SGL Corp. for a maximum of five additional years). The Company owns all of its major manufacturing facilities. The Company believes that its plants and facilities, which are of varying ages and types of construction, are in satisfactory condition. Many of the Company's operations are conducted at extremely high temperatures, exceeding 5,000 degrees Fahrenheit in the case of graphitization. In some facilities, a maintenance "turnaround" is conducted annually; in other facilities, major maintenance is conducted on an ongoing basis. Maintenance expenditures, which are expensed as incurred, amounted to approximately $37.1 million, $36.1 million and $34.4 million for the fiscal years ended July 31, 1996, 1995 and 1994, respectively. Item 3 Legal Proceedings - --------------------------- General The Company is involved in various legal proceedings considered incidental to the conduct of its business, the ultimate disposition of which, in the opinion of the Company's management, will not have a material adverse effect on the financial position, fiscal year operating income or business of the Company. Claims (other than environmental and contract claims and claims for punitive damages) against the Company are generally covered by insurance which includes a $250,000 per occurrence self-insured retention. As of July 31, 1996, a $0.4 million reserve has been recorded to provide for estimated exposure on claims for which a loss is deemed probable. -9- Environmental In April 1995, the Company was named as a third-party defendant in a Superfund action in Federal District Court in New Jersey relating to waste disposal at a landfill located in Sayreville, New Jersey (the Sayreville Litigation). Carbon Graphite Group, Inc. was named as successor to Airco-Speer Company (Airco-Speer). Since this landfill was closed prior to the organization of the Company in 1988, the Company's only possible connection with the Sayreville Litigation would be if it were a successor to Airco-Speer, a claim which it disputes. Furthermore, pursuant to the Asset Purchase Agreement by which the Company acquired assets from BOC, BOC agreed to provide an indemnification for certain environmental matters. BOC has assumed and commenced the defense of the Sayreville Litigation and agreed to indemnify the Company for losses associated therewith in accordance with the terms of the Asset Purchase Agreement. In addition, BOC asserts that the liability in this matter was settled by a 1992 agreement with the plaintiffs in the present case. Based on the above, management does not believe that the Company will incur a material loss with respect to the Sayreville Litigation. Item 4 Submission of Matters to Vote of Securities Holders - ------------------------------------------------------------- This item is not applicable to the Registrant for this Annual Report on Form 10-K. -10- PART II Item 5 Market for Registrant's Common Equity and Related Stockholder Matters - ------------------------------------------------------------------------------- Information required by this item is furnished on page 17 of the Company's Fiscal 1996 Annual Report to Stockholders which has been filed as an exhibit to this Annual Report on Form 10-K and is incorporated herein by reference. Information regarding dividend restrictions is included in Note 8 on page 27 of the Company's Fiscal 1996 Annual Report to Stockholders. Item 6 Selected Financial Data - --------------------------------- Information required by this item is, in part, furnished on pages 16 and 17 of the Company's Fiscal 1996 Annual Report to Stockholders which has been filed as an exhibit to this Annual Report on Form 10-K and is incorporated herein by reference. During fiscal 1994, the Company paid a $5.00 per share Common Stock dividend. No other Common Stock dividends were declared or paid during the five year period ended July 31, 1996. Item 7 Management's Discussion and Analysis of Financial Condition and - ------------------------------------------------------------------------- Results of Operations - --------------------- Information required by this item is furnished on pages 9 through 15 of the Company's Fiscal 1996 Annual Report to Stockholders which has been filed as an exhibit to this Annual Report on Form 10-K and is incorporated herein by reference. Item 8 Financial Statements and Supplementary Data - ----------------------------------------------------- Information required by this item is furnished on pages 17 through 36 of the Company's Fiscal 1996 Annual Report to Stockholders which has been filed as an exhibit to this Annual Report on Form 10-K and is incorporated herein by reference. Supplementary data required by this item is furnished in Note 15 on page 36 of the Company's Fiscal 1996 Annual Report to Stockholders. Item 9 Changes in and Disagreements with Accountants on Accounting and - ------------------------------------------------------------------------- Financial Disclosure - -------------------- This item is not applicable to the Registrant for this Annual Report on Form 10-K. -11- PART III Items 10 Directors and Executive Officers of the Registrant - ------------------------------------------------------------ Information required by this item is furnished on pages 3 through 5 of the Company's Proxy Statement dated November 4, 1996 which is to be filed within 120 days of July 31, 1996 and is incorporated herein by reference. Item 11 Executive Compensation - -------------------------------- Information required by this item is furnished on pages 6 through 15 of the Company's Proxy Statement dated November 4, 1996 which is to be filed within 120 days of July 31, 1996 and is incorporated herein by reference. Item 12 Security Ownership of Certain Beneficial Owners and Management - ------------------------------------------------------------------------ Information required by this item is furnished on pages 1, 2, 5 and 6 of the Company's Proxy Statement dated November 4, 1996 which is to be filed within 120 days of July 31, 1996 and is incorporated herein by reference. Item 13 Certain Relationships and Related Transactions - -------------------------------------------------------- Information required by this item is furnished on page 15 of the Company's Proxy Statement dated November 4, 1996 which is to be filed within 120 days of July 31, 1996 and is incorporated herein by reference. -12- PART IV Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K - ------------------------------------------------------------------------- (a)(1) List of Financial Statements The following consolidated financial statements of the Company and the Report of Independent Accountants set forth on pages 18 through 36 and page 17, respectively, in the Company's Fiscal 1996 Annual Report to Stockholders, which has been filed as an exhibit to this Annual Report on Form 10-K, are incorporated by reference into this Item 14 of Form 10-K by Item 8 hereof: * Consolidated Balance Sheets as of July 31, 1996 and 1995. * Consolidated Statements of Operations for the Years Ended July 31, 1996, 1995 and 1994. * Consolidated Statements of Stockholders' Equity for the Years Ended July 31, 1996, 1995 and 1994. * Consolidated Statements of Cash Flows for the Years Ended July 31, 1996, 1995 and 1994. * Report of Independent Accountants dated September 10, 1996. (a)(2) List of Financial Statement Schedules The following financial statement schedule of the Company and the Report of Independent Accountants are included on pages 20 and 19, respectively, of this Annual Report on Form 10-K and are incorporated by reference into this Item 14 on Form 10-K: * Report of Independent Accountants dated September 10, 1996. * Schedule II -- Valuation and Qualifying Accounts for the Three Years Ended July 31, 1996, 1995 and 1994. All other financial statement schedules are not required, are not applicable or the information called for therein is included elsewhere in the consolidated financial statements or related notes thereto. (a)(3) List of Exhibits
Exhibit No. Description - ------------- --------------------------------------------------------------------------------------------- 3.1* Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1, Registration No. 33-31408) 3.2* Amended and Restated By-Laws of the Company (incorporated herein by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-1, Registration No. 33- 31408) 3.3* Restated Stockholders' Agreement dated as of September 19, 1995 among the Company and the Management Stockholders (incorporated herein by reference to Exhibit 3.3 to the Company's Registration Statement on Form S-1, Registration No. 33-31408) 4.1* Specimen Certificate for Common Stock of the Company (incorporated herein by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-1, Registration No. 33-91102) 4.2* Indenture dated August 26, 1993 between the Company and State Street Bank and Trust Company, as trustee, relating to 11 1/2% Senior Notes Due 2003, including the form of Senior Note included therein (incorporated herein by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-1, Registration No. 33-91102)
-13- Exhibit No. Description - ------------- --------------------------------------------------------------------------------------------- 10.1* Securities Purchase Agreement dated as of September 25, 1991 between the Company and BOC (incorporated herein by reference to Exhibit 10.1 to the Company's Registration Statement on Form S-1, Registration No. 33-65150) 10.2* Asset Transfer Agreement dated as of July 9, 1988 among the Company, BOC, and Centre Capital Investors, L.P. (incorporated herein by reference to Exhibit 10.2 to the Company's Registration Statement on Form S-1, Registration No. 33-65150) 10.3* Asset Purchase Agreement dated as of January 17, 1995 among the Company, The C/G Specialty Products Business Trust, Materials Technology Corporation, and SGL Carbon Corporation (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated January 17, 1995) 10.4* Share Purchase Agreement dated as of January 17, 1995 between the Company and 9012- 9677 Quebec Inc. (incorporated herein by reference to Exhibit 2.2 to the Company's Current report on Form 8-K dated January 17, 1995) 10.5* Revolving Credit Agreement and Letter of Credit Issuance dated December 1, 1995 by and among the Company, PNC Bank, National Association and the Financial Institutions party thereto (incorporated herein by reference to Exhibit 10.5 to the Company's Registration Statement on Form S-1, Registration No. 33-31408) 10.6* Security Agreement and Collateral Assignment, dated December 1, 1995 between the Company and PNC Bank, National Association (incorporated herein by reference to Exhibit 10.6 to the Company's Registration Statement on Form S-1, Registration No. 33-31408) 10.7* Subsidiary Guaranty Agreement, dated December 1, 1995 by Seadrift Coke, L.P. in favor of PNC Bank, National Association (incorporated herein by reference to Exhibit 10.7 to the Company's Registration Statement on Form S-1, Registration No. 33-31408) 10.8* Subsidiary Security Agreement and Collateral Assignment, dated December 1, 1995 between Seadrift Coke, L.P. and PNC Bank, National Association (incorporated herein by reference to Exhibit 10.8 to the Company's Registration Statement on Form S-1, Registration No. 33-31408) 10.9* Payoff, Release and Termination Agreement, dated December 1, 1995 among the Company, The Carbide/Graphite Group Receivables Corporation, Seadrift Coke, L.P., PNC Bank, National Association and The First National Bank of Boston (incorporated herein by reference to Exhibit 10.9 to the Company's Registration Statement on Form S-1, Registration No. 33-31408) 10.10* Termination of Purchase and Sale Agreement, dated November 30, 1995 among The Carbide/Graphite Receivables Corporation, Seadrift Coke, L.P., the Company and PNC Bank, National Association (incorporated herein by reference to Exhibit 10.10 to the Company's Registration Statement on Form S-1, Registration No. 33-31408) 10.11* Pledge Agreement, dated December 1, 1995 by the Company in favor of PNC Bank, National Association (incorporated herein by reference to Exhibit 10.11 to the Company's Registration Statement on Form S-1, Registration No. 33-31408) 10.12* Letter Agreement, dated December 1, 1995 between PNC Bank, National Association and the Company (incorporated herein by reference to Exhibit 10.12 to the Company's Registration Statement on Form S-1, Registration No. 33-31408)
-14- Exhibit No. Description - ------------- --------------------------------------------------------------------------------------------- 10.13* Office Lease dated August 30, 1991 between the Company and The Equitable Life Assurance Society of the United States (incorporated herein by reference to Exhibit 10.10 to the Company's Registration Statement on Form S-1, Registration No. 33-65150) 10.14* Letter Agreement dated as of January 1, 1995 between the Company and James G. Baldwin (incorporated herein by reference to Exhibit 10. 15 to the Company's Registration Statement on Form S-1, Registration No. 33-91102) 10.15* Employment Agreement dated as of January 1, 1995 between the Company and Nicholas T. Kaiser (incorporated herein by reference to Exhibit 10.16 to the Company's Registration Statement on Form S-1, Registration No. 33-91102) 10.16* Employment Agreement dated as of March 1, 1995 between the Company and Walter B. Fowler (incorporated herein by reference to Exhibit 10.17 to the Company's Registration Statement on Form S-1, Registration No. 33-91102) 10.17* Employment Agreement dated as of March 1, 1995 between the Company and Ronald N. Clawson (incorporated herein by reference to Exhibit 10.18 to the Company's Registration Statement on Form S-1, Registration No. 33-91102) 10.18* Employment Agreement dated as of March 1, 1995 between the Company and Stephen D. Weaver (incorporated herein by reference to Exhibit 10.19 to the Company's Registration Statement on Form S-1, Registration No. 33-91102) 10.19* Restated 1988 Management Stock Option Plan of the Company (incorporated herein by reference to Exhibit 10.20 to the Company's Registration Statement on Form S-1, Registration No. 33-91102) 10.20* Performance Option Agreement under the 1988 Management Stock Option Plan (incorporated herein by reference to Exhibit 10.21 to the Company's Registration Statement on Form S-1, Registration No. 33-91102) 10.21* Restated 1991 Management Stock Option Plan of the Company (incorporated herein by reference to Exhibit 10.22 of the Company's Registration Statement on Form S-1, Registration No. 33-91102) 10.22* Stock Option Agreement dated as of August 1, 1993 between the Company and James G. Baldwin (incorporated herein by reference to Exhibit 10.23 to the Company's Registration Statement on Form S-1, Registration No. 33-91102) 10.23* Stock Option Agreement dated as of March 8, 1994 between the Company and James G. Baldwin (incorporated herein by reference to Exhibit 10.24 to the Company's Registration Statement on Form S-1, Registration No. 33-91102)
-15- Exhibit No. Description - ------------- --------------------------------------------------------------------------------------------- 10.24* 1995 Stock-Based Incentive Compensation Plan of the Company (incorporated herein by reference to Exhibit 10.24 to the Company's Registration Statement on Form S-1, Registration No. 33-31408) 10.25 Amendment to 1995 Stock-Based Incentive Compensation Plan of the Company dated August 26, 1996 10.26* Agreement under the 1995 Stock-Based Incentive Plan (incorporated herein by reference to Exhibit 10.22 to the Company's Registration Statement on Form S-1, Registration No. 33-91102) 10.27 Non-Employee Director Stock-Based Incentive Compensation Plan of the Company dated August 26, 1996 10.28* Performance Unit Plan II of the Company (incorporated herein by reference to Exhibit 10.24 to the Company's Annual Report on Form 10-K for the fiscal year ended July 31, 1994) 10.29* Form of Agreement under the Performance Unit Plan II (incorporated herein by reference to Exhibit 10.25 to the Company's Annual Report on Form 10-K for the fiscal year ended July 31, 1994) 10.30 Incentive Bonus Plan of the Company 10.31 Supplemental Executive Savings Plan of the Company 10.32* Replacement Power Agreement between the Power Authority of the State of New York and the Company dated October 17, 1994 (incorporated herein by reference to Exhibit 10.31 to the Company's Registration Statement on Form S-1, Registration No. 33-91102) 10.33* Acetylene Purchase Agreement dated as of January 1, 1985 between BOC (as predecessor to the Company) and GAF Corporation (incorporated herein by reference to Exhibit 10.32 to the Company's Registration Statement on Form S-1, Registration No. 33-91102) 10.34* Amendment to the Acetylene Supply Agreement between Air Products & Chemicals and the Company dated as of October 21, 1994 (incorporated herein by reference to Exhibit 10.33 to the Company's Registration Statement on Form S-1, Registration No. 33-91102) 10.35* Acetylene Agreement dated January 1, 1975, as amended June 12, 1978 and February 10, 1982, between Airco, Inc. and DuPont (incorporated herein by reference to Exhibit 10.34 to the Company's Registration Statement on Form S-1, Registration No. 33-91102) 10.36* Subcontract dated as of July, 1994 between the Company and Brown & Root, Inc. (incorporated herein by reference to Exhibit 10.35 to the Company's Registration Statement on Form S-1, Registration No. 33-91102) 10.37* Supply Agreement dated as of January 17, 1995 between SGL Corp. and the Company (incorporated herein by reference to Exhibit 10.36to the Company's Registration Statement on Form S-1, Registration No. 33-91102) 10.38 Agreement between the Company (Carbide Unit), Calvert City, Kentucky, and the Oil, Chemical and Atomic Workers, International Union, AFL-CIO Local 3-556, dated February 1, 1996 10.39 Agreement between the Company (Electrode Unit) and International Union of Electrical, Technical Salaried Machine and Furniture Workers, AFL-CIO Local Union 502, dated June 3, 1996 10.40 Agreement by and between the Company (Carbide Division), Louisville, Kentucky Plant, and International Brotherhood of Firemen and Oilers Local No. 320, Affiliated with the AFL-CIO, dated July 1, 1996
-16- Exhibit No. Description - ------------- --------------------------------------------------------------------------------------------- 10.41* Agreement between the Company (Electrode Unit) and Oil, Chemical and Atomic Workers International Union and Local Union Number 8-23516, dated January 23, 1994 (incorporated herein by reference to Exhibit 10.40 to the Company's Registration Statement on Form S-1, Registration No. 33-91102) 10.42* Carbide Supply Agreement dated August 1, 1988 between the Company and BOC (incorporated herein by reference to Exhibit 10.30 to the Company's Registration Statement on Form S-1, Registration No. 33-65150) 11.1* Calculation of Earnings Per Share for the Fiscal Years ended July 31, 1991, 1992 and 1993 (incorporated herein by reference to Exhibit 11.1 to the Company's Registration Statement on Form S-1, Registration No. 33-91102) 11.2* Calculation of Earnings (Loss) Per Share for the Fiscal Year and each of the Quarters in the Fiscal Year ended July 31, 1994 (incorporated herein by reference to Exhibit 11.3 to the Company's Registration Statement on Form S-1, Registration No. 33-91102) 11.3* Calculation of Earnings Per Share for the Fiscal Year and each of the Quarters for the Fiscal Year ended July 31, 1995 (incorporated herein by reference to Exhibit 11.4 to the Company's Registration Statement on Form S-1, Registration No. 33-31408) 11.4 Calculation of Earnings Per Share for the Fiscal Year and each of the Quarters for the Fiscal Year ended July 31, 1996 13.1 Fiscal 1996 Annual Report to Stockholders of the Company 21.1 Subsidiaries of the Company 23.1 Consent of Independent Accountants 27.1 Financial Data Schedule
- ---------------- * Exhibit has previously been filed with the Commission and is herein incorporated by reference. (b) Reports on Form 8-K No Reports on Form 8-K were filed with the Commission during the fourth quarter ended July 31, 1996. -17- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on October 25, 1996. The Carbide/Graphite Group, Inc. By: /s/ Nicholas T. Kaiser --------------------------------------- (Nicholas T. Kaiser) President and Chief Executive Officer Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on October 25, 1996.
Signature Title - ------------------------------- -------------------------------------------------------- Chairman of the Board, President, Chief Executive Office /s/ Nicholas T. Kaiser * and Director (Principal Executive Officer) - ------------------------------- (Nicholas T. Kaiser) /s/ Ronald N. Clawson * President -- Carbide Products and Director - ------------------------------- (Ronald N. Clawson) President -- Graphite Electrodes and Graphite Specialty /s/ Walter B. Fowler * Products and Director - ------------------------------- (Walter B. Fowler) Vice President -- Finance and Chief Financial Officer /s/ Stephen D. Weaver (Principal Financial Officer) - ------------------------------- (Stephen D. Weaver) Controller -- Corporate Finance (Principal Accounting /s/ Jeffrey T. Jones Officer) - ------------------------------- (Jeffrey T. Jones) /s/ James G. Baldwin * Director - ------------------------------- (James G. Baldwin) /s/ James R. Ball * Director - ------------------------------- (James R. Ball) /s/ Paul F. Balser * Director - ------------------------------- (Paul F. Balser) /s/ Robert M. Howe * Director - ------------------------------- (Robert M. Howe) Director - ------------------------------- (Ronald B. Kalich)
* Signatures representing a majority of the Registrant's Board of Directors. -18- REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors THE CARBIDE/GRAPHITE GROUP, INC. Our report on the consolidated financial statements of The Carbide/Graphite Group, Inc. and Subsidiaries (the Company) has been incorporated by reference in this Form 10-K from page 17 of the 1996 Annual Report to Stockholders of the Company. In connection with our audits of such financial statements, we have also audited the related financial statement schedule listed under Item 14 on page 13 of this Form 10-K. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. /s/ Coopers & Lybrand L.L.P. Pittsburgh, Pennsylvania September 10, 1996 -19- SCHEDULE II THE CARBIDE/GRAPHITE GROUP, INC. AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS For the Years Ended July 31, 1996, 1995 and 1994 (in thousands)
Col. A Col. B Col. C Col. D Col. E Col. F - -------------------------------------- ---------- ---------- -------------- ---------- ------------- Additions Balance at -------------------------- Beginning Charged Charged to Balance at of Period to Expense other accounts Deductions End of Period ---------- ---------- -------------- ---------- ------------- Allowance for Doubtful Accounts: Year Ended July 31, 1996..... $5,152 $ 120 - ($3,376) * $1,896 Year Ended July 31, 1995..... 5,514 166 - (528) * 5,152 Year Ended July 31, 1994..... 4,396 1,168 - (50) * 5,514
- ----------------- * Represents uncollectible accounts written off and recoveries of customer accounts previously reserved for. -20- EX-10.25 2 REVISIONS TO 1995 STOCK-BASED INCENTIVE PLAN Exhibit 10.25 Amendment to 1995 Stock-Based Incentive Compensation Plan --------------------------------------------------------- EXHIBIT C 2.8. "Committee" means the committee designated by the Board to administer the Plan under Section 4. The Committee shall have at least two members, each of whom shall be both Non-Employee Director and an Outside Director. 2.9. "Disability" means termination of employment with the Company or any of its Subsidiaries or Affiliates as a result of an Employee's inability to perform substantially his or her duties and responsibilities to the Company or any of its Subsidiaries or Affiliates by reason of a physical or mental disability or infirmity (i) for a continuous period of six months or (ii) at such earlier time as such Employee submits medical evidence satisfactory to the Committee that such Employee has a physical or mental disability or infirmity that will likely prevent such Employee from substantially performing his or her duties and responsibilities for six months or longer. The date of such Disability shall be the earlier of the last day of such six-month period or the day on which such Employee submits such evidence. Solely for purposes of Incentive Stock Options, however, "Disability" means "permanent and total disability" as defined in section 22(e)(3) of the Code. 2.10. "Employee" means an officer or other key employee, consultant or advisor of the Company, a Subsidiary or an Affiliate, including a director who is such an employee, consultant or advisor. Solely for purposes of Incentive Stock Options, however, "Employee" means an employee within the meaning of section 3401(c) of the Code. 2.17. "Non-Employee Director" means a director who (i) is not currently an officer or employee of the Company (or any parent or subsidiary thereof); (ii) does not receive compensation, either directly or indirectly, from the Company (or any parent or subsidiary thereof) for services rendered as a consultant or in any capacity other than as a director, except for an amount that does not exceed the dollar amount for which disclosure would be required pursuant to Rule 404(a) of Regulation S-K; (iii) does not possess an interest in any other transaction for which disclosure would be required pursuant to Rule 404(b) of Regulation S-K; and (iv) is not engaged in a business relationship for which disclosure would be required pursuant to Rule 404(b) of Regulation S-K. 4.2. Grants. The Committee shall have full power to interpret and ------ administer the Plan and full authority to act in selecting the Employees to whom Awards shall be granted, in determining the type and amount of Awards to be granted to each Employee, the terms and conditions of Awards granted under the Plan and the terms of agreements that shall be entered into with Holders. Each grant of an Award shall be approved by the Committee as required by Note 3 to Rule 16b-3 under the 1934 Act. 6.6. Payment of Option Price. The Option price of the shares of Common ----------------------- Stock upon the exercise of an Option shall be paid in full in cash at the time of exercise or, with the consent of the Committee, in whole or in part in shares of Common Stock valued at Fair Market Value. With the consent of the Committee, payment upon the exercise of a Non Qualified Stock Option may be made in whole or in part by the delivery of additional, unexercised Non Qualified Stock Options (based on the difference between the Fair market Value of the Common Stock for which they are exercisable and the exercise price of such additional Non Qualified Stock Options or by a "cashless exercise". 7.1. Grant of SARs. SARs are rights to receive a payment in cash or ------------- Common Stock, as selected by the Committee. The value of these rights, which are determined by the appreciation in value of Common Stock, shall be evidenced by SAR agreements. Such agreements shall conform to the requirements of the Plan and may contain such other provisions as the Committee shall deem advisable, including, if applicable, a limit on the timing of the election and exercise of an SAR. An SAR may be granted in tandem with all or a portion of a related Option under the Plan or may be granted separately. A Tandem SAR may be granted either at the time of the grant of the Option or, with respect to a Non Qualified Option, at any time thereafter during the term of the Option. A Tandem SAR shall be exercisable only to the extent that the related Option is exercisable. In no event shall a SAR be exercisable within the first six months of its grant. EX-10.27 3 NON EMPLOYEE DIRECTOR STOCK-BASED COMP. PLAN Exhibit 10.27 THE CARBIDE/GRAPHITE GROUP, INC. NON EMPLOYEE DIRECTOR STOCK-BASED INCENTIVE COMPENSATION PLAN 1. Purpose of the Plan ------------------- The purpose of the Plan is to assist the Company, and its Subsidiaries and Affiliates, in attracting and retaining valued members of the Board of Directors of the Company by offering them a greater stake in the Company's success and a closer identity with it, and to encourage ownership of the Company's stock by such directors. 2. Definitions ----------- 2.1. "Affiliate" means any entity other than a Subsidiary in which the Company has a substantial direct or indirect equity interest, as determined by the Board. 2.2. "Award" means an award of Options under the Plan pursuant to the award formulas provided for herein. 2.3. "Board" means the Board of Directors of the Company. 2.4. "Change in Control" means a change in control of the Company of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the 1934 Act, whether or not the Company is then subject to such reporting requirement; provided that, without limitation, a Change in Control shall be deemed to have occurred if (i) any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity, or any syndicate or group deemed to be a person under Section 14(d)(2) of the 1934 Act, is or becomes the "beneficial owner" (as defined in Rule 13d-3 of the General Rules and Regulations under the 1934 Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities entitled to vote in the election of directors of the Company; or (ii) during any period of two consecutive years (not including any period prior to the execution of this Plan), individuals who at the beginning of such period constitute the Board and any new directors, whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of a majority of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof. 2.5. "Code" means the Internal Revenue Code of 1986, as amended. 2.6. "Common Stock" means the common stock of the Company, par value $.01 a share, or such other class or kind of shares or other securities resulting from the application of Section 6. 2.7. "Company" means The Carbide/Graphite Group, Inc., a Delaware corporation, or any successor corporation. 2.8. "Committee" means the committee designated by the Board to administer the Plan under Section 4 or, in the absence of such designation, the Board of Directors. 2.9. "Disability" means termination of membership on the Board of Directors of the Company as a result of a Non Employee Director's inability to perform substantially his or her duties and responsibilities as a director by reason of a physical or mental disability or infirmity (i) for a continuous period of six months or (ii) at such earlier time as such Employee submits medical evidence satisfactory to the Committee that such Employee has a physical or mental disability or infirmity that will likely prevent such Employee from substantially performing his or her duties and responsibilities for six months or longer. The date of such Disability shall be the earlier of the last day of such six-month period or the day on which such Employee submits such evidence. 2.10. "Non Employee Director" means a member of the Board of Directors of the Company who is not an officer or employee of the Company, but the furnishing of consulting services or advisory services for compensation to the Company, a Subsidiary or an Affiliate, shall not be construed to constitute a director as an employee. 2.11. "Fair Market Value" means, on any given date, (i) the mean between the highest and lowest prices of actual sales of shares of Common Stock on the principal national securities exchange on which the Common Stock is listed on such date or, if Common Stock was not traded on such date, on the next preceding day on which the Common Stock was traded or (ii) if the Common Stock is listed on the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), the mean between the bid and asked price at the close of business on such day. 2.12. "Holder" means a Non Employee Director to whom an Award is made. 2.13. "1934 Act" means the Securities Exchange Act of 1934, as amended. 2.14. "Non Qualified Option" means a stock option not intended to be an incentive stock option within the meaning of Code (S) 422, and designated as a Non Qualified Option. - 2 - 2.15. "Option" means any stock option granted from time to time under the Plan. 2.16. "Plan" means The Carbide/Graphite Group, Inc. Non Employee Director Stock-Based Incentive Compensation Plan herein set forth, as amended from time to time. 2.17. "Subsidiary" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company (or any subsequent parent of the Company) if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 3. Eligibility ------------ All Non Employee Directors are automatically eligible to receive Awards. 4. Administration of Plan ---------------------- It is intended that all Awards pursuant to this Plan be formula awards within the meaning of Rule 16b-3(c)(2)(ii) under Section 16 of the Exchange Act, and the Plan shall be applied and operated to effect that intent. To the extent that recordkeeping and other ministerial functions must be performed to administer and operate the Plan properly, either the Board or a committee appointed by the Board consisting of not fewer than two individuals shall perform such administrative functions. The Board shall have the discretion to remove and appoint members of the committee from time to time. 5. Grants of Awards Under the Plan ------------------------------- 5.1. Grant of Awards. Each Non Employee Director who is a member of --------------- the Board of Directors on August 26, 1996 shall be granted: (x) an option to purchase 1,700 Shares at the Fair Market Value of the Common Stock on August 26, 1996; provided that such option may not be exercised and shall not vest unless such Non Employee Director is a member of the Board on July 31, 1997; (y) so long as he is a Non Employee Director on July 31, 1997, an option to purchase 1,700 Shares at the Fair Market Value of the Common Stock on July 31, 1997; provided that such option may not be exercised and shall not vest unless such Non Employee Director is a member of the Board on July 31, 1998; and (z) so long as he is a Non Employee Director on July 31, 1998, an option to purchase 1,700 Shares at the Fair Market Value of the Common Stock on July 31, 1998; provided that such option may not be exercised and shall not vest unless such Non Employee Director is a member of the Board on July 31, 1999. Each Non Employee Director who is elected or appointed to the Board for the first time subsequent to August 26, 1996, shall be granted: (x) an option to purchase 1,700 Shares - 3 - at the Fair Market Value of the Common Stock on the date such additional Non Employee Director becomes a member of the Board; provided that such option may not be exercised and shall not vest unless such Non Employee Director is a member of the Board on the July 31st next following the date of grant (the "First Vesting Date"); (y) so long as he is then a Non Employee Director, an option to purchase 1,700 Shares at the Fair Market Value of the Common Stock on the First Vesting Date; provided that such option may not be exercised and shall not vest unless such Non Employee Director is a member of the Board on the first anniversary of the First Vesting Date; and (z) so long as he is then a Non Employee Director, an option to purchase 1,700 Shares at the Fair Market Value of the Common Stock on the first anniversary of the First Vesting Date; provided that such option may not be exercised and shall not vest unless such Non Employee Director is a member of the Board on the second anniversary of the First Vesting Date. Options granted hereunder shall have a term of ten years from the date of grant. 5.2. No Reduction in Shares. Any shares issued by the Company ---------------------- through the assumption or substitution of outstanding grants from an acquired company shall not reduce the shares available for Awards under the Plan. Any shares issued hereunder may consist, in whole or in part, of authorized and unissued shares or treasury shares. If any shares subject to any Award granted hereunder are forfeited or such Award otherwise terminates without the issuance of such shares or the payment of other consideration in lieu of such shares, the shares subject to such Award, to the extent of any such forfeiture or termination, shall again be available for Awards under the Plan. 5.3. Restriction on Transferability. No Option shall be transferable ------------------------------ otherwise than by will or the laws of descent and distribution and, during the lifetime of the Holder, shall be exercisable only by the Holder. Upon the death of a Holder, the person to whom the rights have passed by will or by the laws of descent and distribution may exercise an Option only in accordance with this Section 5. 5.4. Payment of Option Price. The Option price of the shares of ----------------------- Common Stock upon the exercise of an Option shall be paid in full (i) in cash at the time of exercise, (ii) in whole or in part in shares of Common Stock valued at Fair Market Value or (iii) in whole or in part by the delivery of additional, unexercised Non Qualified Stock Options (based on the difference between the Fair Market Value of the Common Stock for which they are exercisable and the exercise price of such additional Non Qualified Stock Options). 5.5. Termination by Death. If a Non Employee Director's service as a -------------------- director of the Company terminates by reason of death, any Option held by such Non Employee Director may thereafter be exercised to the extent such Option was exercisable at the time of death by the legal representative of the Holder or by any person to whom the rights have passed by will or by the laws of descent and distribution, for a period of - 4 - one year from the date of such death or until the expiration of the stated term of such Option, whichever period is shorter. 5.6. Termination by Reason of Disability. If a Non Employee ----------------------------------- Director's service as a director of the Company terminates by reason of Disability, any Option held by such Non Employee Director may thereafter be exercised by the Non Employee Director (or, where appropriate, the Non Employee Director's legal representative) to the extent it was exercisable at the time of termination for a period of 18 months from the date of such termination of employment or until the expiration of the stated term of such Option, whichever period is shorter; provided, however, that if the Non Employee Director dies within such 18 month period, any unexercised Option held by such Non Employee Director shall thereafter be exercisable to the extent to which it was exercisable at the time of death for a period of 12 months from the date of such death or until the expiration of the stated term of such Option, whichever period is shorter. 5.7. Other Termination. If a Non Employee Director's service as a ----------------- director of the Company terminates for any reason other than death or Disability, the Option shall be exercisable, to the extent otherwise then exercisable, for the lesser of three months from the date of such termination or the balance of such Option's term, after which such Option will terminate. 6. Adjustments Upon Changes in Capitalization ------------------------------------------ In the event of a reorganization, recapitalization, stock split, spin- off, splitoff, split up, stock dividend, combination of shares, merger, consolidation or any other change in the corporate structure of the Company affecting Common Stock, or a sale by the Company of all or part of its assets, or any distribution to stockholders other than a cash dividend, the Board shall make appropriate adjustment in the number and kind of shares authorized by the Plan and any adjustments to outstanding Awards as it determines appropriate. No fractional shares of Common Stock shall be issued pursuant to such an adjustment. The Fair Market Value of any fractional shares resulting from adjustments pursuant to this Section shall, where appropriate, be paid in cash to the Holder. 7. Effective Date, Termination and Amendment ----------------------------------------- The Plan shall become effective on August 26, 1996. The Plan shall remain in full force and effect until the earlier of August, 2006 or the date it is terminated by the Board. The Board shall have the power to amend, suspend or terminate the Plan at any time; provided, however, that this Plan shall not be amended more than once in any 6 month period, other than to comport with changes in the Code. 8. Execution and Delivery of Stockholders Agreement ------------------------------------------------ - 5 - Unless otherwise determined by the Committee or the Board of Directors, as the case may be, no shares of Common Stock shall be issued or transferred pursuant to an Award unless and until the Holder, or any person to whom rights have passed by will or by the laws of descent and distribution, has executed and delivered to the Company or the Committee or the Board of Directors, as the case may be, the Stockholders Agreement, dated May ___, 1995, by and among the Company and the Management Stockholders named therein. 9. Non-Assignability ----------------- Awards may not be pledged, assigned or transferred for any reason during the Holder's lifetime, and any attempt to do so shall be void and the relevant Award shall be forfeited. 10. General Provisions ------------------ 10.1. No Right to Position. Nothing contained in the Plan, or any -------------------- Award granted pursuant to the Plan, shall confer upon any Non Employee Director any right with respect to continuance of service as a director of the Company. 10.2. Governing Law. To the extent that Federal laws (including, but ------------- not limited to, the 1934 Act, the Code and the Employee Retirement Income Security Act of 1974, as amended) do not otherwise control, the Plan and all determinations made and actions taken pursuant hereto shall be governed by the laws of the State of Delaware and construed accordingly. 10.3. Compliance with Law. No shares of Common Stock shall be issued ------------------- or transferred pursuant to an Award unless and until all applicable requirements imposed by Federal and state securities and other laws, rules and regulations and by any stock exchange upon which the Common Stock may be listed have been met. The Company may require the Holder to take any reasonable action to meet such requirements. The Plan is intended to conform to the requirements of a "formula plan" pursuant to Section 16(b) of the Securities Act of 1934 and the Rules and Regulations thereunder and any provisions of the Plan which are inconsistent with such requirements are void and of no effect. 11. Change in Control ----------------- Notwithstanding any other provision of the Plan to the contrary, upon the occurrence of a Change in Control all outstanding Options shall become immediately exercisable and shall remain exercisable for 30 days following the involuntary termination of the Non Employee Director's service as a member of the Board of Directors of the Company (other than for cause, which shall mean misappropriation of funds, habitual insobriety, substance abuse, conviction of a crime involving moral turpitude, willful and - 6 - material misrepresentation to the directors of the employer or gross negligence in the performance of duties having a material adverse effect on the business, operations, assets, properties or financial condition of the employer) within 18 months following such Change in Control. - 7 - THE CARBIDE/GRAPHITE GROUP, INC. NON EMPLOYEE DIRECTOR STOCK-BASED INCENTIVE COMPENSATION PLAN (Effective August 26, 1996) TABLE OF CONTENTS ----------------- 1. Purpose of the Plan........................ 1 2. Definitions................................ 1 2.1. "Affiliate".......................... 1 2.2. "Award".............................. 1 2.3. "Board".............................. 1 2.4. "Change in Control".................. 1 2.5. "Code"............................... 1 2.6. "Common Stock"....................... 2 2.7. "Company"............................ 2 2.8. "Committee".......................... 2 2.9. "Disability"......................... 2 2.10. "Non Employee Director"............. 2 2.11. "Fair Market Value"................. 2 2.12. "Holder"............................ 2 2.13. "1934 Act".......................... 2 2.14. "Non Qualified Option".............. 2 2.15. "Option"............................ 2 2.16. "Plan".............................. 2 2.17. "Subsidiary"........................ 3 3. Eligibility................................ 3 4. Administration of Plan..................... 3 5. Grants of Awards Under the Plan............ 3 5.1. Grant of Awards...................... 3 5.2. No Reduction in Shares............... 3 5.3. Restriction on Transferability....... 4 5.4. Payment of Option Price.............. 4 5.5. Termination by Death................. 4 5.6. Termination by Reason of Disability.. 4 5.7. Other Termination.................... 4 6. Adjustments Upon Changes in Capitalization. 4
i 7. Effective Date, Termination and Amendment... 5 8. Execution and Delivery of Stockholders Agreement................................... 5 9. Non-Assignability........................... 5 10. General Provisions.......................... 5 10.1. No Right to Position........................ 5 10.2. Governing Law............................... 5 10.3. Compliance with Law......................... 5 11. Change in Control........................... 6
ii EX-10.30 4 FY 1997 INCENTIVE BONUS PLAN FOR EXECUTIVES Exhibit 10.30 FY 97 INCENTIVE BONUS PLAN FOR EXECUTIVES 1. Within the executive plan, there shall be three targeted levels of incentive as follows: a. 30% of base pay for senior management; b. 20% for other officer level executives; and c. 10% for key managers. 2. The plan is based on EBITDA target. For FY 97, that target is $45.68 million. 3. The maximum payout is double the targeted levels (item 1). The EBITDA to reach that maximum is $50.90 million. 4. The payout progresses linearly between the target and maximum (see attached sheet for examples). 5. The "near-miss" provision provides a payout of one-half targeted levels. To achieve the "near-miss" an EBITDA of $44,340,000 must be achieved. 6. The Board retains discretion to modify the payout for windfalls, unexpected adversities, etc. PROJECTED BONUS PAYOUTS AT VARIOUS LEVELS OF EBITDA:
NEAR MISS TARGET LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5 MAXIMUM - --------------------------------------------------------------------- EBITDA 44.34 45.68 46.83 47.98 49.13 50.28 50.90 ($/Mil) - --------------------------------------------------------------------- BONUS 0.34 0.68 0.83 0.98 1.13 1.28 1.36 ($/Mil) - ---------------------------------------------------------------------
EX-10.31 5 SUPPLEMENTAL EXECUTIVE SAVINGS PLAN HIGHLIGHTS Exhibit 10.31 The Carbide/Graphite Group, Inc. Supplemental Executive Savings Plan Highlights Brochure CONTENTS Introduction 2 The Supplemental Executive Savings Plan 2 Eligibility and Enrollment 3 Building Your Plan Account 4 Tax Considerations 5 Vesting 5 Distributions from the Plan 5 Account Statements 6 A Final Word About the Supplemental Executive Savings Plan 6 This brochure describes the key features of the Supplemental Executive Savings Plan. If you have any questions about the plan that this brochure does not answer, please contact the Plan Administrator, Walter Damian, Vice President of Human Resources at (412) 562-3783. 1 INTRODUCTION The Carbide/Graphite Group, Inc. has adopted the Supplemental Executive Savings Plan for certain select highly compensated employees, executives and directors. This plan is a supplement to the Company's Savings Plan which is maintained for all Company employees. As a selected participant, you will be permitted the opportunity to defer receipt of compensation and save amounts on a tax-deferred basis. THE SUPPLEMENTAL EXECUTIVE SAVINGS PLAN AT A GLANCE The Supplemental Executive Savings Plan allows you to defer compensation in excess of the amounts allowed to be deferred under The Carbide/Graphite Group Savings Plan. You are always fully vested in your Supplemental Executive Savings Plan. There is no vesting schedule which would cause deferred compensation to become forfeitable. Your savings grow on a tax-deferred basis until you receive a distribution from the plan. You are able to choose a payment form that best fits your individual situation. Your beneficiary is eligible to receive a benefit from the plan if you die. 2 THE SUPPLEMENTAL EXECUTIVE SAVINGS PLAN ELIGIBILITY AND ENROLLMENT You are eligible to participate in the Supplemental Executive Savings Plan if you have been selected by the Compensation Committee of the Board of Directors to participate. Selection is made on an annual basis. To participate, you must complete an enrollment form. On the form, you will: Choose how much compensation you want to defer for the year Authorize the Company to make salary and/or bonus reductions Designate a beneficiary to receive the value of your plan account if you die. You may change your beneficiary(ies) at any time by completing a new enrollment form. If you do not name a beneficiary to receive your plan account, your account will be distributed to your estate. Keep in mind that your participation in the Supplemental Executive Savings Plan is completely voluntary. You can participate regardless of whether you save under the Savings Plan. Except for unique circumstances which are described in the Plan, once you make an election for a calendar year, you cannot change or stop your contributions during the year. 3 BUILDING YOUR PLAN ACCOUNT Under the Supplemental Executive Savings Plan, your account can grow in several ways. Your Deferrals You can contribute to the supplemental savings plan in two ways: Salary or Director Fee Deferral. You can save any whole percentage or dollar amount of your base salary (or if applicable, director fees), and Bonus Deferrals. You can save any whole percentage or dollar amount of your bonus. For purposes of determining your salary deferrals, base salary means your salary before any contributions to the Company's Savings Plan or the Section 125 cafeteria plan. Your supplemental savings under this plan are not matched by the Company. Investment Growth Your supplemental savings plan account should increase through investment growth. The Company has established a trust fund which will offer you the choice of different funds for investing your deferrals. The Company has established an investment arrangement with the Pacific Select Fund. The Pacific Select Fund is the underlying investment vehicle for the separate accounts funding Pacific Mutual's variable universal life insurance products. The Company's arrangement with Pacific Mutual allows Plan funds to be invested in any of six separate portfolios, as follows: Portfolio Manager Managed Bond PIMCO Government Securities PIMCO Growth Capital Guardian Growth LT Janus Multi-Strategy J.P. Morgan Investment International Templeton The Plan Administrator can provide you with prospectuses for each of these funds upon request. During each annual enrollment period, you will decide the level of your deferrals for the next calendar year. You will also have a chance to establish and change the investment mix of your existing account balance. 4 TAX CONSIDERATIONS Your contributions to the Supplemental Executive Savings Plan are deducted from your paycheck before income taxes are withheld. In addition, the compensation you defer, as well as any investment gains on that money, grows tax-deferred. In other words, you will not pay income taxes on your account value until you receive your benefits from the plan. However, you will pay Social Security taxes on your deferred compensation at the time it is credited to your account. These taxes will be deducted from each paycheck. VESTING You are always 100% vested in your plan account. DISTRIBUTIONS FROM THE PLAN You or your beneficiary will receive your plan account when you: Cease to be an employee of the Company, Retire pursuant to the retirement provisions of the Company's Savings Plan, Become permanently disabled, or Die. Distributions will be made as soon as administratively possible following the end of the month in which one of these events occur. Unlike the Savings Plan, you cannot roll over supplemental savings plan funds into an IRA or any other qualified savings vehicle. In addition, you cannot borrow money from your account. How Benefits Are Paid Your plan account is normally paid to you or your beneficiary in a single lump sum, unless you elect installment payments over a number of years. Important Note: If you wish to have your account paid to you in installments, or if you wish to defer the date your payments begin, you must make your election at least 12 months prior to termination of employment or retirement. Because of tax law considerations, the Supplemental Executive Savings Plan cannot consider any elections you make as to how you want to receive your plan benefits within the last 12 months of your employment. However, this restriction does not apply to any election you make regarding how you want your surviving beneficiary to receive your plan benefits should you die while employed by the Company. 5 ACCOUNT STATEMENTS You'll receive an account statement at least once each year that will show how much money you've contributed to the Supplemental Executive Savings Plan and the earnings (or losses) credited to your account for that period. A FINAL WORD ABOUT THE SUPPLEMENTAL EXECUTIVE SAVINGS PLAN The Supplemental Executive Savings Plan is a non-qualified plan. Although the Company has established a trust for the plan, these non-qualified plan assets will be subject to the claims of general creditors of Carbide/Graphite. This brochure describes certain key features of the Carbide/Graphite Supplemental Executive Savings Plan but is subject to the terms of the plan document. Where this brochure and the official plan document vary in the description of the plan, the plan document is the final authority. Carbide/Graphite intends to continue the plan indefinitely, but reserves the right to change or terminate the plan at any time by action of its board of directors or persons authorized by its board of directors. The language in this brochure does not imply a contract or assurance of employment or compensation. 6 EX-10.38 6 AGREEMENT WITH LOCAL UNION 3-556 Exhibit 10.38 AGREEMENT This agreement entered into as of 1st day of February, 1996, is entered into by and between The Carbide/Graphite Group, Inc, Carbide Unit, located at Calvert City, Kentucky, hereinafter referred to as the "Company" and the Oil, Chemical and Atomic Workers International Union, Local 3-556, for and on behalf of its members, hereinafter referred to as the "Union." ARTICLE I PURPOSE The general purpose of this agreement is to promote the mutual interest of the employer and the employees; to provide a peaceful method of adjusting differences which may arise between the parties; and to provide for the operation of the Calvert City, Kentucky Plant, of The Carbide/Graphite Group, Inc. under the methods which will, to the fullest extent, further the safety and welfare of the employees, economy of operation, elimination of waste, quantity and quality of output, cleanliness of plant and protection of property. ARTICLE II RECOGNITION 1. The Company recognizes the Union as the exclusive bargaining agent of the employees covered by this agreement as certified by the National Labor Relations Board, under date of May 4, 1954, Case 9-RC-2213. The term "employee," as used in this agreement, means all hourly rated production employees, maintenance employees, first aid employees and janitors of the Calvert City, Kentucky Plant, but excluding all office clerical employees, storekeepers (except as modified by the 12/22/93 Agreement), guards, professional employees, supervisors and chemists as defined in the act. 2. The Company will not change the classification of any employee covered hereby or the status of a classification covered hereby for the sole purpose of diminishing the certified bargaining unit. 3. Employees of the Company who are not covered by the terms of this agreement by virtue of their supervisory, clerical, or executive positions, or for other reasons set forth herein, will not perform any work for which contract wage rates are established, except in cases of emergency, or for the purpose of laying out work, or for demonstrating and instructing how work shall be done. The parties agree that the above section has been bothersome and it is the desire of both parties to establish a better understanding and relationship in connection with this problem. The parties agree to use their best efforts in good faith to improve the overall relationship in the various departments. 4. There shall be no discrimination because of race, color, creed, sex, age, national origin, Vietnam era veteran, or disabled Vietnam era veteran status. The term "he," "his," or "man" as used in this agreement shall apply to both male and female employees. The Company and Union further agree to comply with the terms of the Americans with Disabilities Act of 1992 and in the event there is a question as to the application of the terms of the law, the Union and Company shall meet to discuss the matter. It is recognized that employees may need to waive their right to confidentiality to the extent necessary for the Company and Union to discuss 2 the matter as it may apply to seniority. ARTICLE III UNION SHOP 1. All employees within the bargaining unit are required to become members of the Union on and after the thirtieth (30th) day following the date of execution of this agreement and remain members of the Union as a condition of employment. New employees are required to become members of the Union on and after the thirtieth (30th) day following the date of employment and thereafter remain members of the Union in good standing as a condition of continued employment, provided, however, any employee shall be deemed to have such membership in the Union if the employee has paid or tendered the initiation fee and dues uniformly required as a condition of such membership, to the Union or its treasurer. 2. During the life of this agreement and in accordance with the provisions of the Labor Management Relations Act of 1947, and in accordance with the "Authorization of Checkoff of Dues" forms hereinafter set forth, and to the extent permitted by the law of the applicable jurisdiction, the Company agrees to deduct Union Membership dues levied in accordance with the Constitution and By-Laws of the Local Union from the first pay of each employee who executes or has executed the following "Authorization for Checkoff of Dues" form. Date:__________________________ I, ____________________, Clock No. _________, hereby assign to Oil, Chemical and Atomic Workers International Union, A.F.L.-C.I.O., Local 3-556, from any wages earned or to be earned 3 by me as your employee, the appropriate monthly dues and initiation fees in such amount as may hereafter be established by the Union and become due to it, as my membership dues in said Union. I authorize and direct you to deduct such amount from my first pay for each month and to remit same to the Union. This assignment, authorization and directive shall become operative contemporaneous with the effective date of the new collective bargaining agreement between the Employer and Union. This assignment, authorization and directive shall be irrevocable for the period of one (1) year, or until the termination of the said new collective agreement between the Employer and the Union, whichever occurs sooner; and I agree and direct that this assignment, authorization and directive shall be automatically renewed and shall be irrevocable for successive periods of one (1) year or for the period of such succeeding applicable collective agreement between the Employer and the Union, whichever shall be shorter, unless written notice is given by me to the Employer and the Union within fifteen (15) days prior to the expiration of each period of one (1) year, or the expiration of such applicable collective agreement between the Employer and the Union, whichever occurs sooner. Signature____________________________________ Witness__________________________________________________________ 4 ARTICLE IV MANAGEMENT CLAUSE 1. The management of the plant and the direction of the working forces and the operations in the plant, including the hiring, promoting, transferring and retiring of employees; the suspension, discharging, or otherwise disciplining of employees; the laying off and calling to work of employees in connection with any reduction or increase of the working forces; the scheduling of work and the control and regulation of the use of all equipment and other property of the Employer; and all matters not specifically covered by this agreement are the exclusive functions of management. In the exercise of all the above functions, the management shall not act contrary to the provisions of this agreement. 2. No employee shall engage in any Union activities on Company property during working hours, or in any manner which shall interfere with production, except as provided in the Article on Grievance Procedure. 3. It is understood and agreed that the Company, subject to the provisions of Article XIV has the right to discipline or discharge any employee for any just cause, failure or refusal to comply with any of the provisions of this agreement, and violation of any reasonable published or posted rules. 5 ARTICLE V HOURS OF WORK & OVERTIME Hours of Work ------------- 1. The standard work week shall begin at 11:00 p.m. on Saturday night and end on the following Saturday night at 11:00 p.m. and shall normally consist of five (5) days of work and two (2) off days for each employee. The work day shall be from 11:00 p.m. to 11:00 p.m. Where production requires continuous operation twenty-four (24) hours per day, the day will be made up of three (3) shifts and each shift will consist of eight (8) continuous hours. The normal starting time for shift employees is number three (3) shift 11:00 p.m., number one (1) shift 7:00 a.m., and number two (2) shift 3:00 p.m. The normal work time for day workers not on continuous operation is from seven (7:00) a.m. to three-thirty (3:30) p.m. There shall be a thirty (30) minute non-paid lunch period scheduled at the middle of the shift. Overtime -------- 2. All work in excess of eight (8) hours in the twenty-four (24) hour period after an employee starts to work shall be paid for at the rate of time and one-half. Exception to this instance would be when an employee makes a regular scheduled change of shifts or when the change is made at the request of the employee. All work in excess of forty (40) hours in any work week shall be paid for at the rate of time and one-half; provided, however, that the employee will not be paid both daily and weekly overtime for the same hours of overtime work. 3. Time and one-half will be paid for all hours worked on the sixth (6th) consecutive day in a work week when eight (8) full hours have been worked or credited on each of the five (5) days preceding the sixth (6th) day. Overtime pay for the sixth (6th) day will be reduced by 6 the number of hours less than eight (8) worked or credited on any of the five (5) days preceding the sixth (6th) day. Doubletime will be paid for all hours worked on the seventh (7th) consecutive day in a work week when eight (8) full hours have been worked or credited on each of the six (6) days preceding the seventh (7th) day. Overtime pay for the seventh (7th) day will be reduced by the number of hours less than eight (8) worked or credited on any of the six (6) days preceding the seventh (7th) day. When an employee starts a 24-hour period on the sixth (6th) day which extends into the seventh (7th) work day of the work week, the employee shall be paid for all hours worked on the seventh (7th) day at doubletime provided the employee worked or was credited eight (8) hours on the sixth (6th) day as set forth above. Should an employee be sent home by the Company after working a part of a shift due to lack of work, the remainder of the shift not worked will be counted in calculating sixth (6th) and seventh (7th) day overtime. 4. Hours worked in one work week will not be used in calculating sixth (6th) and seventh (7th) day overtime in any other week. Any pay for hours not worked are not counted in calculating overtime unless specifically set forth in this agreement. The rates set forth in Schedule A are the regular rates as that term is used in the Fair Labor Standards Act. Only those rates shall be used in the calculation of overtime, except that night shift differentials shall be included for this purpose. 7 5. Employees who work overtime shall not be required to take time off during that payroll week other than regular scheduled time off. No employee will work overtime without the authorization of his/her supervisor. 6. The following Union time will be counted as working time for the purpose of qualifying for overtime only: (a) Normal Union meetings (i.e., membership meetings); (b) Arbitration; (c) Negotiation. (d) Mediation. 7. This article is intended to provide a basis for calculating overtime and shall not be construed as a guarantee of hours of work per day or per week. 8. An overtime list will be posted for each job overtime group, showing the amount of overtime worked by each employee. This list will be used as a basis for overtime distribution. The Company must necessarily use the available employee for overtime and thus the equalization will take place over selected periods of time. The Union recognizes that the Company can only carry out this principle if all employees cooperate by working overtime when required. In the event an employee has placed his/her card in the "preferred" rack and the employee is then bypassed for overtime, the employee will be paid the applicable rate for which he/she was bypassed. Since the employee from the "preferred" rack is paid for the overtime, the employee shall be charged with the appropriate number of overtime hours. 8 If the employee's card is in the "non-preferred" overtime rack, and the employee is then bypassed, the employee will be paid the premium portion of the pay which would have been earned had such employee worked: (a) time and one-half bypass receives half time premium. (b) doubletime and one-half bypass receives time and one-half premium. (c) call-in pay receives two hours pay or the premium for the time worked. 9. In order to expedite the allocating of overtime opportunities, the following procedure will be followed: (a) In each department suitable name card racks will be provided labeled "Prefer Overtime" and "Do Not Prefer Overtime." (b) Each employee will place his/her name card in the rack of his/her preference. If the preference of any employee changes, the employee may move his/her name card to the appropriate rack and notify his/her Supervisor; however, such change shall not be made during the last three (3) hours of the shift the employee is working. (c) When overtime is worked by anyone who has placed his/her card in the "Prefer Overtime" rack, an equal number of hours will be credited to each person in that overtime group who has not placed his/her card in the "Prefer Overtime" rack and has less overtime hours worked and/or credited to him/her. If more than one (1) employee works overtime, the amount to be credited will be only those hours worked 9 by the person who worked the most overtime that instance. (d) Each time an employee places his/her overtime card in the Preferred Overtime rack, his/her hours will be credited to the high hours plus one (1). 10. In order to further expedite the administration of overtime, the following procedure provides a method for administering overtime in the various job groups. A. Overtime in all groups will be administered in accordance with the following procedure: I. If the overtime requirements are known more than eight (8) hours prior to the overtime shift, but not more than three (3) days, you will: (a) Assign the overtime to employees in the job groups for which overtime is needed that have their cards in the "Preferred Overtime" rack beginning with the employee with the least amount of overtime hours worked or credited. This will not negate the prescheduled employee's overtime opportunities that may occur prior to the prescheduled overtime nor will it change the employee's prescheduled overtime. (b) Offer the overtime to any employees in the job groups for which 10 overtime is needed that have their cards in the "Non-Preferred Overtime" rack. (c) Referring to the Furnace Department only, when the above overtime procedures for the Furnace Job Groups (3, 3A, or 4) have been exhausted, the Company will offer the overtime to other Furnace Department employees in the following manner: (d) Overtime & Progression - See Addendum A dated May 19, 1993. II. If the overtime requirements are realized eight (8) hours or less prior to the overtime shift, you will: (a) Assign the overtime to the employees in the job groups that are on duty and have their cards in the "Preferred Overtime" rack beginning with the employee with the least amount of overtime hours worked or credited, and if additional employees are needed, (b) Offer the overtime to any employees that are on duty in the job groups for which overtime is needed that have their cards in the "Non-Preferred Overtime" rack. (c) Referring to the Furnace Department only, when the above overtime procedures for the Furnace Job Groups (3, 3A, or 4) have been 11 exhausted, the Company will offer the overtime to other Furnace Department employees in the following manner: (d) Overtime & Progression - See Addendum A dated May 19, 1993. B. Yard employees that are assigned into the various departments on a weekly group change will be given equal overtime opportunities. Upon entering the department, Yard employees will be credited with the highest overtime hours that any permanent employee has, plus an additional four (4) hours. Each time a Yard employee changes departments, the above will apply. Yard employees working in production departments on daily assignments will be eligible for overtime in the Yard department only. Overtime lists will be maintained separately for Yard, Truck Drivers, Storekeeper, and Janitor employees. (a) Yard overtime will first be offered to the Yard employees. If additional help is needed, the overtime will be offered to the Truck Drivers and Storekeeper. (b) Truck Driving overtime will first be offered to the Truck Drivers. If additional help is needed, the overtime will be offered to the Yard employees. (c) Janitor overtime will first be offered to the Janitors. If additional help is needed, the overtime will be offered to the Yard employees. 12 (d) Storeroom overtime will first be offered to the Storekeeper if additional help is needed. Overtime will then be offered to the Truck Drivers. C. Overtime Maintenance (a) Overtime in Group #1 will be administered on the basis of primary skills. The three (3) primary skills will be grouped for the purpose of distributing overtime as indicated below: 1. General Maintenance and Welders; 2. Mechanics; 3. Operators. All three (3) of these classifications will have separate overtime racks. If additional manpower is needed in the above three (3) classifications, the Company will follow the overtime procedure for the other classifications. (b) Overtime in Group 1A will be administered on the basis of primary skills as listed below: 1. Electricians 2. Instrument Mechanic Addendum "B" identifies those items which are considered to be instrument work of a call-in nature, however instrument work on the off shifts (of a non- 13 call-in nature) can be performed by a qualified on duty electrician. Work assignments as defined by this paragraph shall apply only to overtime assignment and shall not be construed to involve any other work assignment. (c) If the overtime opportunities are limited to one shift, only those employees on that shift that have their cards in the "Non-Preferred Overtime" rack, who have less overtime hours worked or credited than the employee who worked overtime will be credited; however, if the overtime opportunity is expanded to include all shifts, then all employees on all shifts with cards in the "Non-Preferred Overtime" rack with less overtime hours worked or credited than the employee who worked overtime will be credited. 11. In emergency callouts, the qualified employees in each overtime group who have placed their name cards in the "Preferred Overtime" rack and who have the lowest number of hours worked and/or credited will be called providing they have left their telephone number at the Personnel Department. 12. Before an employee works more than sixteen (16) hours, it must be agreed to by the employee and the Company. In case an employee works more than sixteen (16) hours, the employee will receive two (2) times his/her straight time rate for all hours worked over sixteen (16). If an employee is sent home during his/her regular scheduled shift after completing sixteen (16) continuous hours, the employee shall be paid for the balance of his/her regular scheduled shift that is not worked at the employee's regular straight time rate. 14 13. Employees absent for thirty (30) days or more except for vacation or sick leave will, upon return to work, be credited with hours equal to the employee with the highest hours in the job group. 14. Employees on light or restricted duty will not be allowed to work any overtime (NOTE: The sixth scheduled day for a swing worker is not considered overtime for this purpose). ARTICLE VI WAGE RATES 1. Wages shall be paid in accordance with Schedule "A" which is attached hereto and is a part of this contract. 2. Each employee will be paid once each week on Thursday after 2 p.m. It is recognized that in weeks in which a holiday falls or is observed on Monday, Tuesday, or Wednesday, unusual circumstances might prevent the Company from doing the above. In that event, the Company will post a notice to that effect as soon as the circumstances are known. 3. Employees working on a shift basis will receive a premium of forty (40) cents per hour for the second (2nd) shift starting at 3:00 p.m. and ending at 11:00 p.m. and forty-five (45) cents per hour for the third (3rd) shift starting at 11:00 p.m. and ending at 7:00 a.m. If such employees are required to work during a scheduled non-paid lunch period, they shall be paid for such time worked at the rate of time and one- half and shall be allowed sufficient 15 time to eat their lunch when the job is completed or when they can be relieved. For the purpose of applying shift premiums, all hours worked by an employee during the employee's work day are considered as worked on the shift on which the employee is scheduled to start work and does work, except: (a) If scheduled for the first or second shifts and the employee completes his/her regular turn on those shifts and continues to work for four (4) or more hours into the next shift, the employee will be paid for shift premium for the next shift, for all hours worked on it. Hours under four (4) worked in the succeeding shift do not carry the premium of that shift but do carry the premium of the shift on which the employee started. (b) If scheduled for the third shift and the employee completes his/her regular turn, continuing to work into the first shift, the employee will be paid the third shift premium for all hours worked on the first shift. (c) If the employee completes his/her regular shift and after leaving the plant is called back within the same work day, the employee will receive the applicable shift premium for the hours worked. 4. An employee temporarily transferred from a higher rate job to a lower rate job shall receive the higher rate and an employee on a lower rated job, temporarily transferred to a job paying 16 a higher rate, shall receive the higher rate while so employed. 5. Whenever a new job is started or an old job substantially changed so as to make it a new job, the Company shall discuss the subject with the Union, before fixing or changing the rate. The decision by the Company may be made subject to the Grievance Procedure. 6. Approved rate changes will become effective on Sunday following the eligibility date. An employee shall be promoted from one classification to another when capable of performing the work of the classification. 7. Yard employees working in any production cleanup area will be paid Group Four (4) rate. 17 ARTICLE VII SHIFT TRADING Employees may trade shifts with other employees in the same job classification on a temporary basis not exceeding four (4) weeks, or on a permanent basis. Employees may also trade off days in any one week. These trades will be permitted provided the employees can arrange the trade themselves and it has the prior approval of their supervisor. Maintenance Department Group Trades - In Job Group 1, any employee may trade work schedule groups with another employee in the same crew provided both have the same primary skill classification. In Job Groups 1 and 1A, the trades will be made after the posting of the normal schedule for the period in which the trade is to become effective. Such trades shall not exceed the normal schedule period for these groups. A trade of shifts which interferes with the posted vacation schedule will not be permitted. If a trade is made that interferes, then the employees trading must reschedule their vacations. When an employee, who is involved in a shift trade, receives a new job per the bidding procedure, the employee will go to his/her new job. The other employee, who represents the other half of the shift trade will continue on the shift for which the employee has traded until the end of the trade period. 18 The employee who replaces the employee above will go to the vacancy created by the trade until the end of the trade period, at which time the employee goes to his/her permanent shift. Weekly group changed employees shall be allowed to trade with a permanent employee. Such trades shall be in accord with the terms of this Article VII. A trade of shifts or off days shall not infringe the seniority rights of other employees, shall not result in the working of more than forty (40) hours in any calendar week and shall not result in overtime premium pay. Such trades shall be in accordance with the following: May Trade With Furnace Attendant................................Furnace Attendant Tapper......................................................Tapper Desulf Operator....................................Desulf Operator Packer......................................................Packer Utility....................................................Utility Calcine Coal Attendant......................Calcine Coal Attendant Coke Attendant......................................Coke Attendant Paste Attendant....................................Paste Attendant Acetylene Attendant............................Acetylene Attendant First Aid Attendant............................First Aid Attendant Janitor....................................................Janitor General Maintenance 1C......................General Maintenance 1C 19 General Maintenance 2C......................General Maintenance 2C Welder 1C................................................Welder 1C Welder 2C................................................Welder 2C Equipment Operator 1C........................Equipment Operator 1C Electrician............................................Electrician Truck Driver..........................................Truck Driver Yard..........................................................Yard ARTICLE VIII HOLIDAYS 1. The Company recognizes the following eleven (11) holidays: New Year's Day Fourth of July Washington's Birthday Labor Day (Third Monday in Feb.) Good Friday Thanksgiving Day Memorial Day Day After Thanksgiving (Last Monday in May) Columbus Day Christmas Day (Second Monday in Oct.) Extra Christmas Day If an employee is not required to work on any of the eleven (11) holidays listed above, the employee shall receive eight (8) hours pay at his/her regular rate for such holiday. However, to be entitled to pay for a recognized holiday which is not worked, the employee must be on 20 the payroll and must have worked a major portion (four (4) hours or more) of the scheduled work day immediately before and after the holiday, unless the employee's failure to so work is due to a death in the employee's immediate family or unless the employee's failure to so work on the day before the holiday is due to an absence which has been requested in writing at least twenty-four (24) hours in advance of such absence and which request is granted by Management, or unless the employee's failure to work on the day after the holiday is due to an absence which has been requested in writing at least forty-eight (48) hours in advance of such absence and which request is granted by Management. The above language does not pertain to daily or weekly vacations. In no case shall a request be granted for both days. Also, the employee shall not have refused to work such holiday if the employee was requested or scheduled to work. 2. If an employee is required to work on any of the eleven (11) holidays listed above, the employee shall receive two and one-half (2-1/2) times his/her regular hourly rate for all hours worked on such holiday. 3. In case an employee is required to work more than eight (8) hours on any of the above holidays, such overtime shall be paid for at the rate of two and one-half (2-1/2) times his/her regular rate. 4. When a holiday falls on an employee's regularly scheduled work day, but is not worked by the employee, such holiday will be counted as a day worked for the purpose of computing overtime pay provided the employee qualified for holiday pay. When a holiday falls on an 21 employee's day off and the employee does not work, such holiday will not be counted as a day worked for the purpose of computing overtime pay. ARTICLE IX REPORTING PAY 1. An employee who reports for work at his/her designated starting time on a regular scheduled work day and has not been previously notified that there will be no work for him/her on that day (provided the employee worked the last preceding work period of his/her shift, so that notice could be given, or permission for the employee's absence was granted by his/her supervisor) will be given not less than four (4) hours work, of any type available and pay therefor, or not less than four (4) hours pay at his/her regular hourly rate. 2. This provision shall not apply in case work is not available due to fire, power breakdown or emergencies of any kind beyond the control of the Company. ARTICLE X CALL-IN PAY An employee who has completed his scheduled shift and clocked out, and is called in by the Company to perform work outside of his/her regular scheduled shift will receive not less than four (4) hours pay at straight time, or pay at the applicable rate for such hours worked, whichever is greater. ARTICLE XI VACATIONS 22 1. A regular employee is entitled to an annual vacation as follows: (a) Upon the completion of one (1) year, but less than two (2) years continuous service, one (1) week. (b) Upon the completion of two (2) years, but less than five (5) years continuous service, two (2) weeks. (c) Upon the completion of five (5) years, but less than twelve (12) years continuous service, three (3) weeks. (d) Upon the completion of twelve (12) years, but less than twenty (20) years continuous service, four (4) weeks. (e) Upon the completion of twenty (20) years, but less than twenty-five (25) years continuous service, five (5) weeks. (f) Upon the completion of twenty-five (25) years continuous service, six (6) weeks. Vacation pay will be computed by multiplying the employee's then straight time rate per hour by forty (40) hours in case of employees entitled to one (1) week's vacation and eighty (80) hours in the case of employees entitled to two (2) weeks' vacation and one hundred twenty (120) hours in the case of employees entitled to three (3) weeks of vacation and one hundred sixty (160) hours in the case of employees entitled to four (4) weeks of vacation and two 23 hundred (200) hours in the case of employees entitled to five (5) weeks of vacation and two hundred forty (240) hours in the case of employees entitled to six (6) weeks of vacation. 2. In case employment be terminated after six (6) months service has been completed, an employee shall be paid the proportionate amount of his annual vacation pay (minus vacation pay received, if any) calculated in twelfths (12ths); (maximum allowance 23/12ths) based upon completed months of service to the month in which termination occurs. Any employee separated from the payroll receiving accrued vacation pay, who is subsequently reinstated with full seniority, shall either return the accrued vacation pay at the time of reinstatement, or have it deducted from his/her next earned vacation. 3. Intermittent or continuous absence totaling more than two (2) months during the twelve (12) months preceding an employee's anniversary date of employment will cause the employee's vacation to be reduced one-twelfth (1/12) for each full month of accumulated absence in excess of two (2) months. Exceptions to this above will be made when the time lost was directly attributed to an employee having received an injury at the plant. Absences for any other reasons such as layoffs, granted leaves, etc., will not be counted as time worked in determining vacation earned. When vacation time includes a paid holiday (weekly), an additional day of vacation shall be granted. The day must be the last scheduled work day prior to the week of vacation or the first scheduled work day after the week of vacation. Vacations are to be taken in the year following the date of qualification. The qualifying date for vacations shall be the anniversary of the employee's hire date. 24 Employees who qualify for a vacation shall have one (1) year, beginning with the hire date anniversary in which to complete the vacation. One (1) week of vacation may be carried over into the next vacation year. A vacation calendar will be posted in each department and the employees shall choose vacation dates on a first-come, first-serve basis. Employees with more than two (2) weeks of vacation may elect to draw pay in lieu of time off for those eligible weeks over two (2). Vacation time paid in this manner does not count as time worked for overtime calculation purposes. It is agreed that some employee vacation may be taken in single day units. The amount of single vacation days an individual may take is governed by the following: Normal Vacation Max. No. of Single Days --------------- ----------------------- 1 or 2 Weeks 5 Days 3 Weeks or More 10 Days Normally an employee will request vacation at least a day in advance, but requests will be considered if made at least one (1) hour before start of shift. Individuals making a request after the end of their previous shift recognize they may not know 25 immediately if such request was granted. Management will attempt to answer the query as soon as possible. One-day vacations will be granted on a first-come, first-served basis. One- day vacations will not be granted for negotiated Union holidays. The Company shall have the right to limit the number of employees allowed to be off at any time in order to operate an efficient plant; however, the Company intends to grant the requests wherever practical. The maximum number of employees permitted to take vacations at any one time shall be in accordance with the following schedule:
Maximum Number Number Allowable Allowable Per Week Per Shift ------------------ --------- Calcine Coal 2 1 Electrode Paste 2 1 Electrical Maintenance 1 1 Acetylene 2 1 Mechanical Maintenance* Mechanics 1 1 Operators 1 1 General Maintenance 3 3
26 Welders Yard 2 2 First Aid 1 1 Janitors 1 1 Furnace 3 1 Pack 1 1 Desulf 1 1 Storekeeper 1 1
*The total number of employees allowed on vacation per week in this classification Group 1 will be three (3). If operations of the plant necessitate a substantial change in employment, it is mutually agreed that the allowable number of vacations will be reviewed and adjusted proportionally. Application for vacation dates shall be made verbally to the Heads of the various departments and the Department Head shall post each employee's chosen date on the vacation calendar. If the Company should decide to close the plant for repairs, maintenance, or other purposes, the Company and the Union may recommend to the employees that they take their vacations during such period that the plant is closed. For employees who have three (3) or more weeks of vacation, the Company may schedule 27 one (1) week of that vacation in the event of a plant, department, or department shift shutdown. ARTICLE XII SENIORITY 1. Seniority is based on the total length of service with the Company of an employee at the plant. The seniority of each employee is his/her relative position with respect to other employees. Exercise of seniority by employees shall depend upon qualifications to perform the work. If the qualifications of two or more employees are considered equal and they have sufficient qualifications for the work, the employee having the greatest seniority shall be given preference. 2. Seniority shall apply in filling vacancies, layoffs, transfers, recall, and polling for shift. Seniority will be administered as follows: (a) A new employee shall be considered a probationary employee for the first sixty (60) working days of employment. At the end of that period, if the employee is retained, his/her name will be placed on the seniority list and his/her seniority shall date from the date of hire. A probationary employee shall be subject to layoff, discipline, or discharge at the sole discretion of the Company. Any probationary employee rehired after a termination will have all days worked (both 28 before and after termination) counted toward the completion of the probationary period. (b) The seniority of an employee shall cease on the date of: 1. Discharge 2. Resignation, including an absence for five (5) consecutive days without notifying the Human Resource Department or Supervisor. 3. A layoff or disability leave of absence (as set forth in Section c). 4. An employee declining to return to work, or failing to return to work or make satisfactory explanation within five (5) days from the date when the registered letter of notification is postmarked when recalled. (i) A reply by the employee postmarked within the five (5) day period shall be considered to be within the time period. (ii) Written notification by registered mail to the last known address of the laid-off employee, with copy to the Union, shall constitute adequate notice under this Section. 29 (iii) Written notification of any change of address and telephone number to the Company and Union shall be the sole responsibility of the employee. (c) Any employee who is laid off or incurs a leave of absence will continue to accumulate seniority as follows after the date of layoff or leave. Up to three (3) years of service........................ 12 Months From three (3) to five (5) years of service............. 24 Months More than five (5) years of service..................... 36 Months If such employee is not recalled or in cases of disability does not return within the applicable months, as shown above, from the date of layoff or commencement of disability leave, the employee will cease to have seniority. Such seniority accumulated during a period or periods when not on the payroll will apply only in the case of filling vacancies, layoffs, recall and transfers and will not be counted as length of service for the purposes of determining vacation rights or any other benefits. (d) Employees will retain and accumulate seniority during periods of excused absence or leave of absence. (e) If an employee is transferred from one job group to another, his/her total plant seniority will be transferred. 30 (f) Where an employee is going to be absent for more than two (2) weeks, the job may be filled on a temporary basis from within the job group. If the job cannot be filled from within the job group, then it will be offered to the most senior Yard employee. In the event the employee is off one (1) year or more, the employee will, on return, displace the least senior employee in the job classification. 3. (a) When a permanent reduction in force is to be made in any production job, the employees on the job having the least amount of seniority shall be the first to be laid off from that job. Employees so laid off may displace any less senior employee in Job Groups 2, 2A, 3, 3A, 4, 5, 6, 7, 10, and 11. All displaced employees will have the same displacement rights. Any employee may displace a less senior employee in Group 10. (b) Any temporary reduction in force in any production job classification in excess of two (2) continuous months will automatically become a permanent reduction in force. 4. The Local Union President, Committeepersons, Secretary/Treasurer, and regular Stewards shall have preferential seniority in the matter of layoffs and shall be retained in their respective departments, job and shift to do any work during their tenure in office. This preferential seniority cannot be used for any other purpose. It is agreed that the number of each is as follows and the Union will currently advise the Company of the names of the various individuals: Union President................................................1
31 Secretary/Treasurer...........................................1 Committeepersons............................................ .2 Stewards....................................1 Regular Steward & ............................................1 Alternate Steward for each shift in: Paste, Acetylene, Maintenance, Yard, Pack, Furnace, Calcined Coal, Desulf and Janitor Departments.
When operations are curtailed or suspended in any production group, the Company may retain any or all of the employees in this group according to their seniority, if they so desire, for an indefinite period to do cleanup and repair work which normally falls within the limits of their ability and skill and assist in maintenance work in his/her department. 5. When a reduction in force is to be made, the following employees may be retained irrespective of seniority: An employee who by reason on special training and skill cannot be replaced satisfactorily by an employee having greater seniority. Likewise, an employee who by reason of special training and skill may be recalled out of seniority for assignments within his/her skill. It is understood that simultaneously all other employees within his/her classification will be so assigned within their skill. Prior to recalling or retaining this employee, the Company shall discuss the subject with the Union. 32 6. A permanent vacancy is said to exist in any production group when, after the employees in the group have been assigned jobs according to their seniority, there is need for a permanent addition. (a) The Company shall post on plant bulletin boards notice of permanent vacancies for seven (7) days so that interested employees may bid on such jobs. If no bids are received from active employees, the Company will recall the most senior employee on the recall list. If the most senior employee on the recall list holds a permanent job classification, he/she will not be required to forfeit his/her permanent job upon recall. He/she will be assigned from Group 10, Yard, by seniority to the job opening(s) on a weekly basis in accordance with the Yard preference procedure. When all employees have returned to their permanent jobs, the senior Yard employee at that time will be assigned to the permanent vacancy that was bid. If no one is on the recall list, the Company will hire a new employee. (b) The Company recognizes that a qualified new employee on any job will require a reasonable time to learn how to perform the job. (c) Temporary jobs filled for more than four (4) weeks will be bid as permanent with the 33 exception of vacancies created by employees away from work due to illness or injury (work or non-work related). (d) Any employee who bids on a job shall receive that job and shift. A change of shift may only occur if agreed on by the employee(s) and supervisor, or if agreed to by the Union Committee and Management for the good of the Company or employee(s). 7. The Company agrees to establish and maintain a recall listing of laid-off employees and to maintain a seniority listing showing the names of all employees in the order of their seniority ranking in the various job groups within the Personnel Office for inspection and/or copying by certified Union representatives during office working hours, and to put such list on the bulletin boards. Four (4) copies of such listings will be given to the Union for their sole and exclusive use within thirty (30) days after the effective date of this contract. Such lists mentioned in this article will be posted on the plant bulletin boards. In accordance with seniority provision of this agreement, employees on recall list will be recalled to work beginning with most senior employee in the job group and progressing until needed manpower is obtained. 8. Irrespective of Section 3 of this article which covers a permanent reduction and Section 6 which covers the filling of a permanent vacancy, the following procedure will be followed when there is a fluctuation in the level of operations. (a) In the event of a temporary reduction in force of two (2) months or less, the following shall apply: 34 1. In a partial department shut down, those employees having the least seniority in a job classification shall be reduced first. 2. Employees displaced will be assigned to the Yard. A permanent Group 10 employee (Janitors and Truck Drivers) without sufficient seniority to hold his/her job, will be reduced to Group 10 Yard Laborer. 3. Employees displaced during a temporary reduction will maintain their current rate of pay. 4. Employees without sufficient seniority to claim a job in the Yard Department shall be allowed to displace the least senior employee in job groups 2, 2A, 3, 3A, 4, 5, 6, 7, and 11 before being laid off. 5. If there are employees more senior in the Yard Department, Group 10, the senior employee in the Yard will be assigned on a weekly basis to fill the vacancy based on Yard preference procedure. (b) In other job groups, employees will be reduced according to seniority within the group and those employees reduced will go into Group Ten (10). (c) The least senior employees in Group Ten (10) will be the first to be laid off from that group and their names will be placed on the recall listing as set forth in Section 9 of this article. 35 (d) When operations are resumed, the employees will return to their jobs in the reverse order as outlined in Paragraphs (a), (b), and (c) above. Each employee will return to the job he/she held at the time the operations were reduced. 9. Maintenance: ----------- 1. 1st Class Maintenance 2nd Class Maintenance 1A. 1st Class Electrical Maintenance 2nd Class Electrical Maintenance Maintenance employees will be rated and tested on primary skills such as electrical maintenance, welding, machining, general maintenance ability, ability to run and maintain cranes and bulldozers, and other skills which the operations of the plant might require. In the best interest of efficient operations of the plant, it is the intention of the Company to utilize maintenance employees at their primary skills; however, it is agreed that maintenance employees will perform any and all types of maintenance work as directed by Management. In the assignment of work, the parties to this agreement agree that it is the responsibility of Management to assign work. It is also understood that if this responsibility is used in such a fashion to be unfair or discriminatory, the Union has the right to grieve under the grievance procedure as set forth in Article XIV. In an effort to improve operating efficiencies, employees will be permitted to do incidental work such as cleanup and minor repair work on equipment in their department, only on the back shifts and weekends. This work should not exceed 30 minutes nor require more than 36 the most basic hand tools such as pliers, screwdrivers, wrenches and hammers. This is in no way intended to relax the jurisdictional boundaries between the production and maintenance groups. In no case will this be permitted to compromise employee safety. 10. Job Groups: ---------- 1. 1st Class Maintenance 2nd Class Maintenance 1A. 1st Class Electrical Maintenance 2nd Class Electrical Maintenance 2. Desulf Operator 2A. Pack 3. Furnace Attendants and Tappers 3A. Tapper 4. Utility 5. Calcine Coal 6. Acetylene Attendant 7. Paste Attendant 8. First Aid Attendant 10. Yard: Truck Driver - Labor - Janitor - Storekeeper 11. Coke Attendant 11. Yard: ---- (a) In the assigning of Yard employees to production jobs on a week-to-week basis, the Company reserves the right to assign employees to departments in which they have experience. The senior yard employees will be assigned to the production jobs they have experience in when the need arises. 37 (b) The regular yard Steward will be the last Yard employee assigned to production work except for the Truck Drivers. (c) A permanent or temporarily reduced Group Ten (10) (Yard employee) may exercise a temporary preference for assignments in accordance with seniority into the Paste, Utility, Acetylene, Furnace, Calcine Coal, Coke, Pack, Desulf, and Janitor Department. (d) Such preferences will be made in writing in the Personnel Office no later than the 20th day of the preceding month to be effective and will become effective the first Sunday of each calendar month. (e) When such temporary preference is made, it will be for one (1) calendar month duration. (f) Once an employee exercises a temporary preference, it cannot be changed until the following month. 12. Relief Attendants: ----------------- (a) A bid will be posted for an Acetylene Attendant-Relief. This bid will be posted and any employee in the plant may bid on the opening. The successful bidder will be assigned to the Acetylene Department on a weekly basis to replace an employee on sick leave, vacation, etc. When the employee is not working at the Acetylene Department, he/she will be assigned to the Yard Department and may be group 38 changed to any other department. If a permanent Acetylene Attendant's job opens, the Acetylene Attendant-Relief will fill the permanent position. Each time the Acetylene Attendant-Relief enters the Acetylene Department, the employee's overtime hours will be credited with the highest overtime hours of the permanent Acetylene Attendant plus an additional four (4) hours and then would be eligible for overtime when working in that department on a weekly basis. If the Acetylene Attendant-Relief's job is subsequently eliminated, normal contract procedures will prevail. (b) A bid will be posted for a Temporary First Aid Attendant. This bid will be posted and any employee in the plant may bid on the opening. The successful bidder will be assigned to the First Aid Department on a weekly basis to replace an employee on sick leave, vacation, etc. The First Aid Relief may be used as extra help in the First Aid Department. He may also be used on a daily basis to fill vacancies but only after the overtime procedure for the First Aid Department has been exhausted. If the First Aid Relief is scheduled to be on duty on the vacant shift, he may be transferred to the First Aid Department to cover the shift. If the First Aid Relief is on a different schedule than the vacant shift, his regular shift will not be changed; however, the Company may request that the First Aid Relief cover the vacancy as overtime if agreed to by the First Aid Relief. When the employee is not working in the First Aid 39 Department, he/she will be assigned to their permanent position. If a permanent First Aid Attendant job opens, the Temporary First Aid Attendant will be offered such permanent opening before the First Aid Attendant's job is put up for bid. Each time the Temporary First Aid Attendant enters the First Aid Department, the employee's overtime hours will be credited with the highest overtime hours of the permanent First Aid Attendant plus an additional four (4) hours and then would be eligible for overtime when working in that department on a weekly basis. If the Temporary First Aid Attendant's job is subsequently eliminated, normal contract procedures will prevail. It is mutually understood that this agreement will become valid and all prior agreements in regard to this matter will become null and void. No employee shall be allowed to hold the First Aid Attendant position or First Aid Relief position without EMT Certificate (present incumbents grandfathered). An employee with First Aid training/experience may bid for the First Aid Attendant or First Aid Relief positions without EMT Certification. If such employee is awarded such bid, he/she will obtain EMT Certification within three (3) months. Failure to obtain such certification will result in such employee being removed from such job immediately unless extended by mutual consent of the Company and Union. 40 (c) A bid will be posted for a Temporary Desulf Relief Attendant. This bid will be posted and any employee in the plant may bid on the opening. The successful bidder will be assigned to the Desulf Department on a weekly basis to replace an employee on sick leave, vacation, etc. When the employee is not working in the Desulf Department, he/she will be assigned to the Yard Department. The employee will then take daily assignment from the Yard Department and may be group changed to any other department. If a permanent Desulf Attendant job opens, the Temporary Desulf Relief Attendant will be offered such permanent opening before the Desulf Attendant's job is put up for bid. Each time the Temporary Desulf Relief Attendant enters the Desulf Department, the employee's overtime hours will be credited with the highest overtime hours of the permanent Desulf Attendant plus an additional four (4) hours and then would be eligible for overtime when working in that department on a weekly basis. If the Temporary Desulf Attendant's job is subsequently eliminated, normal contract procedures will prevail. 13. The right of the Company to retire any employee who has attained the age of seventy (70) years is hereby acknowledged and all seniority rights granted to employees hereunder are subject and subordinate to such right. 41 ARTICLE XIII LEAVE OF ABSENCE 1. Leaves of absence without pay, for good and sufficient reasons will be granted upon request to the Company. The duration of such leaves shall not exceed thirty (30) days. 2. The Company will comply with the Family Medical Leave Act of 1993 (FMLA) in granting qualifying leaves of absence. 3. Any employee on leave of absence shall be entitled to benefits as may be in force during the period the employee is on leave of absence with the provisions of the Group Insurance Plan and Retirement Income Plan. Any employee on leave of absence which exceeds the provisions of the Group Insurance Plan and Retirement Income Plan regarding reinstatement in these plans shall be reinstated with benefits in force and provided for by the plans at the time of the employee's reinstatement. 4. Employees on sick leave for six (6) weeks or longer must present a statement from his/her doctor that he/she is physically fit. The Company may request such employee to be examined by a doctor designated by the Company at the Company's expense including four (4) hours pay for the individual. Should the doctor designated by the Company declare any employee unfit to return to work, the employee may return to his/her doctor for examination at the employee's expense. Should the doctor indicate the employee is able to work, then the two doctors shall get together to try to resolve the issue. If the two doctors cannot resolve the issue, they will select a third doctor who will resolve the issue. In such an event, the fees of the third physician shall be 42 paid by the Company. Employees will be paid four (4) hours pay in the event this occurs. ARTICLE XIV GRIEVANCE PROCEDURE AND ARBITRATION 1. Any grievance of any employee covered by the terms of this agreement, or any dispute which shall arise between the Union or its members and the Company with respect to the interpretation or application of any of the terms or provisions of this agreement, shall be determined during the term of this agreement, by the procedure set forth by this article. 2. Grievances shall be taken up for adjustment as may be necessary and in the following manner: Step 1: An employee having a grievance shall within five (5) days from the date of the discovery thereof, take the matter up with his/her supervisor, with or without a steward being present. Regardless of settlement, the grievance shall then be reduced to writing on the grievance forms provided for this purpose and submitted to the supervisor within two (2) days. Reply to be given as promptly as possible but must be given within two (2) days. Step 2: If either party decides to carry the grievance further, it shall notify the other party in writing not later than five (5) days following the decision in the first step and within five (5) days following receipt of such notification the Grievance Committee of three (3), the International Representative or his/her representative of the Union, and the aggrieved employee shall meet with the Works Manager or his/her representatives to reach settlement. Reply shall be 43 made in writing within five (5) days after such meeting. Step 3: In the event the parties are unable to resolve a grievance after having met at the prior steps, they may, by mutual agreement, present the matter to a Kentucky State Mediator who will act only in the capacity of an Advisor. The advisory opinion of the mediator shall not be final and binding on either the Company or the Union. Lost time incurred by the Union will be paid by the Company. Step 4: If not settled, the grievance shall be referred to arbitration in case written request is made by either party within fifteen (15) days after date of reply in the second step. If such request for arbitration is not made, the grievance shall be considered settled. Any grievance referred to arbitration will be waived unless it is arbitrated within thirty (30) days after the request for arbitration unless the parties mutually agree to delay the arbitration for a longer period . 3. A request may be made by either party to the Federal Mediation and Conciliation Service of Washington for the name of seven (7) arbitrators. If the seven (7) arbitrators are acceptable to both parties, one (1) of the seven (7) will be selected by the Union and the Company, both striking three (3) names. The remaining arbitrator shall hear the case and render a decision which shall be final and binding upon both parties. 44 The arbitrator shall not have the power to add to, or subtract from, or to modify any of the articles of this agreement. The expense of the arbitrator shall be shared equally by the Company and the Union. 4. If an employee is discharged and he/she feels he/she has been unjustly discharged, the matter may be submitted to Grievance Procedure, starting with the Second Step, providing the employee makes his/her claim within five (5) days after his/her discharge. 5. The periods of time as above stated in this procedure are exclusive of Saturdays, Sundays, and Holidays in all cases. 6. (a) The Union shall furnish the Company with the names of all stewards and the Grievance Committee and the Company shall recognize and deal with these representatives of the Union in settling grievances in accordance with the above procedure. (b) A Steward shall be permitted to spend a reasonable amount of time without loss of pay to assist in the adjustment of grievances within the department he/she represents by arrangement with his/her supervisor. (c) The Grievance Committee of the Union shall be permitted to spend a reasonable amount of time without loss of pay to discharge their responsibilities in Step 2 above by arrangement with their supervisor. 45 7. The time limits mentioned in this Article are specified for the purpose of expeditiously disposing of grievances and disputes, but may be extended in writing by mutual agreement. However, the waiver by the Employer or the Union of any such time limits in any case shall not constitute a waiver by the Employer or the Union of any such time limits or its right to insist on adherence thereto in any subsequent case. Failure to abide with time limits by either party forfeits the grievance. 8. The words "by arrangement with his/her supervisor" contained in (b) and (c) above shall be construed to mean that the supervisor will make such arrangement within an hour after the request unless it is mutually agreed to extend such time limits, by the Union Representative designated in the specific step and the Management person designated in that step. 9. The Union will not intentionally gut any shift in the processing of grievances. Except in the case of arbitration, the Union will expect to use all witnesses and have them available as the Union deems necessary. ARTICLE XV SAFETY AND HEALTH 1. Employees will at all times exercise safety in the operation and performance of their duties and will immediately report all injuries to the First Aid Department; and the Company will on all shifts, provide first aid equipment and supplies, together with a qualified person familiar with standard first aid practices, for the purpose of first aid to the injured. 2. The Company agrees to furnish protective helmets, goggles, fire retardant clothing, and 46 lumbar support belts. The Company expects to issue such equipment to employees and maintain such equipment, but will deduct from an employee's pay when he/she is separated from the employ of the Company, the value of any such equipment not turned back to the Company. 3. The Company will furnish all hourly rated maintenance and production employees gloves of the quality and number required for the work performed. In furnishing all the above gloves, it is understood and agreed that employees may be required to turn in their old gloves in order to receive a new pair. 4. The wearing of safety shoes is a condition of employment. If an employee so chooses, he/she may purchase shoes via a shoe vendor in the Plant and can receive up to a value of $115.00 toward the purchase price. The Company assumes responsibility to ensure that safety shoes from the shoemobile will satisfy Company requirements. The Company will pay up to $95.00 per year toward the purchase of safety shoes when employees purchase shoes from a vendor of their choice. Payment to be made in February of contract year. Employees working less than (6) months shall not be entitled to any rebate on the purchase of safety shoes. After the employee has completed six (6) months of services, the Company will refund to him/her up to $95.00 toward the purchase of safety shoes. 47 5. The Company will pay for the cost of prescription lenses for those employees who require corrective lenses in their safety goggles. Safety goggles that may become broken in the normal course of work are to be replaced without cost to the employee while safety goggles misplaced or otherwise damaged through carelessness by the employee shall be charged to the employee. When it is necessary to change lenses, the old goggles must be turned in at the Safety Office. Employees will be allowed to order prescription safety glasses from the employee's personal doctor or business of choice. The glasses must comply with plant safety standards. If so ordered, the Company will reimburse the employee the following amounts: Single Vision............ $ 60.00 Bi-Focals................ $100.00 Tri-Focals............... $120.00
These glasses will be subject to the reorder provisions of the above paragraph. 6. The Company will meet and follow OSHA standards for all OSHA mandated reports/logs, etc. 7. An employee on light duty will be paid as if he remained on his shift. In this way, he will receive shift differentials, holiday pay, and the extra scheduled day per month as received by other members of the same shift for that same period. 48 A light duty employee may be assigned such work as he/she can reasonably perform. This may involve alternatives to bargaining unit/production work. 8. A safety advisory committee shall be established consisting of up to twelve (12) members, six (6) to be selected by the Company and six (6) to be selected by the Union. Meetings may be held monthly as determined by the committee. Their duties shall be to make recommendations to the Plant Management for changes or improvements of safety. 9. Should any questions arise as to the work load of an individual or a group, then the Company agrees to discuss this matter with the Union. If the question is not settled by such conference, then it shall be referred to the grievance procedure. 10. If an employee has good reason to believe that an assigned job may involve imminent danger to life or limb, the foreman and Union Steward will be notified immediately. If the matter is not resolved, it will be taken up with the Plant Manager or his designee for the purpose of resolving the dispute. If the dispute is not then resolved, Management shall make an immediate investigation of the imminent danger complaint, including consideration as to the advisability of stopping the job pending final determination of the dispute where in the opinion of Management such action is warranted. If the decision of Management is that the job is safe, the employee must perform the assigned job. If the employee still feels an imminent danger exists, the Plant Manager or his designee and the responsible Union Safety Representative shall meet for the purpose of taking prompt action to determine whether the condition is one involving imminent danger. It is agreed that neither the Company nor the 49 Union will accept or tolerate employee claims of imminent danger which are capricious or otherwise not based on an actual fear that imminent danger does exist. ARTICLE XVI COMPENSATION MAKEUP In case an employee sustains a compensable injury and it is necessary to secure for him/her to send him/her to a doctor, the following shall apply: 1. If the doctor sends the employee back to work that day with a statement to the effect that his/her injury was bona fide and required medical attention the employee shall be credited with the time required for the visit to the doctor; otherwise, the employee shall be given an opportunity to make up time lost due to his/her visit to the doctor. 2. If the doctor sends the employee home, the employee shall be paid for the full number of hours in his/her shift on the day on which the injury occurred at his/her rate on that day. Such time paid for will be credited for the purpose of determining weekly overtime. 3. Any employee who is absent from work because of an occupational injury incurred while on duty at the plant and who reported the injury to his/her supervisor and who has been examined by the Company doctor at the Company's request immediately following the injury during the shift or day the injury occurred and declared unable to work unless the injury was purposely self- inflicted, or due to wilful misconduct, violation of plant rules, or refusal to use 50 safety appliances, will be excused from work. When properly approved by the Company, the employee will be paid for time lost during the normal seven (7) day waiting period provided by the Kentucky Industrial Compensation Board. The maximum amount payable to the employee during this seven (7) day period will not exceed an amount equal to forty (40) hours at the employee's then straight time base rate. The above provision shall not apply in case of back injuries. 4. The following steps are to be taken by an injured employee in order to be eligible for payment for time lost during the seven (7) day waiting period provided by the Kentucky Industrial Compensation Board, based on the intent of Article XVI Compensation Makeup in our present agreement. (a) Employees must promptly report any injury to his/her supervisor. (b) Employee must report to the First Aid Department for treatment. (c) The First Aid Department will determine whether or not the injured employee is to be sent to the Company doctor. (d) The Company doctor shall make the decision on whether or not the employee is able to work. (e) The Company will investigate the cause of the injury. Payment will not be made if the 51 injury was self-inflicted, due to wilful misconduct, due to violation of plant rules, or refusal to use safety appliances. (f) In the event that an injured employee reports to First Aid and is not sent to the Company doctor and in the event the employee's injury should worsen while off duty, the employee may consult another doctor in order to get immediate relief. The employee must, however, report to the Plant First Aid Department, as soon as possible, for examination by that department and/or the Company doctor. In the event that the non-company doctor should confine the injured employee to bed or to a hospital, the employee must notify the Company by telephone so that the employee may be visited by the Company doctor. The following phone numbers must be called to make such report: Worker's Comp Administrator or Human Resources...........................395-4143 In off hours, call the Shift Supervisor on duty. If no Shift Supervisor is on duty, notify the First Aid Attendant on duty. (g) Payments provided in this section will only be made if the injured employee reports to the Plant First Aid Department for treatment at or before the employee's regular starting time each work day unless excused by the Company doctor. 52 5. If the disability shall continue for more than three (3) weeks and the employee receives compensation from the Kentucky Industrial Compensation Board for the seven (7) day waiting period, then the amount to be paid by the employer shall be reduced by the difference between the amount received by the employee and the amount the employer paid to the employee as provided in this section. Said payments in this section will only be made if the injured employee reports to the Plant First Aid Department for treatment at or before the employee's regular starting time each work day unless excused by the Company doctor. 6. If time lost as a result of a compensable injury extends beyond the seven (7) day waiting period, then the employer will make up the difference between what the employee would have earned at the employee's straight time rate per hour and the amounts of money received by the employee from the Kentucky Industrial Compensation Board as payment for time lost as a result of a compensable injury. The employer will only make up such difference up to a period of twenty-five (25) weeks beyond the initial seven (7) day waiting period. The basic intent of this article is to provide that the employee sustaining a compensable injury shall not suffer any diminution in his/her normal straight time hourly earnings for an aggregate period of twenty-six (26) weeks as a result of such injury. Any time paid for under this section will be credited for the purpose of determining weekly overtime. 7. All disability payments provided for in this contract shall be reduced by the amount or amounts of any other benefits which might be provided through state or federal legislation for the same type of disability and for the same period of absence. 53 8. Any wilful abuse of this section by the employee will result in an immediate dismissal of the employee by the Company. ARTICLE XVII BULLETIN BOARDS The employer will provide four (4) bulletin boards in mutually agreeable locations to be used for Union notices. These notices will be posted by the Union and signed by a union official. Union notices shall be restricted to the following: 1. Notices of Union recreational and social affairs. 2. Notices of Union elections, appointments and results of Union elections. 3. Notices of Union meetings. 54 ARTICLE XVIII FUNERAL LEAVE An employee shall be protected against loss of pay for such time as may be needed for the purpose of attending the funeral of a member of the employee's immediate family up to a maximum of three (3) scheduled working days at his/her then regular straight time hourly rate during the period beginning with the day after death and ending with the day after funeral. Immediate family is interpreted to cover husband, wife, father, mother, child, stepchild, brother, sister, mother-in-law, father-in-law, grandchildren, grandfather and grandmother. One day's pay will be paid for sister-in-law, brother-in-law, stepmother, and stepfather for purpose of attending funeral. Any time paid for under this provision, not exceeding three (3) scheduled working days per work week, will be counted as time worked for the purpose of determining weekly overtime. ARTICLE XIX JURY DUTY An employee who is called for jury duty may be excused from work upon presentation of court notice to the employee's immediate supervisor. The employee who has been so excused will be paid the difference between his/her normal straight time earnings and the fees received from the court, provided the employee submits evidence of the amount received from the court. Only the number 55 of his/her scheduled work days actually spent in court are counted in calculating payment. Such days will be credited at eight (8) hours each for overtime purposes. ARTICLE XX LUNCHES 1. (a) A lunch allowance of $4.00 will be given to any employee who has worked twelve (12) continuous hours. (b) Payment in cash shall be made to the employee on the next payday. 2. Vending facilities will be provided for employees electing to secure meals from within the plant. If vending machines are out of order or adequate food not available, reasonable efforts will be made for food to be made available. ARTICLE XXI WORK STOPPAGES 1. It is agreed on the part of the Union that there shall be no strikes, slowdown, sitdowns, walkouts, or other interferences with work during the term of this agreement and on the part of the Employer it is agreed that there shall be no lockouts during the term of this agreement. Both parties agree to make every reasonable effort to adjust any grievance which may arise 56 in accordance with the remedy provided in the grievance procedure. The employer shall have the absolute right, in its discretion, to take disciplinary action up to and including discharge against any or all employees who participate in or who aid, abet or encourage others to participate in an unauthorized strike, sitdown, or work stoppage. Any employee so discharged shall forfeit seniority and any other right or privilege he/she may otherwise enjoy under this agreement. Any question as to whether a particular employee was involved therein may be submitted to the grievance procedure. 2. In the event of an unauthorized strike, sitdown, slowdown or work stoppage, the Union will promptly disclaim responsibility by having an official or committee member so inform the Employer and the Union will also use its best efforts to get the employees back to work. If the Union immediately takes the above action there shall be no financial liability on the part of the Oil, Chemical and Atomic Workers International Union, Local 3-556, or any of its officers or agents. The sole recourse and exclusive remedy of the Employer in the event of such unauthorized strike or work stoppage is to impose disciplinary action as heretofore mentioned. ARTICLE XXII PENSION 1. Employees covered by the Agreement shall be eligible at their option to participate in The Carbide/Graphite Group, Inc. Non-Contributory Retirement Income Plan in accordance with 57 terms and provisions of this Plan. However, the adjustments in the amounts of pensions payable under this Plan by reasons of the 1965 and 1968 amendments to the Social Security Act, or any other amendments during the term of this Agreement, shall be waived. 2. Effective February 1, 1996, the pension benefit multiplier will increase from twenty-two dollars ($22.00) to twenty-six dollars ($26.00) per month for all years of credited service. Effective February 1, 1997, the pension benefit multiplier will increase to twenty-seven dollars and fifty cents ($27.50) per month for all years of credited service. Effective February 1, 1998, the pension benefit multiplier will increase to twenty-nine dollars ($29.00) per month for all years of credited service. Effective February 1, 1999, the pension benefit multiplier will increase to thirty-one dollars ($31.00) per month for all years of credited service. Effective February 1, 2000, the pension benefit multiplier will increase to thirty-three dollars ($33.00) per month for all years of credited service. 3. A participant who retires on an early retirement date and elects to receive a retirement income shall receive retirement income reduced in accordance with Plan provisions, unless the participant retires on or after the date on which the participant attained age and years of 58 credited service that total 85, in which case there is no reduction for early retirement. ARTICLE XXIII COMPREHENSIVE MEDICAL INSURANCE PLAN During the term of this Agreement, the provisions of the Comprehensive Medical Plan will be guaranteed by the Company. If an employee is temporarily laid off or on an authorized leave of absence, the employee's insurance will be continued until the end of the third policy month following the policy month in which the layoff or leave starts. The maximum allowance payable pursuant to the terms and conditions of the Comprehensive Medical Plan shall be $1,000,000. Beginning February 1, 1996, the monthly employee contribution will be $9.00 for employee only coverage, $18.00 for employee plus one dependent, and $25.00 for employee plus two or more dependents. The deductible for in-network will be $300.00 per individual per calendar year with a maximum of two per family per calendar year. The deductible for out-of- network will be $500.00 per individual per calendar year with a maximum of two per family per calendar year. The out-of pocket maximum (inclusive of deductible) for in-network will be $500.00 for an individual or $1,000.00 for the employee and all eligible covered dependents per calendar year. The out-of- pocket maximum 59 (inclusive of deductible) for out-of-network will be $1,000.00 for an individual or $2,000.00 for the employee and all eligible covered dependents per calendar year. The co-payment percentage that will be paid by the insurance (subject to deductibles and limited to eligible expenses) will be 85% for in-network hospitals and other services, 65% for out-of-network hospitals, and 60% for other services out-of-network. Deductibles and out-of-pocket maximums for active employees and retirees under this Plan will therefore be those established by future negotiations. Active eligible employees retiring after February 1, 1996, will be covered by The Carbide/Graphite Group Comprehensive Medical Plan. Employees retiring September 1, 1993, or later will pay premiums equal to active employees. After age 65, the contribution will be one-half of active rate. 1. Sickness and Accident Benefit - The Sickness and Accident benefit shall be ----------------------------- for a maximum period of twenty-six (26) weeks. (a) For employees actively at work who go out on Sickness and Accident Benefits after February 1, 1996, increase the Sickness and Accident benefits from $260 to $270. (b) For employees actively at work who go out on Sickness and Accident Benefits after 60 February 1, 1997, increase the Sickness and Accident benefit from $270 to $280. (c) For employees actively at work who go out on Sickness and Accident Benefits after February 1, 1998, increase the Sickness and Accident benefit from $280 to $290. (d) For employees actively at work who go out on Sickness and Accident Benefits after February 1, 1999, increase the Sickness and Accident benefit from $290 to $300. (e) For employees actively at work who go out on Sickness and Accident Benefits after February 1, 2000, increase the Sickness and Accident benefit from $300 to $310. 2. Life Insurance - The amount of Group Life Insurance for each employee is -------------- $24,000. The amount of Accidental Death and Dismemberment Insurance for each employee is $12,000. Effective February 1, 1997, the amount of life insurance for each employee will increase to $27,000 and the amount of Accidental Death and Dismemberment Insurance for each employee will increase to $13,500. Effective February 1, 1998, the amount of life insurance for each employee will increase to $30,000 and the amount of Accidental Death and Dismemberment Insurance for each employee will increase to $15,000. Effective February 1, 1999, the amount of life insurance for each employee will increase to $32,000 and the amount of Accidental Death and Dismemberment Insurance for each employee will increase to $16,000. Effective February 1, 2000, the amount of life insurance for each employee will increase to $35,000 and the amount of Accidental Death and Dismemberment Insurance for each employee will increase to $17,500. 61 3. Dental Plan - Effective November 1, 1992, those employees and eligible ----------- dependents enrolled in The Carbide/Graphite Group Comprehensive Medical Plan shall have Dental Insurance in accordance with the following plan at no additional cost: Lifetime Maximum.........................................NONE Calendar Year Maximum..................................$1,000 Calendar Year Deductible*......................$25/per person $50/per family (Aggregate Max.) Covered Expenses...................80% Reasonable & Customary Orthodontics.......................................50% of UCR reimbursement $1,000 lifetime maximum per individual
*Deductible will not be applied against any diagnostic or preventive expenses. Employees will be eligible for dental coverage when they become eligible for medical insurance under the Comprehensive Medical Plan. All other terms of the existing plan will remain unchanged (active employees and eligible dependents only). ARTICLE XXIV MAINTENANCE TOOL ALLOWANCE AND TESTING 62 1. The Company will replace, as soon as possible, tools that are broken, worn out, lost and other tools required to do maintenance work for Maintenance Department employees at work up to a maximum amount of $100.00 per year. This applies to employees that have completed their probationary period. Payment to be made in August of contract year. 2. Employees from other job groups who bid on posted jobs in the first class or second class maintenance classification shall be required to pass the examination test for the job bid on. 3. The Company may hire skilled workers directly from the outside into the first class and second class maintenance classifications. It is understood that such hiring will not affect the opportunities for advancement of the employees in these classifications. 4. The testing will start with senior second class employees and work downward. 5. New hires will be given the same test as an employee already in the plant, excepting plant knowledge. 6. Welding tests will be conducted in accordance with A.W.S. standards. 7. An employee for any job group bidding for a posted maintenance job must pass the following tests: 63
Specialty Test --------- ---- Mechanical Maintenance....................General Maintenance Mechanic.............................................Mechanic General Maintenance Equipment Operator...................................Operator General Maintenance Welder.................................................Welder General Maintenance Electrical Maintenance.....................General Electrical Instrument Mechanical..............................Instrument General Electrical
If the employee fails the test in a particular skill, the employee cannot take another test in that skill for three (3) months. 8. The Union recognizes and agrees that at some future date a full complement of first class maintenance employees will be reached and at such time there will be no employees in the second class classification. ARTICLE XXV ACTING SUPERVISOR 1. The Union recognizes that the Company has a policy of promoting from within and in the practical application of this policy does from time to time appoint Acting Supervisors to fill 64 temporary vacancies in the supervisory force or to enlarge the supervisory force to meet a temporary need. It is, therefore, agreed that such Acting Supervisors will not lose any seniority rights by having so served. 2. The Company's policy in regard to the use of Acting Supervisors is as follows: (a) To fill in for regular supervisors who are not on the job because of vacations, illnesses, leaves of absences or other such reasons, plus the utilization of Acting Supervisors to fill in situations where schedule considerations leave a day or so a week which is impossible to efficiently schedule. (b) To cover temporary needs due to fluctuations in production schedules or other temporary needs which the Company is not able to definitize. 3. In carrying out these policies, the Company will make assignments of Acting Supervisors in such a fashion that no single Acting Supervisor will serve in such capacity in excess of ninety (90) working days in a calendar year. 4. The filling of the position of Acting Supervisor shall comply with the following: (a) Probationary employees shall not be used. (b) Upgrades to Acting Supervisor shall be for a minimum of one day. 65 (c) The upgraded employee will not work overtime as an hourly employee immediately after the end of the upgraded shift. ARTICLE XXVI MAJOR DISASTER CLAUSE In the event work is not available because of a major disaster caused by an earthquake, power failure, flood, fire, explosion, enemy attack, Act of God, or other like events that would cause partial or complete evacuation of the plant, then Paragraph 8 of Article V - Hours of Work and Overtime and Article IX - Reporting Pay shall be suspended for the duration of the situation. It is further understood between the parties that during any such disaster as set forth above that the Company must use available employees for whatever work appears to be important to save life; to minimize loss or to prevent the spread of the disaster. Strict rules of seniority shall not be observed until such availability of work has passed, after which all provision of the agreement shall again be in full force and effect. ARTICLE XXVII OUTSIDE CONTRACTORS The Local Union President will be notified before any outside contract work is performed in the plant and will have the right to discuss such work before started by the contractor. 66 After such discussion, the Union President may discuss the matter with the Plant Manager if deemed necessary by the Union. The Company will use its best efforts to have its employees perform bargaining unit work; however, it is recognized that certain work may have to be subcontracted because the Company does not have qualified employees, actively working, available to do the work and/or proper tools, equipment or facilities to perform the work efficiently. It is further recognized that other legitimate business reasons such as emergencies and/or the immediate necessity for start-up or completion of a job may also require a job to be subcontracted. ARTICLE XXVIII TERMINATION AND DURATION This agreement expresses the full and complete understanding of the parties on the subjects of working conditions, hours of work and other conditions of employment, including method of wage payment. Any subject matter not mentioned herein is hereby specifically waived. It is therefore agreed that this agreement will become effective as of 11:01 p.m. January 31, 1996, and remain in effect until 11:00 p.m. January 31, 2001 and for the annual periods running from January 31 to January 31 thereafter unless sixty (60) days prior to any expiration date either party notifies the other in writing of its desire to terminate on the expiration day. It is agreed that neither the Union or the Company will present any demands or claims not included 67 herein during the life of this agreement unless it is agreed by the parties that changes in or amendments to this agreement are desirable. Executed this 31st day of January, 1996: THE CARBIDE/GRAPHITE GROUP, INC. OIL, CHEMICAL & ATOMIC WORKERS INTERNATIONAL UNION 3-556 /s/ R.G. Pepler /s/ H.E. Littlejohn /s/ W.E. Damian /s/ L.J. York /s/ M.B. Armstrong /s/ J. O. Haley /s/ G.F. Weyer /s/ C.L. Heath /s/ R. Duncan /s/ G. J. Madison 68 ADDENDUM "A" MEMORANDUM OF AGREEMENT Effective May 19, 1993 Revised February 1, 1996 The Union and Company agree on the following procedure to be used in the Furnace Department regarding overtime and progression: FURNACE ATTENDANT - GROUP 3 --------------------------- If overtime requirements are realized eight (8) hours or less prior to the overtime shift but more than four (4) hours, you will: 1. Assign the overtime to the available Furnace Attendant (if in the "preferred" overtime rack), or offer to the available Furnace Attendants in the "non-preferred" rack. 2. If the Group 3, Furnace Attendants, elect not to work the overtime, the Company will then use the progression step and assign the Group 4, Utility (charge floor) employee to the Furnace Attendant's job for that shift only. 3. If less than three (3) working hours are needed, the Supervisor will decide if they need to call in another person or work short during that period of time. 3A. If a Utility progresses to the Furnace Attendant job, and a qualified Yard employee is available on shift to cover the utility vacancy without overtime, the overtime procedure stops. If no Yard employee is available, proceed to Step 4. 4. If coverage is needed, the Company would call the "prefer" then "non- preferred" Group 3, Furnace Attendants that are not on duty. If filled, the progression step would be reversed. 5. If the Furnace Attendant elects not to cover the overtime, you will go to the Group 4, Utility, overtime rack and offer the Utility overtime to the employees that have their cards in the "prefer" overtime rack. If coverage is still needed, go to the "non-preferred" overtime rack. 6. If the Utility elects not to cover the Utility overtime needed, the Company would then call the "prefer" then "non-preferred" Group 3A, Tappers, that are not on duty. 7. If you do not obtain overtime coverage from any Group in the Furnace, you then go to Group 10, Yard, employees in the "prefer" then "non- preferred" overtime rack. The Yard person would fill the Utility position needed. 69 If overtime requirements are known more than eight (8) hours prior to the overtime shift, but not more than three (3) days, you will: 1. Assign the overtime to the Furnace Attendant with the least amount of overtime hours in the "prefer" overtime rack. 2. Offer the overtime to any Furnace Attendants for which the overtime is needed that have their cards in the "non-preferred" overtime rack. 3. If the Group 3, Furnace Attendant, elect not to work the overtime, the Company will then use the progression step and assign the Group 4, Utility (charge floor) employee to the Furnace Attendant's job for the shift when it occurs. 4. At this point, the prescheduling should be done for Group 4, Utility, for this shift. You will then go to the Group 4, Utility, overtime rack and assign the overtime to the employee with the least amount of overtime hours in the "prefer" overtime rack. 5. If you do not obtain coverage from the above, you will then offer the overtime to any employees in the "non-preferred" overtime rack in Group 4, Utility. 6. At this point, the Company would then call the "prefer" and "non- preferred" Group 3A, Tapper, that are not on duty and offer the Utility overtime. 7. If you do not obtain coverage in the Group 4, Utility, you then go to Group 10, Yard, "prefer" overtime rack. If you do not fill the vacancy in the "prefer" overtime rack, then offer the overtime to the employees in the "non-preferred" overtime rack. The Yard person would fill the Utility position needed. The same procedures are to be followed for the Group 3A, Tapper, except use Group 4, Utility (ground floor). The same procedures are to be followed for the Group 4, Utility, using Group 3, Furnace Attendant first; then if no coverage is obtained, Group 3A, Tapper. THE CARBIDE/GRAPHITE GROUP, INC. OIL, CHEMICAL & ATOMIC WORKERS INTERNATIONAL UNION 3-556 /s/ R.G. Pepler /s/ H.E. Littlejohn /s/ W.E. Damian /s/ L.J. York /s/ M.B. Armstrong /s/ J.O. Haley /s/ G.F. Weyer /s/ C.L. Heath /s/ R. Duncan /s/ G.J. Madison 70 ADDENDUM "B" Items defined as Instrument work relating to Article V, Section 10, Subsection C(b) are as follows: 1. Gas Analyzer(s) 2. Scale(s) 3. Time Clock(s) 4. Meter Reading(s) 71 ADDENDUM "C" LETTER OF AGREEMENT VOLUNTARY LAYOFFS Effective June 25, 1991 Revised February 1, 1996 It is mutually agreed that during a fluctuation in the level of operations the following moves may be made which will determine who is to be laid off: 1. Senior employees in Groups 2-Desulf Operation, 2A-Pack, 3-Furnace Attendants, 3A-Tappers, 4-Utility, 5-Calcine Coal, 6-Acetylene Attendant, 7-Paste, and 11-Coke Attendant may take a layoff in lieu of working. The total number taking layoffs cannot exceed the total number which would be laid off from that department. If no employee is reduced from a Job Group, no employee from that Job Group may take a voluntary layoff. 2. Senior Janitors, Truck Drivers, and Yard Department employees may take a layoff in lieu of working. When there is a fluctuation in the Yard, Group 10, (when the furnace is running) one employee in the bid job of Janitor and one employee in the bid job of Truck Driver will be allowed to take a voluntary layoff if there are employees fluctuated from the Yard. In the periods of time when the carbide furnace is not running, there will be no limit as to the number of Truck Drivers or Janitors that will be allowed to take voluntary layoffs. Other jobs within Group 10 will be handled as in #1 above. 3. Senior Group 1-Maintenance and Group 1A-Electricians may take a layoff in lieu of working. The total number taking layoffs cannot exceed the total number which would be laid off from that department. 4. If there is a need for employees to assist Maintenance during a fluctuation in the level of operations, the reduced production employees may elect to assist in the Maintenance Department. Those employees who do not elect to assist in Maintenance will be reduced to the Yard Department. However, a less senior production employee cannot remain in Maintenance if a more senior involuntarily reduced production employee is laid off out the gate. The Union agrees it will not permit a more senior employee who refused Maintenance work to file a grievance seeking production pay because a less senior employee was working in Maintenance. 5. Employees desiring to take a layoff in lieu of working must notify the Human Resources Department on or before the 20th of each month. 6. The length of layoffs in lieu of working shall be for a minimum of one month's duration (28 days). If the layoff is for a longer period than one month, the employee on layoff must renew his layoff five days before the end of the first month. Any employee desiring a layoff in lieu of working during the second month shall notify the Human Resource Department before the 20th day of the first month's layoff. 7. In the event production is resumed prior to the original specified time, all employees will return when requested by the Company and all moves and trades will cease as of that date. 72 8. The laid-off employee may file for Unemployment Insurance and the Company will not contest the claim. 9. Management's ability to grant voluntary layoffs will be subject to our ability to have and/or recall a replacement. 10. Voluntary layoffs are granted on a first-come, first-serve basis. 11. If any new jobs are created, they will follow the same guidelines as those listed in #1 of this Agreement. 12. Under no circumstances will employees from other job groups be allowed to work in a department where employees are on voluntary layoff except for the purpose of filling vacations, sick leave, or leave of absence. This Agreement voids the 1964 Agreement, the letter dated November 8, 1982, and the Notice dated September 20, 1984. THE CARBIDE/GRAPHITE GROUP, INC. OIL, CHEMICAL & ATOMIC WORKERS INTERNATIONAL UNION 3-556 /s/ R.G. Pepler /s/ H.E. Littlejohn /s/ W.E. Damian /s/ L.J. York /s/ M.B. Armstrong /s/ J.O. Haley /s/ G.F. Weyer /s/ C.L. Heath /s/ R. Duncan /s/ G.J. Madison 73 ADDENDUM "D" SHORT-TERM VOLUNTARY LAYOFF GUIDELINES Revised February 1, 1996 For a short-term voluntary layoff to occur, the following conditions must be met: 1. The Company must post notice of workload reduction and that layoffs are a probability in affected departments. The approximate period of time the workload reduction will be in effect will be indicated, although employees should realize timing is subject to change. 2. Layoffs will be granted up to the number the Company decides can be off and still achieve its objectives for work to be accomplished. In the event more layoffs are requested than the Company can grant, then first-come, first-served will be used in granting the employee's request. 3. Voluntary layoffs will be granted in one-week increments, with one week (5 working days) being the minimum. Layoffs will not be granted after a pay week has begun. 4. Employees must notify the Personnel Department to request a layoff. Preferably, the employee should request the layoff before Tuesday at 8:00 a.m. In cases where notice of a workload reduction is posted after Tuesday, then employees should notify Personnel as soon as possible. Once an employee requests and is granted a layoff, the employee cannot change their mind and cancel the layoff before the start of the next work week. 5. Once an employee starts a layoff, they will be expected to return to work on the date scheduled unless they contact Personnel to request, and are granted, an extension to the layoff. 6. Under no circumstances will employees from other job groups be allowed to work in a department where employees are on voluntary layoff except for the purpose of filling vacations, sick leave, or leave of absence. THE CARBIDE/GRAPHITE GROUP, INC. OIL, CHEMICAL & ATOMIC WORKERS INTERNATIONAL UNION 3-556 /s/ R.G. Pepler /s/ H.E. Littlejohn /s/ W.E. Damian /s/ L.J. York /s/ M.B. Armstrong /s/ J.O. Haley /s/ G.F. Weyer /s/ C.L. Heath /s/ R. Duncan /s/ G.J. Madison 74 ADDENDUM "E" MEMORANDUM OF AGREEMENT POLLING PROCEDURE Effective February 1, 1996 The Union and Company agree on the following rules regarding scheduling which are not otherwise covered by the Labor Contract: 1. The Union and the Company agree that any shifts worked must conform to the current language of the Labor Contract. Shift schedules may be changed if requested by a majority of the employees in the department involved and subsequently agreed to by the Union and the Company. Employees on a rotating shift schedule will not poll for shifts within the schedule chosen. 2. Alternate schedules for seven (7) day continuous operations: a. Include no more than eight (8) hours of scheduled overtime assuming four (4) shifts are available to cover one hundred sixty- eight (168) hours in a week. b. Alternate schedules will be in effect for one (1) year from the date of implementation. At the end of that year, employees will be given the opportunity to stay with or change their schedule as determined by majority. c. If the alternate schedule does not include rotation, the employees on the shift schedule will repoll for shift preference annually based on seniority. d. Repolling will also be conducted should there be changes in staff levels or scheduling of shifts within the department. 3. Alternate schedules for non-continuous operations: a. The number of people, days, and shifts of operation will be set by Management based on operational priorities. b. A majority of employees may make a request to change schedules in their department as long as it meets the operational needs of the department. If no request is made, Management will set the work schedule. c. Repolling for shift schedule preference in non-continuous operations will be conducted when there are any changes in staffing levels or a schedule change is needed in the department. 4. Polling in the Maintenance Department (Groups 1 and 1A): 75 a. Shift schedules must conform to the coverage deemed necessary by the Company. b. Polling for available shifts will be conducted every two (2) months, within each Group, by seniority. THE CARBIDE/GRAPHITE GROUP, INC. OIL, CHEMICAL & ATOMIC WORKERS INTERNATIONAL UNION 3-556 /s/ R.G. Pepler /s/ H.E. Littlejohn /s/ W.E. Damian /s/ L.J. York /s/ M.B. Armstrong /s/ J.O. Haley /s/ G.F. Weyer /s/ C.L. Heath /s/ R. Duncan /s/ G.J. Madison 76 ADDENDUM "F" SUPPLEMENTAL AGREEMENT OUTSIDE PURCHASES Effective February 1, 1996 1. The Union President (or designated alternate) will be notified of outside purchases which involve metal working/construction of manufacturing process equipment which has been historically performed by Plant Maintenance. 2. The Union will be given an opportunity to discuss this outside purchase. 3. It is recognized by all parties that there are occasions where in the interest of cost containment, quality, speed of production, etc., outside purchases will occur. 4. Such outside purchases will only be conducted through legitimate vendors. 5. This Agreement will not pertain to standard items (as customarily listed in catalogues/price lists) from legitimate vendors. THE CARBIDE/GRAPHITE GROUP, INC. OIL, CHEMICAL & ATOMIC WORKERS INTERNATIONAL UNION 3-556 /s/ R.G. Pepler /s/ H.E. Littlejohn /s/ W.E. Damian /s/ L.J. York /s/ M.B. Armstrong /s/ J.O. Haley /s/ G.F. Weyer /s/ C.L. Heath /s/ R. Duncan /s/ G.J. Madison 77 MEMORANDUM OF AGREEMENT BUY-OUT PROGRAM Effective February 1, 1996 This program is a one-time opportunity for employees to fully terminate from C/G and receive a cash payment for all rights, including pension rights. 1. An individual must declare his/her intention between February 1, 1996, and February 15, 1996. 2. A mutually agreed upon date for severing employment will be reached. Such date may not be later than April 15, 1996. 3. An individual so resigning and forfeiting any future benefits (including pension) will receive: a. One (1) week's pay for every two (2) full years of service. b. Payment of any earned vacation. c. A lump-sum pension payout (to be calculated by the actuary) which reflects the present value of his/her pension. 4. Any individual electing this benefit will not be eligible for any other benefit as a result of C/G or BOC service. THE CARBIDE/GRAPHITE GROUP, INC. OIL, CHEMICAL & ATOMIC WORKERS INTERNATIONAL UNION 3-556 _____________________________________ _____________________________________ _____________________________________ _____________________________________ _____________________________________ _____________________________________ _____________________________________ _____________________________________ _____________________________________ _____________________________________ _____________________________________ _____________________________________ 78 MEDICAL AGREEMENT Effective February 1, 1996 1. No later than April 1, 1996 (sooner if possible), go to Option 2000. 2. Join the Health Design Plus Alliance. 3. When the Alliance product is ready, but no earlier than January 1, 1997, the Union may request which plan (Alliance or Option 2000) they prefer to be on. To assist that choice, the Union will be given an opportunity to learn the details of each option. 4. The Union request (#3 above) will not be denied unless the difference in cost exceeds 10%. If this occurs, a meeting will take place to resolve differences. 5. Employee contribution for life of the agreement: Single $9.00/mo. Employee + One $18.00/mo. Family $25.00/mo. 6. Plan Design: Co-Pay
Hospital Other -------- ----- In Network 85% 85% Out of Network 65% 60%
7. Deductible:
Individual Family ---------- ------ In Network 300 600 Out of Network 500 1000
8. Out-of-Pocket (inclusive of deductible):
Individual Family ---------- ------ In Network 500 1000 Out of Network 1000 2000
9. All employees will be presumed to have satisfied the in-network deductible (300/600) on the change-over (see #1 above) date. 79 SCHEDULE A
PRODUCTION GROUP Effective 2/1/96 Effective 2/1/97 Effective 2/1/98 Effective 2/1/99 Effective 2/1/00 - ---------- ----- ---------------- ---------------- ---------------- ---------------- ---------------- Furnace Attendant 3 $16.96 17.46 18.01 18.61 19.21 Tapper 3A 16.91 17.41 17.96 18.56 19.16 Desulf Operator 2 16.91 17.41 17.96 18.56 19.16 Packer 2A 16.81 17.31 17.86 18.46 19.06 Utility 4 16.81 17.31 17.86 18.46 19.06 Paste Attendant 7 16.81 17.31 17.86 18.46 19.06 Calcine Coal Attendant 5 16.81 17.31 17.86 18.46 19.06 Coke Attendant 11 16.81 17.31 17.86 18.46 19.06 Acetylene Attendant 6 16.96 17.46 18.01 18.61 19.21 Yard 10 16.53 17.03 17.58 18.18 18.78 Yard Truck Driver 10 16.63 17.13 17.68 18.28 18.88 Janitor 10 16.53 17.03 17.58 18.18 18.78 First Aid Attendant 8 16.71 17.21 17.76 18.36 18.96 Storekeeper 10 16.63 17.13 17.68 18.28 18.88
(Continued on next Page) 80 SCHEDULE A (Continued)
MECHANICAL MAINTENANCE GROUP Effective 2/1/96 Effective 2/1/97 Effective 2/1/98 Effective 2/1/99 Effective 2/1/00 - ----------- ----- ---------------- ---------------- ---------------- ---------------- ---------------- Second Class 1 16.95 17.45 18.00 18.60 19.20 First Class 1 17.12 17.62 18.17 18.77 19.37 Equipment Operator - Second Class 1 16.95 17.45 18.00 18.60 19.20 Equipment Operator - First Class 1 17.12 17.62 18.17 18.77 19.37 ELECTRICAL MAINTENANCE - ----------- Second Class 1A 16.95 17.45 18.00 18.60 19.20 First Class 1A 17.12 17.62 18.17 18.77 19.37
Any production employee hired after February 1, 1984, will be paid $3.00/hour less than the current appropriate wage rate in Schedule A for his/her first six months of employment. Upon attaining six months of employment, he/she will receive a $.50/hour wage increase ($2.50 less than the current appropriate rate in Schedule A). Upon attaining 12 months of employment, he/she will receive a $.50/hour wage increase ($2.00 less than the current appropriate rate in Schedule A). Upon attaining 18 months of employment, he/she will receive a $.50/hour wage increase ($1.50 less than the current appropriate rate in Schedule A). Upon attaining 24 months of employment, he/she will receive a $.50/hour wage increase ($1.00 less than the current appropriate rate in Schedule A). Upon attaining 30 months employment, he/she will receive a $1.00/hour wage increase which will be the appropriate wage rate as listed in Schedule A. Employees who are in the progressive pay system while in the Tapper classification on a permanent basis or while filling a temporary job for more than four (4) weeks will be paid one dollar ($1.00) more per hour until he/she has progressed to the current appropriate rate for the Tapper classification as listed in Schedule A. 81 EX-10.39 7 AGREEMENT WITH AFL-CIO LOCAL UNION 502 Exhibit 10.39 AGREEMENT BETWEEN THE CARBIDE/GRAPHITE GROUP, INC. AND INTERNATIONAL, UNION OF ELECTRICAL, TECHNICAL, SALARIED MACHINE AND FURNITURE WORKERS AFL-CIO LOCAL UNION 502 JUNE 3, 1996 CONTENTS - ALPHABETICAL Article Subject Page 19 Arbitration 6 Call-in Pay 24 Change in Method of Payment 35 Company Policy Regarding Supervisory Personnel 42 Conflict of Laws 12 Decrease in Work Force 14 Discharges 34 Employee Ratings 27 Establishing the Standard 43 Expiration and Renewal 36 Family Leave 32 Funeral Leave 18 Grievances 38 Group Insurance 9 Holidays 4 Hours 23 Incentive Pay 11 Job Bidding 13 Job Description and Evaluation 31 Jury Duty 17 Leaves of Absence 26 Making the Time Study 20 Management 29 New Products 33 No Discrimination 3 Notices 8 Overtime and Night Bonus 39 Pensions 1 Recognition 5 Reporting Pay 7 Rest Periods 28 Retiming of Jobs 21 Safety and Health 44 Schedule l - Rate Schedule 45 Schedule 2 - Wage Schedule 46 Schedule 3 - Supplements 41 Scope of Agreement 10 Seniority 37 Stewards 22 Strikes and Lockouts 30 Temporary Time Values 25 Time Studies 16 Transfers 2 Union Security and Checkoff 15 Vacations 40 Wages 1 INDEX Article Subject Page 1 Recognition 2 Union Security and Checkoff 3 Notices 4 Hours 5 Reporting Pay 6 Call-in Pay 7 Rest Periods 8 Overtime and Night Bonus 9 Holidays 10 Seniority 11 Job Bidding 12 Decrease in Work Force 13 Job Description and Evaluation 14 Discharges 15 Vacations 16 Transfers 17 Leaves of Absence 18 Grievances 19 Arbitration 20 Management 21 Safety and Health 22 Strikes and Lockouts 23 Incentive Pay 24 Change in Method of Payment 25 Time Studies 26 Making the Time Study 27 Establishing the Standard 28 Retiming of Jobs 29 New Products 30 Temporary Time Values 31 Jury Duty 32 Funeral Leave 33 No Discrimination 34 Employee Ratings 35 Company Policy Regarding Supervisory Personnel 36 Family Leave 37 Stewards 38 Group Insurance 39 Pensions 40 Wages 41 Scope of Agreement 42 Conflict of Laws 43 Expiration and Renewal 44 Schedule l - Rate Schedule 45 Schedule 2 - Wage Schedule 46 Schedule 3 - Supplements 2 AGREEMENT AGREEMENT, made this 3rd day of June, 1996, between THE CARBIDE/GRAPHITE GROUP, INC, (the Company) and the LOCAL UNION 502, affiliated with the International Union of Electrical, Technical, Salaried, Machine and Furniture Workers, AFL-CIO (the Union), as agent for and on behalf of all the Company's production and maintenance employees (the employees) at the St. Marys, Pennsylvania facility. The purpose of the Agreement is to provide orderly collective bargaining relations between the Company and the Union, to secure a prompt and equitable settlement of grievances, and to establish and maintain fair wages, hours and working conditions for the employees covered by this Agreement. It is acknowledged by both parties that C/G is an ISO9000 certified producer of Carbon and Graphite products and will strive to function within the criteria as set forth to achieve and sustain this certification. 3 ARTICLE 1 RECOGNITION 1. The Company recognizes the Local Union 502 affiliated with the International Union of Electrical, Technical, Salaried, Machine and Furniture Workers, AFL-CIO, and the sole collective bargaining agent for all production and maintenance hourly employees, except foremen, assistant foremen, supervisors, timekeepers, clerks, laboratory assistants, time study, development and method employees, guards and/or watchmen, with respect to rates of pay, wages, hours of employment and all other conditions of employment. 2. It is agreed that no activities pertaining to the Union will be permitted during working hours, it being understood that this clause does not include matters under the grievance procedure. 3. (a) The Company and Union agree that it is desirable for C/G employees to perform maintenance work in the plant where practical. Management, however, reserves the right to subcontract for legitimate business reasons. (b) If the Union desires, an explanation about a maintenance job subcontracted will be provided by the appropriate department or maintenance superintendent. This explanation will include the reasons for subcontracting, such as (1) Unavailability of properly qualified employees (2) Unavailability of equipment or facilities (3) The allowable duration for completion of such work (4) Cost considerations (5) Emergencies (6) Other legitimate business reasons (c) After receiving the answer in (b) above the Union may request such answer in writing. If so requested the Company will respond in writing. 4. The Carbide/Graphite Group, Inc. will create a new Pension Plan covering hourly employees which will be a mirror image of the language of the BOC Plan, effective the date The Carbide/Graphite Group, Inc. takes over. BOC stipulates that the assets in the BOC Pension Plan covering the participants at the St. Marys Carbide/Graphite Plant are more than sufficient to pay all the accrued benefits, both vested and non-vested under the Plan as of December 31, 1987. BOC has entered into similar pension arrangements in the following company locations: Airco Alloys (Niagara Falls, NY), Airco Alloys (Charleston, SC), Airco Alloys (Mobile, AL) and Airco Welding Products (Cleveland, OH). In each of these instances, there has never been a case where a BOC Plan has failed to meet the agreed upon pension obligations. It is the Company's intention that they will not fail at St. Marys as they have not failed at the other locations. Continuous service with BOC will be added to the continuous service of The Carbide/Graphite Group, Inc. for purposes of determining vesting eligibility. 4 In the event that The Carbide/Graphite Group, Inc. Pension Plan for the bargaining unit St. Marys employees is terminated, the BOC Plan for St. Marys employees will vest all unvested Participants (those hired prior to the Closing Date of the sale and still in the employ of The Carbide/Graphite Group, Inc. on the date The Carbide/Graphite Group, Inc. Plan terminates.) Example ------- Assume that the sale of the St. Marys Plant from BOC to The Carbide/Graphite Group, Inc. closes on July 1, 1988. Assume that the per month per year of service benefit in the bargaining unit pension plan is $15 on that date and changes to $16 on July 1, 1990. Assume that a bargaining unit employee retires on July 1, 1990 at age 65 with twenty years of credited service. That employee will receive a total pension benefit of $320 a month. The BOC Pension Plan's responsibility will be frozen as of the terms of the pension plan on July 1, 1988, and the employee service as of that date (18 years x $15 = $270). The Carbide/Graphite Group, Inc.'s Pension Plan will be responsible for the employee service after July l, 1988 and for any benefit levels negotiated after July 1, 1988 (2 years x $16 + $18 = $50). Continuous service with BOC will be added to the continuous service of The Carbide/Graphite Group, Inc. for purposes of determining vesting eligibility. 5 ARTICLE 2 UNION SECURITY AND CHECKOFF 1 Union Shop - Every employee who is a member of the Union on the date this Agreement becomes effective shall be required as a condition of continued employment to remain a member of the Union for the term of this Agreement. Every employee who is not a member of the Union on such effective date shall be required, as a condition of continued employment, to become a member of the Union on the 480 hours worked after such effective date and to remain a member of the Union in good standing for the term of this Agreement. (Note: Dues shall be deducted following 480 hours actually worked.) Every person who is hired on a job, after this Agreement has become effective, shall be required, as a condition of continued employment, to become a member of the Union after 480 hours actually worked from the date of hire and shall remain a member in good standing for the term of this Agreement. 2. During the life of this Agreement the Company agrees to make monthly deductions for the dues and for the Union initiation fee for each employee who signs a deduction authorization. Such deductions will be paid monthly to the Financial Secretary of the Union. The Union agrees to furnish the Company written notice of the amount to be deducted for initiation fees and dues, and of the identity of the Union official authorized to receipt for such deductions. The Union shall report monthly to the Company all amounts owing as dues to the Union from employees for whom no dues were deducted in the preceding month, and such amounts shall be deducted with the employee's next regular dues deduction. LOCAL 502, IUE-AFL-CIO INDIVIDUAL CHECKOFF AUTHORIZATION To: Effective Date: ---------------------- ------------------ (Name of Company) I authorize and direct you to check off from my pay each month the sum of $ as my monthly Union Membership dues (agency equivalent fee), ----- including initiation fee of $ (if payable), and promptly to remit same ----- to Local 502, IUE-AFL-CIO. This check-off authorization shall continue until revoked and may be revoked only at the times and in the manner provided below and shall be irrevocable for a period of one year from 19 , or until the ------------ -- expiration of the Agreement between the Company and the Union (whichever occurs sooner), and shall be irrevocable for each succeeding year thereafter, or until the expiration of the said successive applicable Agreement between the Company and the Union (whichever occurs sooner), unless it is revoked by me within the seven (7) days preceding the end of such period of irrevocability. Revocation shall be effective only if I give you and Local 502 written notice by individual registered mail, return receipt requested, and it is received or postmarked during the period specified above. --------------------------- (Employee's Signature) LOCAL 502 IUE-AFL-CIO Dept. Clock No. ------------ ------------ ------------ 6 3. (a) Temporary employees (college summer help) as a condition of employment, shall, upon accumulation of 960 hours after the date of hiring, become members of the Union and remain members in good standing during the remainder of their temporary employment. Such employees may be terminated by the Company at any time during such temporary employment and not guaranteed re-employment. Neither shall such employees have seniority rights over any permanent employee. Such temporary employee shall acknowledge in writing, within 120 hours of their employment, their understanding of this Article 2 and its applicability to them. (b) The wage of temporary employees will be $8.50 per hour. On 6/8/97 the rate will be $8.75. On 6/7/98 the rate will be $9.00 per hour. 4. No temporary employees will be hired while permanent employees are on layoff. 7 ARTICLE 3 NOTICES The Union shall have the right of free use of Union bulletin boards in the Company's plants for notices in regard to meetings, social gatherings, collecting dues, names of candidates and other notices, provided all such notices are first submitted to and approved by the Human Resources Manager. 8 ARTICLE 4 HOURS 1. Forty (40) hours of work per week, consisting of five (5) days: Monday, Tuesday, Wednesday, Thursday and Friday, not exceeding eight (8) hours per day, shall constitute a normal week's work, except for employees engaged in continuous operations. 2. "Continuous operations," as used in this Agreement, shall be jobs that normally require work seven (7) days a week, such as furnace firemen, boiler firemen, pitch impregnating and graphitizing crews. (a) The Company is not opposed to dupont shifts as a matter of principle. When the Management feels that a situation is appropriate for dupont shifts, and a majority of a crew agrees, the Department Superintendent may implement such shifts. 3. The above provisions are not intended as a guarantee of eight (8) hours work per day or forty (40) hours of work per week. 4. A maximum of fifteen minutes may be permitted for shower time at the end of a complete shift, however, this allowance shall not be used to interrupt the completion of a job or assignment. 9 ARTICLE 5 REPORTING PAY 1. Any employee who reports for work as scheduled and has not been given at least six (6) hours notice not to report shall receive four (4) hours of available work or pay, and employees working the Dupont shift will receive six (6) hours of available work or pay, at the discretion of the Company. This provision shall not apply in the event any of the following conditions interfere with work being provided; power failures, machine breakdowns, fires, disasters, etc. 2. Employees who are absent on any day for any reason shall not be eligible for reporting pay, if upon their return no work is available, unless the employee was excused in advance. 3. It is the employee's responsibility to insure that his current address and telephone number are on file with his immediate supervisor. 10 ARTICLE 6 CALL-IN PAY An employee who has completed his regularly scheduled shift and is contacted to return to work within the next sixteen (16) hours, either voluntarily or as directed, shall receive at least four (4) hours work or pay at the discretion of the Company. Employees who are called to work outside of their regular shift or schedule shall be paid at the rate of double time for such hours worked, and straight time hourly rate for the balance of the four (4) hours if not worked. Employees shall receive shower time on call-in if they work at least four (4) hours. Also, if an employee works at least four (4) hours on the call-in, he will receive a ten (10) minute rest period and, if he continues an additional four (4) hours, he will be entitled to an additional ten (10) minute rest period. 11 ARTICLE 7 REST PERIODS The Company shall grant all employees rest periods totalling twenty (20) minutes for each eight (8) hour shift; wherever practical during such periods, employees shall be free to leave their work places. Hourly workers shall be paid for this time. 12 ARTICLE 8 OVERTIME AND NIGHT BONUS 1. All work performed in excess of eight (8) hours in any one workday, or in excess of forty (40) hours in any regularly scheduled workweek, and all work performed on Saturday, Sunday and holidays, as listed below, shall be paid for at the rate of time and one-half. 2. Employees engaged in noncontinuous operations shall be paid at double time for all work performed on Sunday. 3. Overtime work shall be divided as equally as possible among employees who regularly perform a similar class of work. In the event all employees in a job classification on a shift are scheduled to work overtime and additional employees are necessary, employees from within the job classification will be scheduled in preference to employees from other job classifications, except if call-in pay is necessary to effect a cross-shift assignment the Company may select another employee from within the shift. In the event a temporary vacancy has been filled in accordance with the provisions of Article 11, Section 2, 2(a) and 2(b), the temporary replacement will be assigned to work the overtime. (a) Each foreman will maintain a record of overtime and furnish a copy of that record to the Department Steward upon reasonable demand. (b) Failure to work overtime shall be recorded as having been worked. (c) In the event an absence occurs due to accident, injury or illness, said employee will be charged for overtime as follows: (i) If employee is off less than fourteen (14) days there will be no charge of overtime if the employee was not asked. (ii) If employee is off more than fifteen (15) days the employee will be charged the average overtime worked during his absence upon his return. 4 A list of qualified people in the groups listed below will be maintained and, if all bid-in employees have been asked and refused the overtime, then Miscellaneous employees will be canvassed, and then qualified employees listed will be canvassed, without the necessity for call-in pay. If no qualified employees are willing to work the overtime, the bid-in employee(s) who is low in overtime will be required to work. Groups as used in this section are: 1. Plant 3 (Dept. 18, 19, 22, and 49) 2. Bake (Dept. 20 and 23) 3. Acheson Graph (Dept. 01, 17, 21, and 28) 4. Plant 607 (Dept. 47) 5. Electricians 6. Mobile Mechanics 7. Maintenance Mechanics 8. Outside Maintenance In the event qualified employees are selected to work overtime in place of bid-in employees, they will be charged for the overtime. Similarly, employees from the qualified list will be charged overtime if they refuse. 13 5. When an employee completes a full eight (8) hour shift and is obliged to work overtime for a period of four (4) hours or more, he may take a half hour lunch period for which he shall be paid. At the end of eight (8) hours he either gets a half hour lunch period or, if he must work through twelve (12) hours, he will receive a half hour extra pay. If he is working with a crew which receives a break, he will also be permitted the break. 6. It is agreed that overtime pay shall not be pyramided. In all cases concerning pyramiding, the highest premium rate only shall be paid. 7. Employees, when working overtime, shall be paid the overtime rate on their earnings during that overtime period. 8. All employees working the second and third shifts shall be paid at the rate of time and one-tenth. This shall also apply to incentive and overtime. Third shift employees working overtime hours, consecutive with their regular shift hours, will be paid at the rate of time and one-tenth for all overtime hours worked. First shift employees working twelve (12) or more consecutive hours will be paid at the rate of time and one-tenth for all overtime hours worked. 9. Wherever possible, except in an emergency, all employees will be notified seventy-two (72) hours in advance that they will be called on to perform work on Saturday and Sunday. 10. An employee who is scheduled to work on Saturday and is absent from work on Friday shall be considered to be unavailable for Saturday overtime if he does not report off by his or her mid-shift on Friday. 11. All Union employees will be canvassed within the group as defined in Article 8 - Section 4 before any probationary employees. 14 ARTICLE 9 HOLIDAYS 1. The following holidays shall be designated as "paid" holidays from June 3, 1996 to June 7, 1999: Independence Day December 24 Labor Day Christmas Day Veterans Day New Year's Day Thanksgiving Day Good Friday Day after Thanksgiving Memorial Day First day of Buck Hunting Season 2. Whenever possible, the Company will notify the Union three (3) working days in advance of a designated holiday whether or not work will be performed on that holiday in the plant or certain departments. 3. Continuous operators shall be paid even though the holiday falls on a scheduled day off. (a) Employees working the DuPont schedule who do not work their scheduled holiday due to plant/department shutdown will be paid 12 hours at the reduced rate. 4. All employees working on a paid holiday shall be paid, in addition to eight (8) hours straight time pay, time and one-half for all hours worked. 5. Any employee who is in the first step of the absentee disciplinary procedure and is absent the day before or the day after an observed paid holiday, unless excused otherwise by Management, shall not receive any pay for said holiday. (a) In order to be eligible to receive pay for a holiday not worked, an employee will be required to have a punch sometime in the pay period in which the holiday falls. (b) "Inactive employees will be ineligible for holiday pay under the following conditions": (i) New Hires who start after the holiday. (ii) Voluntary quits prior to the holiday if they do not work on their scheduled day immediately preceding the holiday. (iii) Employees discharged for cause prior to the holiday if the discharge is upheld. 6. In the event an employee is injured or is ill during the pay period in which the holiday falls, said employee will nevertheless be paid for such holiday, if he works at all during that pay period. The Company may require medical proof of such injury or illness. 7. Employees who are scheduled to work on a paid holiday and fail to report for work shall not receive any pay for said holiday, unless said employee notifies the Company not later than noon of the day before the holiday and is excused from reporting. 8. It is understood and agreed that Saturdays, Sundays and holidays shall begin with the morning shift and shall continue for twenty-four (24) hours thereafter. 9. When a paid holiday falls on a Saturday it will be celebrated on Friday; when a paid holiday falls on a Sunday it will be celebrated on Monday. 15 10. Any continuous or maintenance employees, who work a paid holiday, may elect to take another day off without pay within sixty (60) days following that holiday at the discretion of the Company, with seniority being the basis for consideration. 11. The First Day of Buck Hunting Season and Christmas holidays will be considered restricted workdays except for Power Monitors and Kiln Attendants. The Company will, to the greatest extent practical, minimize the work requirements on these days. If the Company is unable to fill all of the requirements deemed necessary on a voluntary basis, junior qualified employees will be directed to work. 16 ARTICLE 10 SENIORITY 1. The Company agrees to recognize the principle of seniority insofar as it applies to regular employees who have been employed by the Company for more than the probationary period. 2. Any new employee hired by the Company shall be placed on a probationary period consisting of 480 hours actually worked. During this time, the Company will have the sole right to determine whether employment will be continued. Upon completion of this probationary period, the new employee shall automatically receive the applicable miscellaneous rate in Article 40 hereof. 3. Seniority shall not apply during an employee's probationary period, and any employee may be discharged during such probationary period, but when an employee has remained in continuous employment and has actually worked 480 hours or more, said employee's seniority shall be computed from the date first hired. 4. In all cases of layoffs, recall, transfers and promotions, length of service and ability shall govern. "Seniority", as used herein, shall mean length of service, qualifications and ability. Qualifications, previous experience with the Company or elsewhere, education, skill and ability, related work, etc., shall be determined by the Company, subject to the grievance procedure. (a) The only jobs requiring the passing of an aptitude test will be those in Group III Power Monitor and Kiln Attendant or those that are progression jobs which lead to a job listed under Group III. Employees who have bumped or are recalled will be subject to 120 hours qualifying period, (200 Hours for Group III Power Monitor and Kiln Attendant). (b) Employees may request a review of the results of the aptitude test with a Union representative present at the time the results are reviewed. 5. An employee's seniority will end and he will be considered terminated if he: (a) voluntarily quits, or (b) is discharged or released for proper cause (c) has not worked for the Company for thirty-six (36) consecutive months, or (d) fails to comply with the layoff-recall provisions of Article 12, Sections 3 and 4. 6. Seniority shall be maintained, but shall not accumulate beyond thirty-six (36) consecutive months absence due to illness, when supported by a doctor's certificate. In all cases of absence due to illness, the Company may require the said employee to be examined by another physician; and, in the event said employee refuses to submit to such examination, or after examination is certified as able to perform available work and said employee declines such work, he shall be discharged and his seniority shall cease. 7. The Company agrees that it will furnish the Union each month with a list of all employees hired, laid off, recalled, transferred from one department to another and/or promoted out of the bargaining unit. 8. An employee who is transferred out of the bargaining unit shall accumulate seniority following such transfer for an additional period, not to exceed one year, and have the right in the event of a layoff or abolishment of his job to return to available work in the bargaining group in line with his accumulated seniority as described above. Employees who return to available work in the bargaining unit will not be permitted to bid for a period of six (6) weeks. Employees transferred prior to the 1969 Agreement shall have accumulated seniority, for purposes of this Article only, to October 15, 1970. 17 (a) An employee transferred out of the bargaining unit after March 9, 1984 shall accumulate seniority following such transfer for an additional period not to exceed one year. Such transferred employees must decide at this time whether or not they wish to return to the bargaining unit. If their choice is to remain out of the bargaining group they relinquish all rights to return to that unit. If their choice is to return to the bargaining unit the conditions set forth in 8. above will apply. 18 ARTICLE 11 JOB BIDDING 1. The following increase in work force procedure will be followed for all plants: (a) The Company shall post all bid jobs factory-wide for a period of seven (7) calendar days, and any employee may apply for them. Such bid jobs must be posted within fourteen (14) calendar days after the vacancies exist. In the case of a retirement, the job will be posted twenty-one (21) calendar days prior to the effective retirement date. (b) Preference will be given the employee with the greatest seniority, provided: (i) said employee has not requested and received another job within the preceding eight (8) weeks. The eight (8) weeks shall be determined by the removal date on the bid sheet, and (ii) said employee is competent to perform the work. The Company shall be the judge of the competency of its employees, subject to review under the grievance procedure. "Competency" shall be considered to mean ability to do an available job in a workmanlike manner and in the event any employee because of inability whether due to lack of experience, physical unfitness or otherwise is unable to perform available work in a workmanlike manner, the job will be re-bid. (iii) A successful bidder is required to complete any physical testing requirements within six (6) calendar days of the date the job is removed from bid. If the successful bidder does not comply, he shall remain on his job, his vacancy shall be cancelled, and the job shall be awarded to the next senior qualified bidder. (iv) Employees on S&A who bid and are awarded the job must be able to perform the job duties within four (4) weeks of removal of bid. If not able to perform the job, the job will be re-bid. (c) In the event an employee voluntarily requests and is granted a transfer to another plant, said employee shall comply with Sections (b) (i) and (ii) above before bidding. All voluntary straight out transfer requests must be honored before recalling any junior employee from layoff or new hire to fill the job. This employee shall be considered as the junior miscellaneous employee in that department for a period of six (6) weeks from the date of the transfer, for the purpose of premium assignments. The Union agrees that this language will not be used to the extent of hindering the Company's production requirements in any Department. (d) The Company agrees that it will transfer the successful bidder to the bid job within a period no greater than four (4) weeks. (e) When the Engineering Department turns over new equipment to the Production Department and the equipment is approved by the latter for production purposes, then the Company shall post a bid, if a vacancy exists, within seven (7) calendar days after the acceptance of the new equipment by the Production Department. (f) When a bid job has been posted for a period of seven (7) calendar days and no bids have been received, then the job shall be filled at the discretion of the Company with rights as though bid, except that Section (b) (i) above shall not apply if he elects to bid another job. 19 (g) Applications to fill vacancies must be in writing and shall be deposited in a sealed box to be provided by the employer and placed in the various plant offices. The employer and the Union shall jointly open the sealed box and examine the applications for the job vacancies. (h) In the event an employee is a successful bidder and he declines to accept, he shall be transferred, as soon as practical but never longer than four (4) weeks later, to miscellaneous in the plant he is part of at the time of bidding, and he shall be prohibited from any further bidding for a period of six (6) months. Furthermore, this employee shall be considered as the junior miscellaneous employee in that department for a period of three (3) months from the date the employee is transferred to miscellaneous for the purpose of premium assignments. 2. In the event a temporary vacancy occurs due to accident, injury, illness, contested discharge or suspension, or other absence of a regular employee, the job will not be posted but filled by an available employee who shall continue as the temporary replacement for the remainder of the vacancy. (a) The employee will not assume the seniority of the employee he is replacing. (b) In the event of a layoff or reduction of work in the job classification, the temporary employee will first be removed. (c) If an employee's physical condition is such that it is medically certified that the employee will never be able to return to his bid job, the job will be posted for bid. 3. When it becomes necessary to reduce permanent classified jobs (not miscellaneous jobs) in Plant 3, Mass and Sagger Bake and Inspection, Graphitizing Department, Pitch Impregnating, Central Cleaning Department, and Plant 607 due to a long term lack of work, such jobs shall not be posted for bid, and the employees holding these jobs shall be returned to their positions without virtue of bid when the jobs are re-established. If a person is holding job rights under this paragraph, he is the youngest miscellaneous employee, unless he agrees to give up job rights, then he falls back in line with seniority. When a permanent vacancy(s) occurs within a plant complex, the jobs will be offered out in line with seniority. All miscellaneous employees in the complex shall be canvassed for the opening(s), with employees retaining rights to bid jobs being asked last. If all employees refuse the opening(s), the youngest employee(s) in line with regular seniority will be assigned to the vacancy(s). A permanent vacancy is defined as any job normally posted for bid. A temporary vacancy(s) will be filled according to the miscellaneous agreement (Article 11, paragraph 2). 4. A bid job shall be considered permanent only after it has continued in operation for a period of more than three (3) weeks after the bid notice has been taken down. (a) In the event that an employee is removed from a bid job within the three (3) weeks because the job is abolished, he will return to his old bid job in his original plant. If the employee's prior job was miscellaneous work, he will return to his original plant. 5. In an effort to clarify the practice of filling temporary vacancies in the Plant, it is hereby understood and agreed that the following procedures shall apply for employees holding "bid rights" within a department. 20 (a) When two or more employees holding "bid rights" are working in their bid-in-department on a temporary basis, the junior in seniority will be removed first and returned to the miscellaneous workforce, irregardless of who was first to fill a vacancy. (b) When one employee holds "bid rights" and is working a temporary vacancy in his bid-in department, and the other employee is miscellaneous, the miscellaneous employee will be returned to miscellaneous first. (c) When two or more miscellaneous employees are filling temporary vacancies, the miscellaneous employee shall continue as the temporary replacement for the remainder of the vacancy. It is understood that in the event of cross-shift assignments in the case of a. or b. above, it may be necessary to retain the junior "bid rights" holder or miscellaneous employee for a day in order to effectively change the shift of the senior employee. 6. Vacancies of one (1) day or less which occur with or without advance notice will be filled from the miscellaneous workforce in accordance with normal canvassing procedures. Vacancies of two (2) days or longer will be filled with the senior bid-in operator holding rights. Vacancies which occur as a result of absences on a day-to-day basis without notice, will be filled from the miscellaneous workforce by following normal canvassing procedures. It is also understood that in the event of cross-shift assignments it may be necessary to retain the junior bid-rights holder or miscellaneous employee for a day in order to effectively change the shift of the senior employee. 21 ARTICLE 12 DECREASE IN WORK FORCE 1. In the event of transfers or layoffs due to a reduction in the work force, seniority will govern. Employees will be permitted to displace other employees, except those jobs listed in Group III and listed below, provided those retained are competent to perform the work. (a) Employees may displace a junior employee in Group III, or those listed in paragraph l.b. only if they previously held that classification and when they would be placed on layoff from the factory. (b) The Protected Jobs are: 365 Kiln Attendant 719 Power Monitor 2. The following reduction in force procedure will apply for all plants as set forth in Section 9 of this Article. (a) An employee affected under this Section will be placed on available work within his plant. If there is no available work, he will displace the least senior employee within the plant. (b) An employee removed from his plant under Section (a) or unable to bump under Section (a) will then be placed on available work factory-wide. If there is no available work factory-wide, he will displace the least senior employee factory-wide. Rather than exercise this bump, the employee may elect to take a layoff. (c) The least senior employee factory-wide who is affected by bumping will then be placed on layoff. (d) An employee's election not to bump under Section (b) above shall be construed to mean that the employee is not suited for the work offered and will not prejudice his right to receive benefits under the Unemployment Insurance Program in the state of Pennsylvania. 3. Employees, if able to perform the job, will be recalled from layoff in line with their seniority and without regard to their former plants. However, employees exercising the option in Section 2(b) above must specify at time of layoff to which plants (other than the one for which a bumping opportunity was refused) he or she would be willing to accept recall. In the event of a recall opportunity to any of those plants for which a preference was indicated, the employee must either accept the recall or be terminated. 4. In the event a laid off employee fails to report for work at the time said employee is directed to do so and should such employee also fail to notify the Company of any reason for failing to report as directed, then, in such event, the Company is under no obligation to offer such employee an opportunity to return to work, and such employee shall lose all seniority rights. At least five (5) days notice, by registered mail, to the employee's last known address shall be sufficient for the purpose of this Section. A copy of the notice will be sent to the local Union. 5. If a laid off person is recalled any time within thirty-six (36) months from his date of layoff, he will receive seniority credit for the actual time laid off. 6. Except in cases of classifications where in the judgment of the Company special fitness or skill is required, no new employee will be hired until all laid off employees with seniority rights who are capable of efficiently performing the work have been given an opportunity to return to work. 22 7. When an employee is removed from his plant due to a decrease in work force other than layoff, said employee may request a transfer back to his original plant from the foreman in his new department. This request will be filed with the Human Resources Office within fourteen (14) days of his removal and a copy shall be given to the Union. (a) When vacancies occur in his former plant, Management, before hiring any new applicant or recalling a junior employee from layoff for such vacancy, will honor, by seniority, a written request for transfer back to such plant from any employee who was transferred from such plant through no fault of his own, provided said employee is competent to perform the work. (b) In the event an employee bids and secures a job in his new plant, his right to transfer back to his original plant shall cease. (c) When an employee takes a voluntary layoff he will be treated as a decrease in workforce upon his return from the voluntary layoff. 8. (a) A "temporary layoff" shall be defined as any layoff not exceeding four (4) days in duration because of lack of work, power failures, machine breakdowns, fires, disasters, etc. In such event, employees of the affected job classification on a shift shall be laid off in seniority order but without bumping opportunities in the case when the events leading to the temporary layoff became known after the beginning of the workday. If such temporary layoff continues into the next workday, the application of seniority will be within the job classification without regard to shift. Such shift reassignments as are required to effect these seniority provisions shall not result in premium or call- in pay. When the temporary layoff is concluded, the employees first recalled will be those who are regularly assigned to the first full shift scheduled. If other work is available in any plant, it will be distributed in accordance with seniority, as above defined. This temporary layoff provision will not be used to effect work sharing or to avoid a permanent layoff because of a sustained reduction in the work load. (b) For DuPont shift workers, a temporary layoff shall continue to be defined as four (4) days, however: (i) The first three (3) days shall be exactly as defined above. (ii) At the time of layoff, each employee will be canvassed as to his desire to work on the fourth day. For those desiring to work, the Company shall provide available work. 9. For the purpose of decrease in work force or such other purposes as are expressly provided for in this Agreement, it is agreed that The Carbide/Graphite Group is divided as follows: Plant 3 - Double Deck and Miscellaneous; Carbottom, Mass and Sagger Bake, and Miscellaneous; Pitch Impregnating Department, Central Cleaning Department, and Graphitizing (Acheson and Longitudinal) Department and Miscellaneous; Plant 607 (Department 47) and Miscellaneous; Mechanical Maintenance; 23 Electrical Maintenance; Outside Maintenance; Mobile Maintenance. Each of the above groups shall be interpreted as a plant. 10. If an employee elects to take a voluntary layoff in accordance with this Article, the employee shall have the opportunity of exercising bumping privileges into his seniority unit at thirteen (13) week intervals from the last day worked, or upon expiration of such employee's Unemployment Compensation benefits provided his seniority so permits, and the employee provides two (2) weeks notification to the Company of the Unemployment Compensation benefit expiration and his intention to return. In the event the seniority of the employee on voluntary layoff status would not permit the employee to be working, that status will convert to involuntary layoff, and all benefits shall revert to those benefits as provided for with involuntary layoff. Any employee who elects a voluntary layoff shall have insurance coverages for medical, surgical, hospitalization, major medical, prescription drug and life insurance continued for a maximum of thirty-nine (39) weeks from the last day worked. The employee may continue such coverage for the thirty-nine (39) week duration by payment of the contractually specified amount for the same to the Company. 24 ARTICLE 13 JOB DESCRIPTION AND EVALUATION 1. It is agreed and understood that the wage structure for this plant is based upon job evaluation. 2. The present job evaluation plan shall be used in evaluating the new jobs and in reevaluating existing jobs when changes in job content occur. In the event no agreement is reached, it is agreed it shall be handled under the grievance procedure. 3. Classifications and the establishment of new classifications shall be subject to negotiation and agreement by and between the employer and the Union. Disputes shall be subject to the grievance and arbitration procedure. 4. The Company agrees to notify the Union of new job evaluations and changes in existing evaluations. The Company will furnish the Union with copies of job descriptions, and they will be deemed a part of this Agreement. Job descriptions and evaluations shall be kept up to date. 5. Where certain jobs were granted an inequity increase by the Company, and which was added to the evaluated classified wage rate, then a reevaluation of any such job shall not be cause for the Company to take away the inequity increase granted such job. 6. It is understood that the Company is presently engaged in a program to update job descriptions and evaluations for existing job classifications. In case a job is reevaluated at a lower rate of pay, the employee presently on that job shall receive no reduction in his classified wage rate. Any employee whose current rate exceeds the evaluated job rate shall continue to be paid the current rate until such time as the employee leaves the job or the job is abolished. All other employees hereafter assigned to the job shall receive the evaluated job rate. 7. The members of the Union Shop Committee shall also act as the members of the Union Job Evaluation Committee. Time lost by the members of the Committee on problems dealing with job evaluation shall be paid for by the Company in the same manner as provided for under Article 37, Section 7, in the current Agreement. 25 ARTICLE 14 DISCHARGES 1. Any employee guilty of habitual absenteeism, who does not report for work for a period of five (5) days, may be dropped from the Company's payroll and said employee's services and seniority terminated. 2. Any employee who is absent from work for a period of ten (10) days without a justifiable reason or excuse may, upon proper notification from the Company, be dropped from the Company's payroll and said employee's services and seniority terminated. 3. (a) Discharge of regular employees may be made subject to cause only, and all discharges are subject to review between the Union and the Company under the grievance procedure. (b) In the event that after a discharge or a suspension pending a discharge the Company reinstates any employee so involved, it may do so with full or part pay, or without any pay whatsoever, for the period of the suspension or discharge. (c) In the event that any discharge becomes the subject of arbitration and if reinstatement is ordered, the arbitrator may provide for reinstatement with full or partial pay, or with no pay whatsoever, for the period of the discharge. 4. It is important that complaints regarding unjust or discriminatory layoffs or discharges be handled promptly. Grievances must be signed by the Chief Steward or his designated alternate and filed with the Human Resources Department within three (3) working days of the layoff or discharge; the Management will review and render a decision on the case within three (3) working days of its receipt. If a decision of the Management in such a case is not appealed within three (3) working days, the matter will be considered closed. 5. It is understood that violation of Company rules is proper cause for appropriate disciplinary action or discharge, subject to review under the grievance procedure. 6. In the event a discharge becomes the subject of arbitration it must be referred to arbitration within seven (7) days, it being understood that the purpose of this clause is to have such arbitration held with all reasonable dispatch. 26 ARTICLE 15 VACATIONS 1. Paid vacations shall be granted as follows: (a) Upon completion of one (1) year of employment, but less than two (2) years - one (1) week. (b) Upon completion of two (2) years of employment, but less than seven (7) years - two (2) weeks. (c) Upon completion of seven (7) years of employment, but less than nine (9) years - two (2) weeks, plus one (1) day. (d) Upon completion of nine (9) years of employment, but less than ten (10) years - two (2) weeks, plus two (2) days. (e) Upon completion of ten (10) years of employment, but less than sixteen (16) years - three (3) weeks. (f) Upon completion of sixteen (16) years of employment, but less than seventeen (17) years - three (3) weeks, plus one (1) day. (g) Upon completion of seventeen (17) years of employment, but less than eighteen (18) years - three (3) weeks, plus two (2) days. (h) Upon completion of eighteen (18) years of employment, but less than nineteen (19) years - three (3) weeks, plus three (3) days. (i) Upon completion of nineteen (19) years of employment, but less than twenty (20) years - three (3) weeks, plus four (4) days. (j) Upon completion of twenty (20) years of employment, but less than twenty-three (23) years - four (4) weeks. (k) Upon completion of twenty-three (23) years of employment, but less than twenty-five years (25) - four (4) weeks, plus two (2) days. (l) Upon completion of twenty-five (25) years of employment, but less than twenty eight (28) years - five (5) weeks. (m) Upon completion of twenty-eight (28) years of employment, but less than thirty (30) years - five (5) weeks, plus two (2) days. (n) All employees upon completing thirty (30) or more years of employment shall be granted six (6) weeks vacation. 2. Vacations shall be paid at the average earned rate and shall be based on the average number of hours worked in the first five (5) pay periods in the six (6) pay periods prior to the vacation, but not less than forty (40) hours times the classified rate of the job classification existing at the time the vacation is taken. 3. When vacation time includes a paid holiday, an additional day of vacation shall be granted. 27 4. All employees whose services are terminated for any cause whatsoever shall receive, with their final pay, their earned vacation allowance. (a) An employee who is placed on layoff prior to September lst of a calendar year may request that five (5) vacation days be held in anticipation of a recall. (b) Employees electing the option under 4 (a) who are recalled after September lst, or not recalled in that year, shall be paid for the five (5) days. 5. Returning veterans shall be treated as having worked continuously for the purpose of computing vacations. 6. Any employee entitled to five (5) weeks vacation may elect to take his or her vacation in five (5) periods. 7. In the event that an employee is laid off and is later recalled, he may be required to complete two (2) months of continuous employment before taking any vacation to which he may be entitled. 8. Employees may elect to take one week of vacation pay in lieu of time off at the discretion of the Company. 9. An employee may elect to take his vacation in individual days and receive vacation pay for said day in his next regular pay period. 10. Effective October 1, 1994 the vacation year will begin on October 1 and end the following September 30. Employees will specify normal vacation preference in writing by September 1 of each year on forms provided by the Company no later than August 1 of each year. Normal vacation preferences may be changed upon request for good and sufficient reasons. The Company will notify employees whether their vacation requests are granted by October 1 of each year. It is understood that selections of preferred vacation made after October of each year will be on the basis of the next senior employee denied the days, then "first come, first served". The only time after October 1 that vacation schedules may be altered by the Company is by job changes of a senior employee. The junior employee shall then be notified within thirty (30) days that his vacation schedule must be altered. It is also understood that if a major shift in work schedule occurs (for example, continuous shift to Dupont shift or vice versa) after the vacation schedule has been completed, it may be necessary to reschedule vacations. 28 ARTICLE 16 TRANSFERS 1. When an employee is assigned to a job listed in Group 1 (see Schedule 1), whether due to bidding, layoff or transfer, said employee shall be paid the classified rate of the job or task to which said employee is assigned if said employee was previously classified, otherwise said employee will be paid the miscellaneous rate until such time as the said employee becomes competent to perform the work and is so classified. An employee who fails to qualify for classification in a 120-hour working period (within his classification including Saturday, Sunday, sixth and seventh day overtime) shall be placed under Section (b). The Company and the Union may agree to extend the 120-hour working period. (a) When an employee is assigned to a job listed in Group II (see Schedule 1), whether due to bidding, layoff or transfer, said employee shall be paid the classified rate of the job or task to which said employee is assigned if said employee was previously classified for that job, otherwise said employee will be paid the miscellaneous rate until such time as the said employee becomes competent to perform the work and is so classified. An employee who fails to qualify for classification in a 200-hour working period (within his classification including Saturday, Sunday, sixth and seventh day overtime) shall be placed under Section (b). The Company and the Union may agree to extend the 200-hour working period. (b) In the event that an employee is removed under this Section, he will be placed as if he were a miscellaneous employee and he will return to miscellaneous work in his original plant. 2. An employee working on a task for which said employee has not been classified and for which a "standard" has been established shall be paid the "standard hours" times the rate for the job or task for such time as said employee exceeds the standard. 3. A classified non-incentive employee temporarily assigned at the convenience of the Company shall be paid for the remainder of the shift or for the first full shift assignment, if the assignment is initially made at the beginning of the shift, at the rate of the job on which said employee worked immediately before the transfer or the rate of the new job, whichever rate is higher. Classified incentive employees temporarily reclassified or transferred from one job to another shall be guaranteed at least the average earnings on their former job for the remainder of the shift or for the first full shift assigned, if the assignment is initially made at the beginning of the shift, provided the transfer is at the convenience of the Company. In the event the temporarily reassigned employee is replaced on his job, he shall be paid the higher of the permanent and temporary rates. Reassignments due to lack of work will not be cause for maintaining the rate of the job from which transferred. 4. (a) Decrease in Workforce - See Article 12 - Paragraph 7 (a), (b) and Paragraph 10. (b) Regular Transfers - See Article 11 - Paragraph 1.(c). 29 ARTICLE 17 LEAVES OF ABSENCE 1. Any member of the Union (not to exceed two (2) members) being elected to permanent or temporary office or selected for appointive office by officials of the International Union, shall be guaranteed reemployment on his former job of his last employment with full seniority accumulated during such absence. 2. Any member of the Union being elected as a delegate to any Union activity necessitating a temporary leave of absence shall be granted such leave and, at the end of the mission, shall be guaranteed reemployment with full seniority accumulated during such absence. 3. Any employee may request a leave of absence not to exceed thirty (30) days, provided said leave is not for the purpose of working elsewhere. The Company, within its discretion, shall determine the advisability of granting such leaves of absence. The Company will notify the Union whenever leaves of absence are granted. 30 ARTICLE 18 GRIEVANCES 1. A "grievance" shall be defined as a complaint regarding wages, hours of employment and/or working conditions. The grievance must be taken up within thirty (30) days of occurrence by the employee(s) involved. 2. All employee grievances which arise shall be adjusted in the following manner: (a) Between the aggrieved employee and the Department Steward or, in his absence, the nearest available member of the Union's Shop Committee on the one hand and the Department Foreman on the other. If no satisfactory settlement is reached between them within eight (8) hours, the complaint shall be reduced to writing and shall be referred to: (b) The Chief Steward and/or his designate, the Department Steward in which the grievance originated and the Department Superintendent and Foreman, who shall meet within seventy-two (72) hours, excluding Saturdays, Sundays and holidays. In the event a satisfactory agreement is not reached within twenty-four (24) hours, the matter shall be referred to: (c) The Shop Committee and representatives of the Company, who shall meet once a week or whenever necessary. Any issue discussed at one week's meeting shall be answered within seven (7) calendar days. If the decision of management in such cases in 2 (b) and 2 (c) is not appealed within fourteen (14) calendar days from the date that is picked up and signed for at the Human Resource Office by the Chief Steward or his designate, the matter will be considered closed. In the event of further failure to settle the grievance, the matter shall be referred to: (d) Representatives of the Union and representatives of the Company. Any issue discussed at a Fourth Step Meeting shall be answered within seven (7) calendar days. If a decision of the Management in such a case is not appealed within seven (7) calendar days, the matter will be considered closed. Both parties by mutual consent may extend the seven (7) day period. 3. It is agreed that all matters pertaining to policy or to the interpretation of any clause of this Agreement shall be dealt with among the Shop Committee, representatives of the Union and Management or any person designated by Management. 4. The Company shall supply the Union with all legally required, pertinent information in connection with the adjustment of any grievance. 5. The Company and Union may at any time, by mutual agreement, refer a grievance directly to arbitration in accordance with Article 19, Arbitration. 6. The Company will pay any grievance pay within two (2) pay periods of final grievance resolution. 31 ARTICLE 19 ARBITRATION 1. Any dispute, which has not been satisfactorily settled with seven (7) days after the fourth step of the grievance procedure, may be submitted to arbitration by either party. In order to initiate this process, either party may request, by written notice to the Director of the Federal Mediation and Conciliation Service, a panel of names from the lists maintained by said Service. A copy of the communication to said Director will be forwarded to the other party to this Agreement at the same time the original request is mailed. Employees covered by this Agreement cannot, except through the Union, initiate or invoke the arbitration procedure set forth in this Article. (a) The Company and the Union shall attempt to mutually agree in writing as to the statement of the issue to be arbitrated and the arbitrator shall confine his decision to the particular matter thus specified. In the event of a failure of the parties to agree on a statement of the issue to be submitted, the arbitrator shall confine his decision to the written grievance. 2. Upon receipt of a request for arbitration, the Federal Mediation and Conciliation Service will forward a duplicate panel of arbitrators to both Company and Union. No arbitrator shall be appointed by the Service who has not been approved by both parties. In the event the parties fail to agree on an arbitrator after exhausting three (3) panels or within three (3) months, whichever occurs first, the Federal Mediation and Conciliation Service shall appoint an arbitrator. 3. Notwithstanding any other provision of this Agreement, no arbitrator shall, without specific written agreement from the Company and the Union with respect to the arbitration proceeding before him, be authorized to add to, detract from or in any way alter the provisions of this Agreement. 4. Either party may be represented by counsel at any hearing without prior notification to the other party or the Service. 5. The award of the arbitrator shall be in writing and final and binding upon the parties to this Agreement. The award shall be made within thirty (30) days from the close of hearing, unless otherwise agreed to by the parties. 6. The Company and the Union shall bear equally the fee and expenses of the arbitrator. 7. Unless there is written mutual agreement between the parties that more than one grievance may be heard by an arbitrator, an arbitrator will be restricted to ruling on only one grievance. 32 ARTICLE 20 MANAGEMENT Management shall have the right to manage the affairs of the Company, subject to the limitations and the grievance procedure set forth in this contract. 33 ARTICLE 21 SAFETY AND HEALTH 1. The Company shall continue its practice of providing for the safety and health of its employees while at work. Protective devices and other equipment required by law to protect employees from injury shall be provided by the Company. The Union agrees that it will encourage all employees to work in a safe manner. 2. The parties agree to cooperate in achieving compliance with governmental safety and environmental regulations. 3. If an employee has good reason to believe that an assigned job may involve imminent danger to life or limb, the foreman and Union Steward will be notified immediately. If the matter is not resolved, it will be taken up with the Safety Engineer for the purpose of resolving the dispute. If the dispute is not then resolved, Management shall make an immediate investigation of the imminent danger complaint, including consideration as to the advisability of stopping the job pending final determination of the dispute where in the opinion of Management such action is warranted. If the decision of Management is that the job is safe, the employee must perform the assigned job. If the employee still feels an imminent danger exists, the Safety Engineer and the responsible Union Safety Representative shall meet for the purpose of taking prompt action to determine whether the condition is one involving imminent danger. It is agreed that neither the Company nor the Union will accept or tolerate employee claims of imminent danger which are capricious or otherwise not based on an actual fear that imminent danger does exist. 4. The Union and Company agree to form a joint committee, which shall be known as the Safety and Health Committee as follows: (a) A committee of six (6) employees - two (2) to be appointed by the Union, one (1) Shop Committee Member, and three (3) to be appointed by the Company. 5. The Safety Committee shall meet monthly at the call of the designated Safety Representative. The Committee shall discuss Safety and Health problems and make recommendations to Management to carry out our expressed mutual desire. Time lost by the employee members of the Committee from their regular scheduled hours of work in attendance at Safety Committee meetings shall be paid in the same manner as outlined in Article 37, Stewards. 6. If an employee injured on the job disputes a Panel doctor's determination that he is capable of returning to work, he may request a second opinion from a physician of his choice at Company expense. The employee is expected to report for work while awaiting the second opinion. The employee shall extend his best efforts to arrange an appointment within 48 hours. If an appointment cannot be arranged on his own time, the Company will pay for reasonable time away from the job for the purpose of having a consultation. In the event the two (2) physicians differ in their opinion as to whether the employee is able to return to work, they shall jointly select a third physician and the majority decision shall prevail. The expense of the third physician will be paid by the Company. injured employee is required to visit one of the panel physicians for a thirty (30) day period. After this, the employee may select the physician or practitioner of his choice. 7. The Company will provide once per contract year OSHA approved safety glasses for employees only. If the Company's participating Opticians are used, then the employee going to any of those locations will be treated as in the past. If the employee wishes to choose an optician of his/her choice, then the Company will pay a voucher allowance of seventy-five ($75.00) dollars. 8. The Company will pay a voucher allowance of ninety($90.00) dollars once every nine (9) months for safety shoes. After the second nine (9) month period, the voucher allowance will be increased to one hundred ($100.00) dollars. 34 ARTICLE 22 STRIKES AND LOCKOUTS 1. The Union will not cause or officially sanction its members to cause or take part in any strikes (including sit-downs, stay-ins, slowdowns or any other stoppages of work) and will cooperate with the Company in every way possible to prevent any such stoppages of work and to terminate such stoppages that may occur as soon as possible. The Company agrees not to lock out any of the employees. 2. Any employee who violates the above provisions or Section shall be subject to discipline or discharge. 35 ARTICLE 23 INCENTIVE PAY 1. Incentive rates shall be so set that the average operator can earn 130% of the base rate. 2. Machine-controlled operations will be set according to the following procedure: (a) Manual-controlled elements shall be set so that the average operator working at an incentive pace can earn 130% of the base rate. (b) Machine-controlled elements shall be so set that the average operator can earn 120% of the base rate. [See Article 27, Sections 6(a), (b), (c) and (d).] It is understood that an operator is not limited to earnings of 120%. 3. There shall be no favoritism in the distribution of incentive work. 36 ARTICLE 24 CHANGE IN METHOD OF PAYMENT There shall be no change in the standard hour method of payment for any employees covered by this contract without the agreement of the Union. It is further agreed that all piece rates and day work, wherever possible, shall be converted to the standard hour system as soon as is practical. 37 ARTICLE 25 TIME STUDIES 1. The Company agrees to establish courses in time study techniques in order to train Union personnel. No more than two (2) employees will be trained at any one time. The Union will submit the names of the designated employees to the Company. 2. Time lost attending these courses by such employees shall be paid for by the Company at their classified rate. While attending these courses, such employees will be under the supervision of the Control Department. 3. The Union Time Study man shall be provided with or have access to the records (copies) of the Time Study Department. Other than if it be absolutely necessary in the processing of a grievance, the Time Study information and records furnished to the Union Time Study Representative by the Company cannot be removed from the Company premises. In the event that it is deemed necessary in the processing of a grievance to take such records off the premises, the Union Time Study Representative must sign a receipt for such written information and records that he requests to remove from the Company premises. In no event will the records or information being made available to the Union Time Study Representative be passed on to Company competitors. 4. The Union Time Study man will be assigned to regularly work the first shift during the Monday through Friday workweek on a job for which he is qualified. 5. The Union Time Study man and the alternate shall not be subject to the layoff provision of the contract, in effect they will have super-seniority (only to be exceeded by that of the Shop Committee), but shall be subject to all other provisions of the contract. 6. No Union Time Study man or alternate shall be promoted or transferred out of the bargaining unit until he is released by the Plant Shop Committee of the Union. 7. The Steward or, in his absence, the operator shall be informed of any proposed time studies and the reason for which the studies are being taken. 8. When a study is completed, the Time Study Observer will inform the Steward or, in his absence, the operator of the following: (a) Name and classification of operator studied. (b) Total time of study. (c) Number of pieces or units produced. (d) The total number of strikeouts used during the study. (e) The performance rating factor for each element. 9. The Company will furnish the Union with a copy of the operation number and standard for all jobs studied. The Union shall have the right to question all time studies and, upon request, the Company will furnish the Union with a copy of the time study in issue. As may be necessary, the Union may request to have longer time studies taken on time values that are in issue. 38 ARTICLE 26 MAKING THE TIME STUDY 1. The Time Study Observer will contact the Foreman regarding the operations to be studied. The employee working on the operation will be informed by the Foreman that an analysis is to be made and a time study is to be taken. 2. The Observer will discuss any improvements with the Foreman, and the Foreman will instruct the Operator. 3. Divide the job into its elements and arrange them advantageously on the sheet. 4. Make elements as short as possible without interfering with accurate observations. 5. Describe elements exactly. 6. Assign numbers to the elements in the order of their first occurrence, as 1, 2, 3, 4, etc. If an element is repeated after its first occurrence, use the same number that was first used. 7. At the beginning of the first element to be included in the study, start the hour-decimal watch and read the time of day on the ordinary watch. 8. Record the time of day. 9. Record the hour-decimal watch reading: (a) At the completion of Element 1, record the watch reading in Column 1 opposite the heading "Continuous," the reading at the end of Element 2 in Column 2 opposite heading "Continuous," etc. (b) Allow the watch to run continuously. (c) At the completion of the first piece, allow the watch to run and return to column for second piece following the same procedure for next pieces. 10. When an operation is being time studied for the purpose of setting a rate a sufficient number of pieces shall be studied, the number to be governed by the nature of the job. In all cases the total number of pieces observed shall be at least twenty (20) or the total time of the study shall be at least thirty (30) minutes, whichever in the discretion of the Time Study Observer is more appropriate. In the event an operation in its entirety takes less than thirty (30) minutes, the entire operation shall be studied. When a detailed time study is completed, a rate will be issued. In the event a study is not completed, the Steward will be advised of the reasons and the incomplete study will be destroyed in his presence. 11. At the completion of the last element to be included in the study, record the time of day as indicated on any ordinary watch. 12. Make a note of the effort and skill for each element on the front of the sheet by checking the term that applies. 13. Sign and date the time study. 39 ARTICLE 27 ESTABLISHING THE STANDARD 1. The first step of the computations is to determine elemental elapsed times by subtracting successive watch readings. These times are to be recorded in column marked "Individual." 2. Before taking up the summary of the elapsed times, the study should be carefully examined for abnormal values. If any are found, they should be indicated so that they can be readily distinguished and excluded from the summary. No time shall be excluded unless it is noted on the study. No watch readings shall be struck out in the taking of a time study unless a clear explanation of the reason for the exclusion appears on the observation sheet. Strikeouts which are decided upon after the Time Study Observer has left the department will be shown on the Time Study Summary Sheet with the high strikeouts summarized and the low strikeouts summarized and the two totals listed separately. Should there be a dispute as to the number of strikeouts, only those values which are more than one standard deviation above or below the mean may be eliminated. 3. After elimination of abnormal values, the elapsed time for occurrence of each element is added and the average determined. The full decimal, to four (4) places, should be shown in this average. 4. The average time for each element will be leveled to an average or normal time by multiplying by the leveling factor determined by the following chart:
SKILL EFFORT --------------------------------------------------------- +15 A1 +13 A1 +13 A2 Super +12 A2 Excessive --------------------------------------------------------- +11 B1 +10 B1 + 8 B2 Excellent +8 B2 Excellent --------------------------------------------------------- + 6 C1 +5 C1 + 3 C2 Good +2 C2 Good --------------------------------------------------------- 0 D Average 0 D Average --------------------------------------------------------- - 5 E1 -4 E1 -10 E2 Fair -8 E2 Fair --------------------------------------------------------- -16 F1 -12 F1 -22 F2 Poor -17 F2 Poor ---------------------------------------------------------
CONDITIONS CONSISTENCY + 6 A Ideal +4 A Perfect --------------------------------------------------------- + 4 B Excellent +3 B Excellent --------------------------------------------------------- + 2 C Good +1 C Good --------------------------------------------------------- 0 D Average 0 D Average --------------------------------------------------------- - 3 E Fair -2 E Fair --------------------------------------------------------- - 7 F Poor -4 F Poor ---------------------------------------------------------
General Rating for Study Skill/Effort/Conditions/Consistency ------------------------------------------------------------ 5. Skill and effort ratings were marked at completion of time study. Conditions and consistency will be marked after subtraction of elapsed time. 6. The next step is to assign several standard allowances to the normalized time for certain factors not taken into consideration by the watch readings. (a) Fatigue refers to the physical exertion required by the task. A minimum fatigue allowance of 5% will be made on all elements of machine and handling time. 40 (b) Personal needs are required since it is necessary for the operator to go to the rest room, or secure drink of water, etc. Minimum allowance 5%. (c) Contingency refers to possible elements in the operation that are reasonably expected to occur but timing and length of occurrence are unpredictable. Lack of material or servicing, minor adjustments and power failures of short duration would be properly appraised as contingency elements. Minimum allowance 5%. (d) Machine-Controlled Allowance refers to all elements that are machine- controlled. A 5% allowance will be applied only to the elements which are machine-controlled. 7. The "allowed time" for each element is determined by adding the allowed time for personal, fatigue, contingencies, (and machine-controlled allowance as may be required) for each element to the normalized time. 8. The "standard time" for the task is determined by adding the allowed time for each element. 41 ARTICLE 28 RETIMING OF JOBS The Union shall be informed of any proposed change before retiming. 1. Permanent standards once established will not be increased or decreased unless there is a definite change in the following: (a) Change in design. (b) Change in materials. (c) Change in tools or equipment. (d) Change in methods. (e) Change in quality standards. (f) Work added to or removed from job. (g) Mathematical errors in setting the timing of the rate are to be corrected within ninety (90) days of the effective date of the time study or rate. 2. Whenever any of the above changes take place which affect time values, only that portion of the time value affected by the change will be adjusted. Sufficient additional elements (which may include all elements) to those affected by the change may be studied to determine the effect of the change on existing values. Recorded or standard time values, where established, shall not be changed unless there has been a 10% change in the time value of the element. Only the time value of that element will be changed. 3. When the elements are established for retiming, they shall be as identical as possible to prior studies on the operation. When a change is to be made in an operation and the old time value is not broken down into elements, a time study may be taken before the change is made in order to establish the elements of the existing time value, but the old time value will not be changed as a result of this study. When the change in the operation is made, the provisions of Sections 2 and 3 of this Article will apply. 5. When an old order repeats and there is no original study, the operations will be time studied and the rates will not be changed, but inflated to the original standard. When any further change in the operation is made, the provisions of Sections 2 and 3 of this Article will apply. 6. When an old order repeats and there is an original study, provided a change occurs, a study will be taken and the language of the present contract will apply. 42 ARTICLE 29 NEW PRODUCTS Whenever the Company makes a change in a product or introduces a new product, incentive standards for identical operations that existed prior to the change and are still performed on the changed product or new product shall not be changed. Disputes which arise under this Article will be subject to the grievance procedure, beginning in the third step. 43 ARTICLE 30 TEMPORARY TIME VALUES 1. Temporary or estimated time values established for an item being manufactured shall become permanent values at the end of three (3) months from the date the item repeats on a new manufacturing order, unless a permanent value is established at an earlier date. If the original order is for a large quantity, the employer and the Union shall negotiate for a shorter time than three (3) months for the establishment of temporary value as the permanent value. 2. When a production run is interrupted by a short run job on which no time values have been established, the employee shall receive no less than his average hourly earnings for the production run. 44 ARTICLE 31 JURY DUTY An employee called for jury duty will be reimbursed the difference between the amount he is paid for such service, not including transportation allowances, and his straight time hourly classified rate for time lost from work up to ten (10) working days. An employee called as a juror for a coroner's inquest will be reimbursed on the same basis as above. 45 ARTICLE 32 FUNERAL LEAVE 1. An employee who has completed his or her probationary period with the Company and who is scheduled to work may be excused from work because of a death in his or her immediate family. When excused he or she shall be paid an allowance for the hours he or she is scheduled to work on Monday through Friday, not to exceed eight (8) times his or her classified rate of pay, for each day excused, for not more than three (3) days. 2. The funeral benefit will terminate at the end of the day of the funeral. If the employee does not attend the funeral of the deceased, pay allowance as provided herein will not be allowed. 3. "Immediate family," for the purpose of this Section, is defined as mother, father, mother-in-law, father-in-law, spouse, son, daughter, brother, sister, grandchild and grandparent. 4. In the event of the death of a brother-in-law or sister-in-law, an employee who has completed his or her probationary period may be excused from work on the day of the funeral (or if the funeral is held on Sunday, Monday will be the day excused). The pay for this absence will not exceed eight (8) times his or her classified rate of pay. 5. If the day of the funeral is on a Saturday and the employee is scheduled to work on that day, he/she will be paid straight time. 46 ARTICLE 33 NO DISCRIMINATION There shall be no discrimination in the wages, hours or other terms and conditions of employment on account of sex, race, color, age, creed or national origin, veterans status, disability, or handicap. Word used in masculine gender applies also to the feminine gender. 47 ARTICLE 34 EMPLOYEE RATINGS Hourly employees covered by this Agreement shall be given their ratings in writing within one hundred twenty (120) hours after any new rating or change in rating is made. A copy of the employees' ratings shall be furnished to the Union. 48 ARTICLE 35 COMPANY POLICY REGARDING SUPERVISORY PERSONNEL Supervisors shall not perform production or maintenance work, except in cases where circumstances create an emergency. 49 ARTICLE 36 FAMILY LEAVE The parties agree that they shall comply with the Family and Medical Leave Act of 1993. In administering family leave, the Company and Union shall comply with regulations/directives promulgated by the Federal Government. The parties agree that maternity shall continue to be treated as a disability in accordance with Federal/State statutes. 50 ARTICLE 37 STEWARDS 1. Stewards, including the Chief Steward and the Assistant Chief Steward, in their respective departments shall remain in said departments on their respective shift and crew until all other employees are laid off (including temporary layoffs) or transferred from that department, provided said employee is competent to perform the available work. 2. Shop Committee and Stewards shall be the last to be laid off and the first to be recalled on a factory-wide basis, provided said employee is competent to perform the available work. 3. In the event a Department Steward is laid off or transferred out of his department due to a lack of work, his rights as Steward shall cease. 4. The Chief Steward shall have seniority over all employees in the bargaining unit, on a factory-wide basis. 5. A Steward shall be permitted to leave his job for the purpose of assisting in adjusting grievances. In such cases, the Foreman shall be notified, and, when necessary, the Foreman shall be given an opportunity to replace the Steward with another operator. 6. Required time lost on Company property by Union representatives in settling differences, disputes or grievances shall be paid for by the Company. 7. Payment for time lost by Stewards in the settlement of grievances shall be made as follows: (a) Stewards working on non-incentive operations at the time he or she is handling a grievance shall be paid the rate for the job he or she was performing. (b) Stewards working on incentive operations at the time he or she is called upon to assist in the settlement of a grievance shall immediately punch out and his or her average earned rate at the time of punching out shall be paid for the time spent in handling the grievance. 8. Payment for time lost at grievance (including arbitration hearings held at the Municipal Building) and negotiation meetings with the Company shall be limited to six (6) members. 51 ARTICLE 38 GROUP INSURANCE 1. The Company agrees to provide all employees in the bargaining group and pay the premium for the following benefits: (a) Life Insurance and Accidental Death and Dismemberment increased as follows: $26,000 effective July 1, 1996 $28,000 effective July 1, 1997 $30,000 effective July 1, 1998 (b) Weekly Accident and Sickness benefits for twenty-six (26) weeks as follows: $255, effective July 1, 1996 $265, effective July 1, 1997 $275, effective July 1, 1998 2. The Company agrees to continue the Blue Cross/Blue Shield Plan of Western PA. The Company agrees to pay the increased costs of the program for its employees and dependents. The employee will pay the premium specified in paragraph 38.3. If there is a premium increase during the life of this contract, the Company reserves the right to change insurance carriers, provided the change does not affect the benefit levels set forth in the plans. (a) Cost Containment Provisions (i) Second surgical opinion required for non-emergency elective surgery. (ii) Ambulatory surgery must be done on an out-patient basis. (iii) Room and board charges on either Friday or Saturday before non- emergency elective surgery are not covered. (iv) Pre-admission testing must be done on an out-patient basis. If done in-patient, the room and board expense are not covered. (b) Hospital Coverage - 120 day plan, full ward or semi-private; In- Hospital extras - unlimited; Surgical - prevailing fee; Maternity - 10 days plus extra charges. Eligible dependent children - from date of birth to age 19, students to age 23, disabled child to any age. (c) Hospital outpatient surgical - subject to $25 deductible; 3 per family annually. At the Company's request, this deductible can be eliminated from the plans. (d) Outpatient Diagnostic X-ray and Diagnostic Medical Laboratory - no deductible, no maximum. (e) Home and office visits for employee only when unable to work. Maximum 21 visits. $25 deductible per year. (f) Major medical - $200 deductible individual, two per family per calendar year; 80/20 co insurance. Effective July 1, 1996 the major medical maximum is $800,000 (effective 7/1/97 - $900,000; 7/1/98 - $1,000,000). 52 (g) Major Medical - An annual out-of-pocket maximum under major medical of $2000 per individual (20% of $10,000 in major medical charges eligible for payment). This out-of-pocket maximum does not include nor pertain to mental/nervous charges. (h) In-Hospital medical benefits (as an overnight patient in an accredited hospital because of a disease or injury, such as heart attack, pneumonia, diabetes, or contagious disease) are provided for the services of a doctor of medicine or of osteopathy up to a maximum of 120 days for each period of hospitalization - Prevailing Fee. (i) Prescription Plan - Premier plan of Blue Cross/Blue Shield employee co-pay $4 generic/$6 name brand. The Company will also establish a mail order drug plan. Once established, this will require that any prescriptions exceeding thirty (30) days be purchased through mail. 3. The monthly employee contribution for all classes of coverage will be $20.00. 4. Employees laid off will be covered by the Blue/Cross Blue/Shield insurance for three (3) months following layoff, provided they continue to contribute the amount set forth in Section 3 above. 5. (a) The Company will offer continuation of medical insurance (but not the prescription drug card) for retirees age 62 to 65 with 25 years of continuous service. This insurance will be effective only while the retiree is between the ages of 62 and 65. (b) For the life of this agreement the retiree will contribute 55% of the full coverage cost based upon the active and retired groups combined. (c) The Company's contribution for this coverage in the future shall be limited to the amount of the Company contribution as of June 3, 1996 based upon the rate for retirees as a separately rated group. 53 ARTICLE 39 PENSIONS 1. The Company agrees to keep the pension plan adopted June 1, 1955, in effect during the labor contract, together with all the improvements made to date. 2. The present hourly pension program shall be increased as follows: (a) Effective July 1, 1993 there shall be no maximum service benefit for calculation of retirement benefit. An employee may retire at age 62 with ten (10) years continuous service with non-reduced benefits. (b) Effective January 1, 1989 vesting in the Carbide/Graphite Pension Plan for Hourly Bargaining Unit employees at St. Marys will be reduced from ten (10) years of continuous service to five (5) years of continuous service. (c) Effective July 1, 1996, the normal retirement benefit will be $23.50 per month per year of service (an increase of $1.00). (d) Effective July 1, 1997, the normal retirement benefit will be $25.00 per month per year of service (an increase of $1.50). (e) Effective July 1, 1998, the normal retirement benefit will be $26.00 per month per year of service (an increase of $1.00). 3. The complete pension program as amended, will be made available in booklet form. 4. Effective 6/3/96 the paid-up life insurance for retirees will be increased by $500.00 to $2000.00. 5. Effective 6/7/93 the service requirement for Disability Retirement will be ten (10) years of continuous service. 54 ARTICLE 40 WAGES 1. The starting rate for employees hired for "Carbon Manufacturing, Machine Finishing and Maintenance" jobs is set forth in Schedule 1. After completing the probationary period, employees shall be paid a minimum of the miscellaneous rate as set forth in Schedule 1. 2. A schedule of the classified rates is attached in Schedule 1 and becomes part of this Agreement. 3. Wages shall not be subject to arbitration. 4. Annual increases: (a) Effective June 3, 1996, a general wage increase of 3-1/2% percent applied to all wage classifications. (b) Effective June 8, 1997, a general wage increase of 3% percent applied to all wage classifications. (c) Effective June 7, 1998, a general wage increase of 3-1/2% percent applied to all wage classifications. Effective June 3, 1996, jobs listed in Group III are granted an additional adjustment of twenty-five cents ($.25) per hour. Effective June 8, 1997, jobs listed in Group III are granted an additional adjustment of twenty-five cents ($.25) per hour. Effective June 7, 1998, jobs listed in Group III are granted an additional adjustment of twenty-five cents ($.25) per hour. 55 ARTICLE 41 SCOPE OF AGREEMENT 1. This Agreement expresses the understanding of the parties in respect to matters deemed by them to be applicable to the bargaining unit, and it shall not be changed or modified except by mutual consent in writing. 2. This Agreement and any supplements which may be added to this Agreement shall supersede all previous agreements. 56 ARTICLE 42 CONFLICT OF LAWS It is mutually agreed that if the adoption or amendments of any State or Federal law conflict with or are contrary to any provision of this Agreement, negotiations will be opened to make necessary adjustments, but the negotiations will be confined to changes necessary to comply with the new or amended law. 57 ARTICLE 43 EXPIRATION AND RENEWAL This Agreement shall remain in effect from June 3, 1996, to 12:01 A.M. June 7, 1999, and shall thereafter automatically renew for one (1) year from year to year, unless either party gives written notice to the other at least sixty (60) days prior to any expiration time of intention to modify or terminate the Agreement. In the event such a notice is received, then, upon request, a conference shall be arranged between the parties for within ten (10) days after receipt of such notice. The parties having met for the purpose of negotiating a Collective Bargaining Agreement, declare that the foregoing represents the sole and complete Agreement between the Company and the Union for the period of June 7, 1996 to and including midnight, June 7, 1999, and further that each had the opportunity to bargain on all issued and matters during negotiations and that all other requests and proposals made by both of the parties are waived and withdrawn herewith, and each party relieves the other of any obligation it might have to bargain with the other during the term of this Agreement on matters not specifically included in this Agreement. THE CARBIDE/GRAPHITE GROUP INTERNATIONAL UNION OF ELECTRICAL, ST. MARYS PLANT TECHNICAL, SALARIED, MACHINE, AND FURNITURE WORKERS, AFL-CIO, LOCAL UNION 502 W. E. Damian E. J. Greenawalt J. A. Ditson D. T. Herzing T. F. Gregorchik B. J. Sherry P. E. Younghans D. A. Kopp S. P. Herzing R. A. Larkin W. F. Gausman D. Gustafson Each party had the opportunity to bargain on all issues and alter the language. All other requests and proposals made by both parties are hereby waived and withdrawn. - ------------------- -------------------- W. E. Damian E. J. Greenawalt - ------------------- -------------------- J. A. Ditson D. T. Herzing - ------------------- -------------------- T. F. Gregorchik B. J. Sherry - ------------------- -------------------- P. E. Younghans D. A. Kopp -------------------- S. P. Herzing -------------------- R. A. Larkin -------------------- W. F. Gausman -------------------- D. Gustafson 58 ARTICLE 44 SCHEDULE 1 RATE SCHEDULE It is understood and agreed that the Starting and Miscellaneous Rates in CARBON MANUFACTURING, MACHINE FINISHING AND MAINTENANCE JOBS are:
START MISC. ------ ------ (a) Effective 6/3/96 $10.85 $12.05 (b) Effective 6/8/97 $11.18 $12.41 (c) Effective 6/7/98 $11.57 $12.84
The Classified Rates for the jobs are: 59
GROUP I 6/3/96 6/8/97 6/7/98 Job Class. Class. Class. No. Title Rate Rate Rate 020 Sweeper 12.05 12.41 12.84 034 Shipping Equipment Operator 12.38 12.75 13.20 149 Granular Materials Operator 12.39 12.76 13.21 201 14" Press Mixer 12.35 12.72 13.17 205 14" Press Operator 12.52 12.90 13.35 211 14" Press Tubman 12.32 12.69 13.13 227 Clean Plates 12.05 12.41 12.84 233 Tube Driller Operator 12.13 12.49 12.93 275 Miscellaneous Labor 12.05 12.41 12.84 303 Universal Mill Operator 12.45 12.82 13.27 304 Outside Mill Operator 12.45 12.82 13.27 306 Inspector/Relief Operator 12.55 12.93 13.38 310 48 Press Operator 12.51 12.89 13.34 311 48 Mixer Loader/Unloader 12.39 12.76 13.21 312 48 Scrap Crusher 12.49 12.86 13.31 313 48 Mix Weigher 12.39 12.76 13.21 319 Equipment Operator 12.22 12.59 13.03 323 Double Deck Operator 12.38 12.75 13.20 327 Opening Kilns 12.05 12.41 12.84 333 Cleaning Rods by Hand 12.05 12.41 12.84 336 Carbottom Utility Operator 12.36 12.73 13.18 338 Cleaning Plates by Hand 12.05 12.41 12.84 354 25 Press Operator 12.51 12.89 13.34 355 25 Mix Weigher 12.35 12.72 13.17 356 25 Scrap Crusher 12.40 12.77 13.22 357 25 Tubman 12.23 12.60 13.04 416 Stock Clerk 12.22 12.59 13.03 602 Crushing Graphite 12.05 12.41 12.84 605 Crushing Lampblack 12.05 12.41 12.84 610 Sludge Operator 12.10 12.46 12.90 640 Product Processor 12.52 12.90 13.35 642 Picking Up Graphite 12.05 12.41 12.84 643 Prod. Proc. Wheelabrator 12.22 12.59 13.03 650 Picking Up Bake Scrap 12.05 12.41 12.84 663 Banding Rods 12.05 12.41 12.84 664 Sand House Operator 12.16 12.52 12.96 700 Pitch Impregnator Operator 12.65 13.03 13.49 701 Pitch Impregnator Helper 12.51 12.89 13.34 712 Sand Drag 12.73 13.11 13.57 715 Hyster Operator 12.22 12.59 13.03 720 Keener Cleaner Operator 12.15 12.51 12.95 721 Process Materials Operator 12.73 13.11 13.57 722 Custom Furnace Loader & Unloader 12.42 12.79 13.24 723 Kostkutter Loader/Unloader 12.30 12.67 13.11 724 Copper Cleaning 13.08 13.47 13.94 725 Clean Graphitized PI Material 12.05 12.41 12.84 726 Wheelabrator Operator 12.28 12.65 13.09 727 Wheelabrator Helper 12.22 12.59 13.03 746 Rail Car Unloader 12.29 12.66 13.10 747 KVS Crusher Operator 12.19 12.56 13.00
60 749 Mass Furnace Loader-Setter 12.38 12.75 13.20 750 Mass Furnace Loader 12.29 12.66 13.10 751 Mass Furnace Unloader 12.22 12.59 13.03 760 Sagger Utility Operator 12.31 12.68 13.12 794 Shotblast Cleaning 12.31 12.68 13.12 831 Utility Operator 12.51 12.89 13.34 833 Saw Operator 12.21 12.58 13.02 835 Screen Operator 12.21 12.58 13.02 837 Janitor/Equip. Operator 12.22 12.59 13.03 913 Mill Payloader Operator 12.17 12.54 12.98 915 Payloader Operator 12.17 12.54 12.98 GROUP II
6/3/96 6/8/97 6/7/98 Job Class. Class. Class. No. Title Rate Rate Rate 066 Bricklayer Helper 12.60 12.98 13.43 067 Maintenance Parts Attendant 13.66 14.07 14.56 071 Oiler 13.38 13.78 14.26 076 Building Maintenance 13.52 13.93 14.42 360 Universal Kiln Attendant 13.07 13.46 13.93 615 Maintenance Equipment Operator 13.18 13.58 14.06 620 Vacuum Operator 13.18 13.58 14.06 706 Graphite Crane Operator 12.51 12.89 13.34 719 Power Monitor 13.30 13.70 14.18 GROUP III 6/3/96 6/8/97 6/7/98 Job Class. Class. Class. No. Title Rate Rate Rate 069 Maintenance Mechanic A 15.20 15.91 16.73 070 Maintenance Electrician A 15.22 15.93 16.75 072 Mobile Mechanic A 15.91 16.64 17.48
Employees moved out of progression where an established progression system exists will be treated as Group II employees. 61 ARTICLE 45 SCHEDULE 2 WAGE SCHEDULE ELECTRICAL APPRENTICE AND MACHINIST APPRENTICE
6 1 1.5 2 2.5 3 3.5 4 Start Months Year Years Years Years Years Years Years - ------- ------ ---- ----- ----- ----- ----- ----- ----- 82.5 83.75 85 87.5 90 92.5 95 97.5 100
MAINTENANCE MECHANIC, AND MOBILE MECHANIC APPRENTICE
6 1 1.5 2 2.5 3 Start Months Year Years Years Years Years - ------- ------ ----- ----- ----- ----- ----- 82.5 84.35 86.20 89.90 93.60 97.30 100
62 ARTICLE 46 SCHEDULE 3 SUPPLEMENTS TO THE LABOR AGREEMENT BETWEEN THE CARBIDE/GRAPHITE GROUP, INC. AND INTERNATIONAL UNION OF ELECTRICAL, TECHNICAL, SALARIED, MACHINE AND FURNITURE WORKERS AFL-CIO LOCAL UNION 502 CONTENTS SUPP NO. SUBJECT 1 Classification Reinstatement 2 Graphitizing PMO 3 Maintenance Banding 4 Overtime Canvassing - Maintenance Outside, & Mechanical 5 Substitution of Rates - Plant 3 6 Miscellaneous Labor - Processing 7 25 Inch and 48 Inch Extrusion Press Incentive 8 Incentive System - Pitch Treater 9 Dupont Shift Agreement Sample 10 Cleaning Area Product Processor Incentive 11 Custom Crew Incentive Provisions - Acheson Graph 12 Universal Mill Operator Incentive 13 Longitudinal Graphitizing Crew Incentive Plan 14 Mechanical & Electrical Maintenance Overtime Agreement 15 48" Press Incentive Agreement 63 CLASSIFICATION REINSTATEMENT SUPPLEMENT NO. 1 Any classifications or plants that are deleted from this contract, shall be reinstated as in previous contract, if the job is reinstated during the life of this agreement, and any wage increases will be applied to the classification. The effective date of this supplement is June 3, 1996 through June 7, 1999. 64 GRAPHITIZING PMO SUPPLEMENT NO. 2 1. This Supplement entered into in August of 1970, by the Company and the Union is hereby extended for the duration of the present labor Agreement existing between the parties. The effective dates of the Supplement are June 3, 1996 through June 7, 1999. 2. To the extent necessary the provisions of the parties' present labor Agreement are amended or expanded to provide the following. 3. Both parties recognize that it is impractical to install a standard hour element system for the Process Material Operators in the Graphitizing Department. Consequently, it is agreed to place in effect an incentive system based on the following: (a) The Average Monthly Incentive Earnings of all Acheson Graph Loading and Unloading Crews. (b) PMO Earnings = classified rate x % from table below: One shift operation 10 furnaces = 100% of crew rate 9 furnaces = 90% of crew rate 8 furnaces or less = 80% of crew rate The above table applies when the Graph is operating five days a week, one shift and one PMO. Two Shift operation 20 furnaces = 100% of crew rate 19 furnaces = 95% of crew rate 18 furnaces = 90% of crew rate 17 furnaces = 85% of crew rate 16 furnaces = 80% of crew rate 15 furnaces or less = 75% of crew rate The above table applies when the Graph is operating five days a week, two shifts and two PMO's. Three Shift operation 30 furnaces = 100.0% of crew rate 29 furnaces = 96.7% of crew rate 28 furnaces = 93.3% of crew rate 27 furnaces = 90.0% of crew rate 26 furnaces = 86.7% of crew rate 25 furnaces = 83.4% of crew rate 24 furnaces or less = 80.0% of crew rate The above table applies when the Graph is operating five days a week, three shifts and three PMO's. NOTE: If the maximum number of furnaces is exceeded during a month, the number exceeded by will be added to the following month. (c) When additional help on the shift is required, the helper shall not receive any incentive. 65 (d) When an operator transfers out of the PMO classification he shall continue to be paid at the incentive he earned as a PMO operator for one month from the time he leaves the classification. The new operator will begin to receive incentive earnings when the previous operator's earnings terminate. (e) Attached is a general list of operator duties. It should be noted that these can be reduced or increased at any time Management so desires. Cleaning of pits and unloading of trucks and railroad cars shall not be part of the operator's incentive duties. These may be performed by any miscellaneous man without affecting his earnings. However, the miscellaneous man shall not be paid incentive for performing these jobs. Samples which must be taken: (i) One composite on each round of 75/25 mix. (ii) One weekly composite of sideblock cycle mix. (iii) One sample of each round of regular pack when equipment is in place, PMO will reject or accept on his own screen analysis. (iv) One weekly sample of buckwheat, regular fines and custom fines. (f) Changes in method of payment, system, or the complete elimination of this system shall be a management decision. However, the Union shall be notified in advance. Specification for 75/25 insulation mix is to have a silicon to carbon ratio of 1.5 to 2.0. The formula is silicon/(carbon + 1/3*sawdust). If the results fall below 1.1 or above 2.2, three months in a row, there will a 7% penalty on the PMO earnings. If equipment failure is the cause of a problem, the PMO should make sure both parties meet in the first month that the problem occurs.
Example Crews Fce. Loaded 75/25 Result Earnings - ------------ ----- ----------- -------------- ------------------ Jan. 3 27 1.445 90% of crew rate Feb. 3 26 0.998 86.7% of crew rate March 3 22 0.886 80% of crew rate April 3 28 0.999 (-7%) 93.3% of crew rate May 3 28 1.775 93.3% of crew rate
NOTE: If Management determines it will run without sand, cycle mix or sawdust, those results will not be included for determining if there is a penalty. 4. The following will apply effective June 3, 1996 and shall be in force whenever the department is on continuous shift: a. The Graphitizing PMO will be paid the same incentive percent as his crew as long as they remain on continuous shifts. NOTE: i) The PMO will receive the one month in arrears incentive due. ii) Any number of furnaces banked will be recorded. b. It is understood that the PMO may assist Utility Operators (in such instance these hours will go into the numerator and denominator at the incentive formula). 66 c. When additional help on a shift is required, the helper shall not receive any incentive. i) When running a four shift (continuous) operation and the PMO is: 1. hauling crushed bake scrap from the KVS or 2. loading RP coke into hoppers at Plant 3, If additional help is required and authorized by the Graph Supervisor, the additional help will receive incentive for those hours in 1 & 2 above. d. If the department come off continuous shift the present Supplement 2 shall apply. NOTE: In this instance the furnaces previously banked shall be reinstated. 5. This Supplement supersedes all other Supplements, written agreements or oral understandings between the parties with reference to the subject matter herein. 67 MAINTENANCE BANDING SUPPLEMENT NO. 3 The repair of all banders from this date will be offered to the senior employee in the Maintenance Department. Seniority will prevail. The employee is also to repair nailguns, airdrills, port-a-powers, jack hammers, etc. The employee will normally work day shift. The employee is to fall in line for overtime during the week, Saturday and Sunday. The employee may also be called upon to perform other duties deemed necessary by the Company. This amendment is entered into on the 7th day of June, 1993 by the Company and the Union and is hereby extended for the duration of the present Labor Agreement existing between the parties. The effective dates of the Supplement are June 3, 1996 to June 7, 1999. 68 OVERTIME CANVASSING - MAINTENANCE OUTSIDE, MECHANICAL SUPPLEMENT NO. 4 The procedure for overtime canvassing in Maintenance as described above shall be conducted as follows: 1. If work required is estimated to be one (1) hour or less duration, then any qualified personnel may be assigned to perform the work without resorting to call-in pay. 2. If the work estimate exceeds one (1) hour, then normal overtime canvassing will be performed. 3. If the work required exceeds one (1) hour, then the low employee(s) on the overtime list will be compensated at time and one-half (1-1/2) (if work would have been covered by scheduled overtime) or two (2) times (if a call-in would have been required) for the actual hours worked. This amendment is entered into on the 7th day of June, 1993 by the Company and the Union and is hereby extended for the duration of the present Labor Agreement existing between the parties. The effective dates of the Supplement are June 3, 1996 to June 7, 1999. 69 SUBSTITUTION OF RATES - PLANT 3 SUPPLEMENT NO. 5 1. This Supplement entered into this 20th day of October, 1972, is for the purpose of setting forth and continuing the past practice of substitution of rates in Plant 3. The effective dates of this Supplement are June 3, 1996 through June 7, 1999. 2. To the extent necessary the provisions of Article 30 of the parties' labor Agreement are amended or expanded to provide the following: 3 The past practice of substituting rates on incentive jobs in Departments 17 (Cleaning), 19 (Extrusion), 20 (Baking) and 49 (Banding) of Plant 3 will be continued in the following manner. 4. For jobs not currently on incentive in these Departments, the Company will immediately start a review to determine whether they can be placed on incentive. 5. While the Company will make every effort possible to take time studies establishing permanent rates and eliminating substitution, the parties to this Supplement recognize that substitution may have to be resorted to in the Departments listed in Section 3 above where A grades (for extrusion only), short runs, mixed or partial decks or cleaning or banding insufficient material to time study are involved. 6. Employees desiring a substituted rate must request such from Time Study through their foreman. Final determination of the rate to be substituted will be the responsibility of the Time Study Department. 7. A substituted rate will be on a one-time only basis, i.e., remain in effect only for the duration of the particular job for which it was requested. If an identical job repeats, a substitute rate must be requested again. 8. The Article 30 (Temporary Time Values) has not been considered applicable to this practice and will not be so considered. 9. The parties agree and understand that substitution of rates is not to be considered a factory-wide general practice. The scope of this Supplement is limited to Departments and jobs set forth in Sections 3 and 5 above. 70 MISCELLANEOUS LABOR - PROCESSING SUPPLEMENT NO. 6 1. This Supplement entered into on the 1st day of February, 1978, by the Company and the Union is hereby extended for the duration of the present labor Agreement existing between the parties. The effective dates of the Supplement are June 3, 1996 through June 7, 1999 2. To the extent necessary the provisions of the parties' present labor Agreement are amended or expanded to provide the following. 3. It is agreed by both parties that all premium jobs will be offered to miscellaneous laborers in accordance with their seniority. 4. The foreman shall give the employee, in line of seniority, the jobs available at the start of the shift and the number of days on each job when possible. 5. An employee may refuse a premium job, but, when he refuses, he shall be deprived of all incentive jobs for that day. 6. If the job is refused down the line of seniority, the junior qualified employee must accept the job assignment. 7. When the list of miscellaneous employees has been exhausted and additional premium jobs occur, canvassing will revert to the senior miscellaneous employee not assigned to a premium job at that time consistent with #5 and #6 above. 8. An employee filing in long term will immediately be credited with average overtime hours. An employee filling in day-to-day will be credited with average overtime hours after fourteen (14) calendar days. 9. This Supplement supersedes all other Supplements, written agreements or oral understandings between the parties with reference to the subject matter herein. 71 25 INCH AND 48 INCH EXTRUSION PRESS INCENTIVE SUPPLEMENT NO. 7 1. This Supplemental Agreement is entered into on this 22nd day of April, 1981, between Airco Carbon, A Division of Airco, Inc., with respect to that portion of its manufacturing facilities located in St. Marys, Pennsylvania, and the International Union of Electrical, Radio, Machine and Furniture Workers, AFL-CIO and its Local Union 502. The effective dates of this supplement are June 3, 1996 through June 7, 1999. (a) The capacity (or Choke point) of the system will be determined for each size, and/or Grade if applicable, that is extruded on the 25 Inch Press or the 48 Inch Press. (b) The rate will be established so that when production reaches a rate which is 95% of the capacity of the press system the crew members can earn 150% of their base rate. This Agreement, does not apply to the Inside Mill Operator and Mill Payloader Operator. (c) In case of equipment failure or breakdown the above mentioned level of earnings will not apply. (d) "Down Time" such as clean up, lunch time, die changes, equipment failure, etc., will be paid at the appropriate classified rate, unless covered in other agreements. Shower time will be paid according to the present agreements (regular policy for the 25 Inch Press and "Hands On-Hands Off" policy on the 48 Inch Press). (e) Should there be any changes affecting these presses, such as new or changed equipment, changes in formulation, or changes in mix size which affect the capacity (or Choke point), the new capacity will be determined and a new rate established using the 95% of capacity equals 150% earnings relationships. (f) Should the extrusion press revert back to "Bulk Pitch" this agreement will be void and the existing methods of determining earnings will apply. (g) Present methods of paying for scrap pieces, or mixes, will apply. (h) Rate changes for these two (2) presses will be made according to the provisions of Article 28 of the present Labor Agreement. (i) If a change is made in the operation of a press, such as going on continuous shift or going off continuous shift then the shower time allowance will be changed if warranted. The shower time will be paid according to the applicable policy (Regular or "Hands On-Hands Off"). 2. This Supplement supersedes all other Supplements, written agreements or oral understandings between the parties with reference to the subject matter. 72 INCENTIVE SYSTEM - PITCH TREATER SUPPLEMENT NO. 8 1. This Supplement entered into on the 9th day of February, 1973, by the Company and the Union is hereby extended for the duration of the present labor Agreement existing between the parties. The effective dates of the Supplement are June 3, 1996 through June 7, 1999. 2. To the extent necessary the provisions of the parties' present labor Agreement are amended or expanded to provide the following: 3. Both parties recognize that it is impractical to install a standard hour element system at the Pitch Treater. Consequently, it is agreed to place in effect an incentive system based on the following: (a) Baskets unloaded per day. (b) Pounds unloaded per day. (c) Crew size. Example ------- Four man crew/2 sides - 12 baskets/day unloaded Three man crew/2 sides - 8.16 baskets/day unloaded Five man crew/3 sides - 16.70 baskets/day unloaded 4. The average weight/basket will be recalculated at the beginning of each month using the previous month production figures. Any change in cycle time, or any other change in loading-unloading procedures, or basket size would warrant a recalculation of the rate. 5. For other information concerning methods of payment, "Down-Time," "Blue- Dot" material, etc., refer to agreements dated 2/9/73 and 8/12/80 and all pertinent information associated with these agreements. 6. Unique to the Pitch Treater incentive system, the base incentive rate will be equivalent to the classified rate. 7. The Supplement became effective on March 5, 1973, and will remain in effect until the expiration of the present Contract. Thereafter, upon the expiration of the Labor Agreement, either party may reopen the Supplement for the purposes of amendment or termination. In the event that the Supplement is not reopened, it will automatically renew itself and remain in effect through the expiration date of the then existing Labor Agreement. 8. This Supplement supersedes all other Supplements, written agreements or oral understandings between the parties with reference to the subject matter herein. 73 DUPONT SHIFT SUPPLEMENT NO. 9 This Supplemental Agreement, dated , is between The Carbide/Graphite ------------- Group, Inc. (hereinafter referred to as the "Company") and the International Union of Electrical, Technical, Salaried, Machine and Furniture Workers, AFL-CIO Local Union 502 (hereinafter referred to as the "Union"). Objective. This Supplemental Agreement is entered into in order to temporarily modify certain terms and conditions of the Agreement between the parties dated , to permit adoption of the so-called 12-Hour Schedule for a ------------- temporary period and involving only certain employees of the . - ------------------------ Duration. This Supplemental Agreement shall be in effect from to and ----------- including , except that either party may give written notice to the ----------- other to terminate the Supplement Agreement. To become effective such termination notice must be received two weeks preceding the Monday when it is desired to terminate the Supplemental Agreement and revert fully to the terms of the basic Agreement. The basic Agreement is modified for the purposes of this experiment as follows: ARTICLE 4 - Hours ----------------- Section 4. "12-hour shift schedule" as used in this Agreement shall be jobs that normally require work of three 12-hour or four 12-hour days a week. ARTICLE 7 - Rest Periods ------------------------ Participating employees will be granted rest periods totaling 30 minutes for each 12-hour shift, wherever practical during such periods. ARTICLE 8 - Overtime and Night Bonus ------------------------------------ Section 5. Participating employees upon completing a full 12-hour shift and obliged to work overtime for a period of four (4) hours may take a 30-minute lunch period for which he will be paid. ARTICLE 9 - Holidays -------------------- Section 10. Participating employees will not have the option of taking another day off without pay. ARTICLE 15 - Vacations ---------------------- It is agreed for the purpose of this Agreement that a day's vacation (12 hours) will be counted as a day and one-half towards his/her allotted time. ARTICLE 32 -Funeral Leave ------------------------- Section 1. Participating employees when excused shall be paid an allowance not to exceed 24 hours at the classified rate of pay he/she is scheduled to work. ARTICLE 40 - Wages ------------------ "12-Hour Shift Wage Schedule". A reduction factor will be applied to the base rate of a classification. 74 Scope of the Supplemental Agreement. It is understood and agreed that no - ----------------------------------- obligation exists on either party to continue either temporarily or permanently the 12-hour shift schedule beyond the period set forth in this Supplemental Agreement, or to utilize a similar schedule with other groups of bargaining unit employees. The above represents the general overview of a Dupont schedule agreement which replaces a normal 8-hour continuous shift schedule. Specific agreements within a plant, department, or classification will be posted in that area under glass. 75 CLEANING AREA PRODUCT PROCESSOR INCENTIVE SUPPLEMENT NO. 10 A. This supplement entered into on the 3rd day of June, 1991 by the Company and the Union is hereby extended for the duration of the present labor agreement existing between the parties. Effective 6/3/91 the Product Processor (Job #640 in the Wheelabrator Department, #17 only) will be paid on an incentive system when required to identify material by virtue of physical identification, utilizing an electric grinder with a Carborundum wheel, drill or other techniques. The physical identification operation is to be performed as the material exits the cleaning machine and the Product Processor's incentive earnings will be calculated by multiplying the base rate of Job #640 by the earned percentage of the Wheelabrator operator (Job #726) for the cleaning operation. This policy is valid only when the physical identification is being performed as previously stated and it is to be understood that any changes to methods, tools or physical identification requirements will void this agreement, subject to review by the Company for an amended policy. B. Effective 3/13/95 the Product Processor (Job #640 in the Wheelabrator Department, #17 only) will be paid on an incentive system whenever the Central Cleaning Crew (Wheelabrator Operator, Job #726 and Wheelabrator Helper, Job #727) is on incentive. The Product Processor's incentive earnings will be calculated by multiplying the base rate of Job #640 by one half (fiftypercent) of the earned percentage of the Wheelabrator operator (Job #726) for the cleaning operation. It is agreed by the Union that this supplement will not be considered as a basis for incentive pay for Product Processors in other plants. This supplement entered into on the 13th day of March, 1995 by the Company and the Union is hereby extended for the duration of the present labor agreement existing between the parties. The effective dates of this Supplement are June 3, 1996 to June 7, 1999. 76 CUSTOM CREW INCENTIVE PROVISIONS - ACHESON GRAPH SUPPLEMENT NO. 11 1. (a) The Company will provide an incentive program for Job #722, Custom Furnace Loaders and Unloaders, based on the following: 60 earned hours to load a LLB furnace 60 earned hours to unload a LLB furnace 40 earned hours to load a coke furnace 40 earned hours to unload a coke furnace 60 earned hours to load a Wagstaff furnace 40 earned hours to unload a Wagstaff furnace (b) Effective 5/26/92, Substrate Furances are added to Job #722. 60 earned hours to load a Substrate furnace 40 earned hours to unload a Substrate furnace 2. On a daily basis the percent of completed furnace will be determined by foreman and crew to the nearest 5%. Completed furnace is 100%. Examples
Total % People Hrs. Hrs. Job Done Earnings ------- --- ----- --- ---- -------- A 2 7.42 14.84 Load LLB 30% .30 x 60 = 1.21 -------- 14.84 B 2 7.42 18.65 Unload Wagstaff 40% .40 x 40 = .86 -------- 3.83 18.65 No Incentive C 2 9.42 18.84 Load Coke 70% .70 x 40 = 1.49 -------- 18.84
3. From the date of this agreement until November 6, 1991 this program may be revoked by the Company. 4. Article 30, "Temporary Time Values" does not apply to this agreement. The Company reserves the right to time study the operation at any time in the future. The Company will continue to pay by this scale until it completes time studies for each section. 5. The Craneman (Job No. 706) will be paid the rate of the custom crew for the hours he spends in the crane loading, unloading or setting the custom crew up. 6. Removing pallets from furnace is not part of the custom crews job. 7. This Supplement was entered into agreement on July 24, 1991. The effective dates of this supplement are June 3, 1996 through June 7, 1999. 77 UNIVERSAL MILL OPERATOR INCENTIVE SUPPLEMENT NO. 12 1. This Supplement entered into on the 1st day of April, 1987, by the Company and the Union is hereby extended for the duration of the present labor Agreement existing between the parties. The effective dates of this supplement are June 3, 1996 through June 7, 1999. 2. To the extent necessary the provisions of the parties' present labor Agreement are amended or expanded to provide the following. 3. The Company and Union mutually agree that the continuous shift universal mill operator who supplies materials to the presses will be paid incentive as follows:. (a) If two or more presses are operating, the payment will be the average incentive produced by those presses; total hours earned on all presses divided by number of presses in operation. (b) If the 48" press only is operating, the payment will be the incentive rate produced on that press. (c) If the 25" press only is operating, the payment will be the incentive rate produced on that press. (d) If the 14" press only is operating, the payment will be as follows: 14" Press Incentive Mill Incentive Less than 100% No Incentive 100% - 109% 103% 110% - 119% 106% 120% - l29% 109% 130% - l39% 112% 140% - 149% 115% 150% - 159% 118% 160% or greater 121% (e) When the 14" press is not running but the outside mill is running, (Example: milling graphite for Plant I) no incentive will be paid. 4. This Supplement supersedes all other Supplements, written agreements or oral understandings between the parties with reference to the subject matter herein. 78 LONGITUDINAL GRAPHITIZING CREW INCENTIVE PLAN SUPPLEMENT NO. 13 EXTENSION It is agreed and understood by the parties that the conditions set forth in the Supplemental Agreement for the Longitudinal Graph, dated November 24, 1980, be extended through June 7, 1999. Multiple time studies to determine permanent rates were begun in June, 1981. As permanent rates for individual operations are set, they will replace temporary standards presently being used. Although a Saw Operator job was established, Utility Operators will continue to be utilized to operate the saw if the need arises. 79 MECHANICAL AND ELECTRICAL MAINTENANCE OVERTIME AGREEMENT SUPPLEMENT NO. 14 OVERTIME WILL BE CANVASSED AS FOLLOWS ------------------------------------- 1. Offered to the employee on the job for the first day only. 2. Offered to the low person on the shift overtime occurs by shift. 3. Weekend and Holiday overtime will be offered to low person in the department. 4. All work assignments on Sunday will be canvassed from low person on Sunday list. 5. In the event of a force, low person on shift available for canvassing. 6. If employee has boxed vacation, he cannot be asked or forced. OVERTIME IS CHARGED 1. If employee works overtime. 2. If employee refuses overtime. 3. Overtime will be charged for only the overtime hours that he is canvassed, worked, or refused. OVERTIME IS NOT CHARGED 1. If employee is not available on the day of canvassing. 2. If employee is on vacation or has weekend boxed. 3. Overtime canvassing will be performed to satisfy contract Article 8. 4. Overtime is calculated on a weekly basis. 80 48" PRESS INCENTIVE AGREEMENT SUPPLEMENT NO. 15 1. This plan is applicable to 14" diameter and larger electrodes, and Grade 876 mold stock utilizing six mixers. It will also apply to these products if one or two mixers are inoperable. The number of mixes required will be reduced by 1/6 or 2/6, respectively. Additional grades and/or sizes may be included in the plan by mutual agreement of the Company and the Union. 2. The full 12-hour shift incentive opportunity will be as follows: a. 140-143 mixes will earn 155% as the base condition. b. 144 mixes will earn 157%. c. Each mix above 144 will increase earnings by 4%. d. Each mix below 140 will reduce earning by 1%. e. The mix loader will be provided an extra 10 minute relief. The base mix requirement will be reduced appropriately for shifts in which die changes and breakdowns occur. 3. Die changes will earn 155% if performed within the standard time, where standards exist. 4. Downtime periods for breakdowns begin with the end of the last piece pushed and end when the first mix begins dumping from the cooler after the interruption. The downtime period for mold stock sizes and grades not included in this plan will end with the restart of the weighout. 5. If manual scribing is required because the scribing machine is inoperable, a person will be assigned to help scribe 14" and 16" electrodes. If the machine is operable but is incapable for keeping up with press output, in the judgment of management, an extra scribing person will be assigned. 6. If the mill cannot supply sufficient materials for weighout, as determined by management, a rate of 155% will be paid during the period of deficiency. If the mixing cycle time is increased so 140 mixes cannot be achieved, the 155% rate applies. 7. This plan applies to the extrusion of pit scrap in the above stated electrode sizes and any mold stock sizes mutually agreed to by the Company and the Union. 8. Incorrect mixes caused by actions of the crew will be excluded from the incentive earnings calculation. Examples are a weightout mistake or a mix loader incorrectly matching mix hoppers. 9. The objective of this plan is to maximize the productivity of the 48" press without sacrificing quality. 81 EX-10.40 8 AGREEMENT WITH LOCAL UNION 320 Exhibit 10.40 A G R E E M E N T By and Between THE CARBIDE/GRAPHITE GROUP, INC. CARBIDE DIVISION Louisville, Kentucky Plant And INTERNATIONAL BROTHERHOOD OF FIREMEN AND OILERS LOCAL NO. 320 Affiliated with the AFL-CIO Entered into July 1, 1996 CONTENTS
ARTICLE PAGE I Purpose............................ 2 II Coverage........................... 2 III Non-Discrimination................. 3 IV Union Security..................... 3 V PAC................................ 4 VI Wages and Hours.................... 4 VII Holidays & Premium Pay............. 6 VIII Call-In Pay........................ 8 IX Reporting Pay...................... 9 X Vacations.......................... 9 XI Seniority.......................... 12 a) Yard........................... 12 b) Furnace........................ 23 c) Pack........................... 25 d) Acetylene...................... 27 e) Lime........................... 30 XII Grievance Procedure and Arbitration 34 XIII Strikes and Lockouts............... 36 XIV Safety & Health.................... 36 XV Compensable Injuries............... 39 XVI Control Lab........................ 40 XVII Overtime........................... 40 XVIII Schedule A/Wage Rates.............. 44 XIX General............................ 46 XX Maintenance Department............. 47 XXI Group Insurance.................... 52 XXII Retirement......................... 54 XXIII Jury Service & Funeral Leave....... 57 XXIV Severance Pay...................... 58 XXV Termination & Duration Appendices.. 58 XXVI Management Function................ 59
AGREEMENT THIS AGREEMENT, entered into as of July 1, 1996 by and between the Louisville, Kentucky Plant of THE CARBIDE/GRAPHITE GROUP, CARBIDE DIVISION hereinafter called the "Company", and the INTERNATIONAL BROTHERHOOD OF FIREMEN AND OILERS affiliated with the A.F.L.-C.I.O. acting as the bargaining agent for the employees affiliated with Local No. 320 I.B. of F. and O., hereinafter called the "Union". WITNESSETH: ARTICLE I Purpose The general purpose of this Agreement is to promote the mutual interest of the Company and the employees; to provide for the operation of the plant of the C/G Carbide Division under the methods which will further, to the fullest extent possible, the safety, health and welfare of the employees, economy of operation, elimination of waste, quantity and quality of output, cleanliness of plant and protection of property. It is the duty of the Company and of the employees to cooperate fully, individually, and collectively for the advancement of said conditions. ARTICLE II Coverage The Company hereby recognizes the Union as the exclusive bargaining agency of all of the hourly rate production and mechanical maintenance, and safety and first aid employees for the purpose of collective bargaining as provided in applicable Federal statutes. Executives, chemists, clerical, office, drafting and engineering; also salaried employees and supervisory employees having the right to hire and fire, and guards and watchmen shall not be represented by the Union and are not subject to the provisions of this agreement. The Company will not change the classification of any employee covered hereby or the status of classification covered hereby for the primary purpose of limiting or altering the Union's jurisdiction over the N.L.R.B. certified bargaining unit. Employees of the Company who are not covered by the terms of this Agreement by virtue of their supervisor, clerical, or executive position, or for other reasons set forth herein will not perform work for which contract wage rates are established except in cases of emergency, or for the purpose of laying out work or for demonstrating and instructing how work shall be done. The Company shall have the right to establish new jobs or make changes in existing jobs. When a new position is established or when an existing job position is changed, the Company will evaluate and set up an appropriate wage rate for the position. The wage rate will be applied to the new or revised job position for a period of thirty (30) working days. Employees assigned to the new or revised job position will be required to work the thirty (30) day trial period. If the employee believes that the wage rate established by the Company is unjust and requires further consideration, he shall have the right to request the Union represent him at a meeting on this subject. 2 Such a request must be made by the employee prior to the thirtieth (30th) working day. Both parties shall meet within seven (7) working days to discuss and resolve the employee's request. If the parties have not resolved the issue, the employee and/or Union shall have the right to file a grievance and utilize the grievance/arbitration procedure provided in the Agreement. ARTICLE III Non-Discrimination It is the policy of the Company and the Union that the provisions of this Agreement shall be applied to all employees without regard to race, color, sex, age, religious creed, national origin, disability, Viet Nam era veteran status, disabled veterans or membership in the Union. The terms "he", "his", or "man", as used in this Agreement shall apply to both male and female employees. ARTICLE IV Union Security All employees within the bargaining unit are required to become members of the Union within thirty (30) days from the date of execution of this Agreement and remain members of the Union as a condition of employment. New employees are required to become members of the Union on the thirty-first (31st) day of employment and thereafter remain members of the Union in good standing as a condition of continued employment. Vacation Relief Workers (Students): Employee to have temporary status and will be laid off on September 1. Employee must join Union on thirty-first (31st) day of employment. Upon receipt of proper written assignment conforming with requirements of the National Labor Management Relations Act of 1947, the Company will deduct from first pay of each employee the initiation fee of the Union, and shall also deduct from such first pay and from the first pay of each month thereafter the regular monthly dues that apply to employees of C/G. All fees and dues so deducted shall be promptly remitted to the Secretary-Treasurer of the Local Union. Upon receipt of proper notice from the Union that an employee has lost his Union membership, the Company will remove such employee from the seniority roster. Such notice will be sent to the Company and the employee by certified mail. It is understood that when the Company takes such action at the request of the Union that the Union will take full and complete financial responsibility for all legal actions arising out of such action. The Company, shall, during the course of discussing Company rules and policies inform new employees of the existence of a Union within the plant, and at the termination of the interview said new employee shall be introduced to some Union member designated by the Union for this purpose. ARTICLE V Political Action Check-Off 3 Upon receipt of proper written notice from the employee, the Company agrees to deduct the weekly amount specified from the wages of those employees voluntarily authorizing such contributions to the Firemen and Oilers COPE PAC. The Company will transmit such deductions weekly to the treasurer of the Firemen and Oilers, accompanied by a list of the names of those employees for whom such deductions have been made and the amount deducted for each such employee. The Union shall indemnify and hold the Company harmless against any and all claims, suits or other forms of liability that shall arise out of or by reason of the above paragraph. ARTICLE VI Wages and Hours 1. Eight (8) hours in a calendar day constitute the standard work day, and forty (40) hours in calendar week shall constitute the standard work week. The calendar day begins and ends at 11:00 p.m. and the calendar week begins and ends at 11:00 p.m. Saturday. 2. All work in excess of eight (8) straight time hours in the calendar day or forty (40) straight time hours in any calendar week shall be paid for at the rate of time and one-half, provided, however, that employees will not be paid both daily and weekly overtime for the same hours of overtime work. Exceptions to this will be as follows: A. An employee who receives a permanent assignment as a result of his own bidding or through his own request shall be paid overtime if he has less than eight (8) hours off between his last scheduled shift and his first scheduled shift in his new assignment. B. A Yard employee who received a temporary assignment to a department by the Personnel Department as a result of following his attained seniority and his expressed department preference, shall be paid overtime if less than eight (8) hours has elapsed between his last scheduled shift in his current assignment and his first scheduled shift of his new assignment. C. Employee who works both the 3-11 shift on one day and the 11-7 shift on the following day will be paid at one and one-half (1-1/2) rate for the 11-7 shift on the following day. Should that employee's normal shift be 3-11 and he/she works such shift on the same day as the 11-7 shift above, the normal shift will be at straight time, plus any applicable premium. 3. Hours paid for vacations, holidays, attendance at joint sponsored labor/management functions, company sponsored training, company paid union business during the grievance procedure (including arbitration), and home with pay will count as time worked for the purpose of computing weekly overtime. 4 4. The rates set forth in Schedule A are the regular rates as that term is used in the Fair Labor Standard Act. Only those rates shall be used in the calculation of overtime except that shift differentials shall be included for this purpose. 5. No employee shall be laid off during his regular working schedule to equalize any authorized overtime the employee has worked during the same work week or pay period. Any overtime shall be in addition to the regular working schedule of the employee. 6. Any employee who may be called upon to work more than sixteen (16) hours in any twenty-four (24) hour period and as a result thereof finds that this leaves him less than six (6) hours before his time to report for a regularly scheduled shift of work, shall have the hours of this above named scheduled shift counted both for purposes of pay and determining overtime hours worked that week. Preparatory time worked outside the normal shift by leaders receiving responsibility pay will not count toward the sixteen (16) hours. 7. An employee having legitimate reasons may trade his off day with another employee, providing the men can arrange the trade themselves and it has the approval of their foreman. The above will not be construed as prohibiting non-leaders from swapping off days with leaders or leaders swapping off days with non-leaders. When swaps of this kind are approved by the foreman and made, the leader will lose his leader pay for any days he does not actually work as a leader. 8. When an employee on a continuous operation is required to hold over to take the place of a scheduled employee who fails to appear at the schedule time, he shall be provided: (a) at least one-half (1/2) hour's work, if the scheduled employee reports for work within one-half (1/2) hour or (b) at least one (1) hour's work if the scheduled employee reports between one- half (1/2) hour and one (1) hour late. In case of employees held over from 11-7 shift, the above shall apply, except that the employees may leave immediately when the late employee reports, and will be paid for the full half-hour or the hour. 9. This Article is intended to provide a basis for calculating overtime and shall not be construed as a guarantee of hours of work per day or per week. 10. Wages shall be paid in accordance with Schedule "A"/Wage Rates, which is attached hereto and is part of this contract. 11. Employees will be paid each Thursday between the hours of 7:00 a.m. and 3:30 p.m. It is recognized that in weeks in which a holiday falls or is observed, on Monday, Tuesday or Wednesday, unusual circumstances might prevent the Company from doing the above. In that event, the Company will post a notice to that effect as soon as the unusual circumstances are known. 12. An employee temporarily transferred from a higher rated job to a lower rated job shall receive the higher rate and an employee on a lower rated job, temporarily transferred to a job paying a higher 5 rate shall receive the higher rate while so employed. However, employee initiated transfers to a lower rated job will be paid at the lower rate. If such employee works on a higher rated job for four (4) hours or more he will be paid the higher rate for the entire shift. 13. Any employee temporarily transferred for a period of three (3) or more days to any department in which there is automatic rate progression shall have all such periods of three (3) days credited to his time spent in that department for the purpose of determining when he is entitled to the higher rate within any particular department. 14. The rate of working leaders in all departments or units thereof shall be forty (40) cents per hour higher than the rates set forth in Schedule A/Wage Rates. There shall be two (2) working leader on each of the three (3) shifts at the Acetylene Plant. 15. Yard employees doing cleanup work in the furnace building monitor and on the furnace building roof and those that take the cleaned up material from the canvas chute to the load lugger trucks will be paid the furnace production rate. In addition to the above cleanup work, Yard employees will be paid the production rate for cleaning the roof of the Dry Generators, Pack Screening Building, Pack Storage Building and the Lime Sheds which are attached to the Furnace Building. ARTICLE VII Holidays and Premium Pay Holidays shall be New Year's Day, Martin Luther King (3rd Monday in January), Washington's Birthday (3rd Monday in February), Good Friday, Decoration Day (last Monday in May), "Flag Day", June 14, Independence Day, Labor Day, Columbus Day (2nd Monday in October), Thanksgiving Day and Christmas Day. Should either the Federal or State government change the three legislatured Monday holidays, the Company and Union would discuss such effect upon the observance of these holidays. For each holiday the Company shall pay to employees not scheduled to work on the holiday an amount equivalent to eight (8) hours at his straight time rate, provided he works his regularly scheduled shift after the holiday, unless he has a reasonable excuse for being absent. No employee shall receive holiday pay unless he performs work for the Company in the week in which the holiday occurs, except that an employee who is absent from work for the entire week in which the holiday occurs due to his own illness or an off-the-job accident or injury to himself, shall be paid holiday pay if he performs work in the week preceding or the week following the week in which the holiday occurs. This is the pay referred to in the first sentence of this paragraph. For all work performed on a holiday the Company shall pay two and one-half (2- 1/2) times his straight time rate. If any such hours worked on a holiday are overtime hours, as defined in Article VI, an additional half (1/2) time will be paid for such overtime hours. Any employee failing to work on a holiday when scheduled to do so shall not receive any holiday pay under any circumstances except when the reason be due 6 to having received a compensable injury and in these instances holiday pay as such shall be paid for the holiday during the week in which the injury occurred. Subsequent holidays will not be paid. Sunday Premium Pay For all hours worked on Sunday which are not paid for on an overtime basis, a premium of forty per cent (40%) based on the regular base rate as set forth in Schedule "A"/Wage Rates shall be paid. Sunday shall be deemed to be the twenty-four (24) hours beginning at 11:01 p.m. Saturday. Shift Premium Employees working on a shift basis will receive a premium of forty (40) cents per hour for the second shift (any shift starting between 12 noon and 8:00 p.m.) and fifty (50) cents per hour for the third shift (any shift starting between 8:00 p.m. and 4:00 a.m.). For the purpose of applying shift premiums, all hours worked by an employee during his work day are considered as worked on the shift on which he is scheduled to start to work and does work, except: A. If scheduled for the first or second shifts and he completed his regular turn on those shifts and continues to work four (4) or more hours into the next shift, he will be paid the shift premium for the next shift or all hours worked on it. Hours under four (4) worked in the succeeding shift do not carry the premium of that shift, but do carry the premium of the shift on which he started. B. If scheduled for the third shift and he completes his regular turn, continuing to work into the first shift, he will be paid the third shift premium for all hours worked on the first shift. C. If he completes his regular shift and after leaving the plant is called back within the same work day, he will receive the applicable shift premium for the hours worked or allowed. ARTICLE VIII Call-in Pay Any employee who may be called in after he completed a shift and left the premises of the Company and before he is scheduled to return shall be guaranteed four (4) hours' work at time and one-half (1-1/2). In the event the work for which the employee was called is completed in a period of time less than four (4) hours, the employee may leave the job unless, in the meantime, another emergency condition has developed and it requires the same type of workers to handle it. If this latter condition does not develop, the employee called in may leave the job and receive either four (4) hours' pay at his straight time rate or time and one-half (1-1/2) for the hours actually worked whichever is greater. Only those hours actually worked will be used in computing overtime. 7 If call-in is in addition to time worked during a twenty-four (24) hour period, the employee gets time and one-half (1-1/2) pay for time on call-in, as call-in pay. He also gets an additional half time (1/2) for all hours over eight (8) in the twenty-four (24) hour period. He does not get weekly overtime for this also. [If call-in are the only hours worked in a twenty-four (24) hour period, then he is paid time and one-half (1-1/2) for all hours worked as call-in pay.] He also gets an extra half-time (1/2) at the end of the week for all time in excess of forty (40) hours in the week. If an employee is called in to fill out a shift, he is paid time and one-half (1-1/2) for the hours worked on that day and not the additional one-half (1/2) times for all hours worked over eight (8) hours in a twenty-four (24) hour period or over forty (40) hours in the week. It is, therefore, not necessary for an employee under the above circumstances to have to work his full weekly schedule in order to get time and one-half (1-1/2). It is understood and agreed that when time worked on call-in is within two (2) hours of the start of the scheduled work time, and the call-in becomes continuous with the regularly scheduled hours, the Company will pay only time and one-half for the hours worked prior to schedule. Exception to Call-in A. When an employee has completed sixteen (16) hours consecutive work he will be bypassed for call-in until he has had eight (8) consecutive hours away from the plant (reporting time). B. When an employee calls off absent on his scheduled shift, he shall not be eligible to be called-in until sixteen (16) hours have elapsed. ARTICLE IX Reporting Pay If there is no work for an employee on a day for which he is regularly scheduled to work, the Company shall notify him not later than fourteen (14) hours before his scheduled reporting time. If he is not notified and reports for work, he shall receive a minimum of four (4) hours' work, or four (4) hours' pay if no work is available, at his regular rate for his scheduled work on that day, and such four (4) hours shall be counted in computing overtime. It is agreed, however, that this shall not apply to an employee who was absent without leave or without a reasonable excuse on his last regularly scheduled work day, or when the lack of work is due to strikes, fires, floods, windstorms, power interruptions, acts of violence, or other similar things which are beyond the control of the Company. The Company agrees that if it becomes necessary to send employees home after the start of the shift, it will be on the basis of department seniority and qualification. The most senior, qualified employee(s) will remain on the job. ARTICLE X Vacations 1. At the completion of one year's continuous service, an employee is entitled to a vacation of one week and shall have one year from his qualification date in which to take his vacation. After qualifying for this initial one week vacation, the subsequent vacation qualifying date for such employee shall be May 14 and such employee shall have the period from May 14 to May 14 in which to 8 take his second one-week vacation. On the following May 14, the employee will become eligible to receive two weeks of vacation which will be taken during the vacation year from May 14 to May 14. A. During the vacation years (May 14 to May 14) in which an employee's continuous years of service is five (5) or greater, but less than twelve (12) the employee will receive three (3) weeks of vacation. B. During the vacation years (May 14 to May 14) in which an employee's continuous years of service is twelve (12) or greater, but less than twenty (20) the employee will receive four (4) weeks of vacation. C. During the vacation years (May 14 to May 14) in which an employee's continuous years of service is twenty (20) or greater the employee will receive five (5) weeks of vacation. D. Employees who are eligible for three (2) weeks vacation shall have the option to take one (1) week of their vacation at one (1) or more day intervals. Employees who are eligible for four (4) or more weeks vacation shall have the option to take two (2) weeks of their vacation at one (1) or more day intervals. Employees must notify the Company twenty (20) hours in advance of their regularly scheduled shift to be allowed one (1) or more vacation days. Eligible employees who are absent for three (3) or more consecutive work days shall have the option to receive vacation pay for the first regularly scheduled day not worked when at least twenty (20) hours notice is given to the Company prior to the second day provided the absence is verified by a doctor's statement. In such instance, no occurrences will be assessed. At the end of the vacation year (May 14), employees shall be paid for any unused vacation. In lieu of payment, employees may carry-over one (1) week of unused vacation into the next vacation year by notifying the company prior to April 1. In addition, employees with more than three (3) weeks vacation eligibility may elect to draw pay in lieu of time off for those eligible weeks over three (3). Except as noted herein, no vacations may be carried over from year to year. The Company shall have the right to limit the number of employees allowed to be off at any time in order to operate an efficient plant. 2. Vacation pay will be computed by multiplying the employee's then straight time rate per hour by forty (40) hours in the case of employees entitled to one (1) week vacation, eighty (80) hours in the case of employees entitled to two (2) weeks vacation, one hundred and twenty (120) hours in case of employees entitled to three (3) weeks vacation, one hundred and sixty (160) hours in the case of employees entitled to four (4) weeks vacation, and two hundred (200) hours in the case of employees entitled to five (5) weeks vacation. In addition, applicable shift differentials will be included in an employee's vacation pay and holiday pay will also be included in the event that one of the eleven (11) recognized holidays falls within the week or weeks in which he takes his vacation. This holiday pay will not be withheld because of the provision in paragraph two (2) of Article VII. Employees regularly scheduled to work one or more days as an alternate leader will also have the leader rate for those scheduled days included in their vacation pay. Employees 9 working on temporary assignments at the time they take their vacations will have their vacation pay computed on the basis of the average of their hourly straight time earnings, inclusive of shift differentials for the twelve (12) weeks preceding their vacation week or weeks. 3. An employee will earn a full vacation as described in Paragraph 1 and Paragraph 2 in this Article by working fifteen hundred (1500) or more hours in his qualifying year if he has not completed five (5) years service. If he has completed five (5) or more years of service he shall be entitled to full vacation by working twelve hundred (1200) or more hours in his qualifying year. All employees who have completed their first six (6) months of service in their initial year and who failed to work as much as fifteen hundred (1500) hours in their initial year or who worked less than fifteen hundred (1500) hours in any subsequent vacation qualifying year during their first five (5) years of service be given vacation in accordance with the schedule given below:
Hours Worked Fraction of a Whole Vacation 1200 - 1400 4/5 900 - 1199 3/5 600 - 899 2/5 0 - 599 None
All employees who have completed five (5) years or more of service who failed to work as much as twelve hundred (1200) hours in any vacation qualifying year will be given vacation in accordance with the schedule given below:
Hours Worked Fraction of a Whole Vacation 960 - 1199 4/5 720 - 959 3/5 480 - 719 2/5 0 - 479 None
Time lost due to an employee being ill, taking earned vacation or having received an injury will be counted as time worked for the purpose of computing vacation earned, except that in case of prolonged absences for any reason including sickness or injury, an employee will cease to earn vacation benefits at the end of twelve (12) months from the time that such an extended time loss began. Vacation due employees who get laid off or have their employment terminated in the third (3rd) qualifying period which is the time between the second (2nd) anniversary and the following May 14, will be determined by using the number of hours provision set forth in paragraph 3 of this Article. 4. Any new employee who leaves the Company or has his employment terminated for any reason before completion of six (6) months' service shall not be entitled to receive any vacation pay. An employee who has completed six (6) months service and leaves the Company, has his employment terminated for any reason, or begins to lose time because there is no work available shall be paid 10 at that time, if he so desires, any vacation he has earned but not taken or previously received pay for. 5. For the purpose of fitting the vacation plan to operating requirements, it shall be necessary for a period of one (1) month to elapse between vacations. Vacations will so far as possible, be granted at times most desired by employees and departmental seniority shall be taken into consideration in the allotment of the vacation period, but the final right to designate the vacation period, for the specific purpose of insuring the efficient operation of the plant, is reserved exclusively to the Company, and the Company may specify a week or weeks as the vacation period, or part thereof, if it should decide to close the plant for repair, maintenance, or other purposes. In such cases, employees entitled to one (1) week vacation will take their vacation during one (1) of such weeks and the employees entitled to two (2), three (3), four (4), or five (5) weeks vacation may be required if the plant is closed for as long as five (5) weeks to take all of their vacation during such period or if the plant be closed down for one (1) week to take the remaining weeks of their vacation in consecutive order either before or after. A request made by a senior employee after May 4 (for a preferred vacation period) will not be honored if this time has been selected prior to May 4 by a junior employee. Selections of preferred vacation period made after May 4 of each year will be on the basis of first come, first served. 6. Vacation checks will be available to employees on the same day as they receive their regular paycheck, or as soon as they are available. ARTICLE XI Seniority 1. Without discrimination in regard to race, sex, color, age, or creed, departmental seniority shall apply in case of layoff, transfer, and promotion within and between the different departments. Seniority, as used herein, shall consist of the following factors: A. Length of departmental service. B. Qualification. C. Ability. When factors B and C are relatively equal, length of departmental service shall govern. 2. The departments are as follows: A. Acetylene Department B. Furnace Department C. Packing, Crushing, and Raw Materials Department 11 D. Mechanical Maintenance Department E. Control Lab F. Safety and First Aid Department G. Yard Department H. Lime Department 3. Employees who may be laid off from any and all departments will be assigned to the Yard Department. All layoffs from the plant will be from the Yard on the basis of plant seniority. When the Company decides to make a layoff from the Yard they will check the plant seniority list for the whole plant. If the most junior employees on the basis of plant seniority are not in the Yard Department, the Company will move out a sufficient number of junior employees by plant seniority from the various departments, subject to the exceptions listed below, to meet, or fill out, the quota or employees to be laid off. Exceptions to getting the most junior employee from the departments other than the Yard are listed below: A. The Junior employee has a permanent skill classification above the level of helper and is currently assigned to a section of the Maintenance Department other than: 1. Maintenance Helper B. The junior employee holds the job of First Aid Attendant and a senior employee is unable to meet the established qualifications for this job. C. Removing the junior employee will result in either the Furnace, Acetylene, Lime or Packing Departments having more than ten percent (10%) of the total number of permanently assigned employees currently working in the department but have not attained departmental seniority status. All recalls from layoff outside the plant will be made on the basis of plant seniority and in accordance with Paragraph 6-H of this Article. People returning from layoff will return to a job in the department where they last worked, based on their departmental seniority. They would then have forty-eight (48) hours to accept that job, or any other job their seniority would entitle them to, as a permanent assignment. Should the employee choose such other job, it is understood the Company would have until the start of the following week to get the employee transferred thereto. If the need is such that in the opinion of the Company it can only be met by taking on skilled employees, the Company will first call back laid off employees who possess the required skills. 4. There shall be a continuous ninety (90) calendar day probationary period for new production employees, for new mechanical maintenance and first aid employees, during which time the Company may discharge or discipline with or without cause, and its decision shall not be subject to grievance procedure. If new employees are continued in the employ of the Company after the stated period, they shall be immediately thereafter credited with seniority dated back to the date of employment. 12 5. The Company may assign qualified employees to temporary duty not exceeding seven (7) calendar day. Such employee will receive pay in keeping with rights granted in paragraph ten (12) of Article VI. It is agreed that such assignments will only be made when there is no employee available and qualified remaining in the Yard Department. 6-A. Seniority shall not be interchangeable between any of the departments listed in numbered paragraph 2 above. 6-B. An employee will attain departmental seniority after he has worked for six (6) months in a given department. Time worked in a department, whether resulting from either a temporary or permanent assignment, will be recorded and counted toward this six (6) months required to attain departmental seniority status, if in each instance it is as much as five (5) days duration. Assignments for periods of less than five (5) days will not be counted for this purpose and no permanent record of them will be kept. Employees who have accumulated six months departmental seniority in a given department will not accrue further seniority in that department until they are permanently assigned to that department. 6-C. An employee attaining departmental seniority in accordance with Paragraph (B) above, and who later gets a job in some other department except the Yard as a result of being the successful bidder on a posted vacancy shall continue to accumulate seniority in his old department for a period of six (6) months. However, after completing six (6) months in this new department, his seniority in his old department shall revert back to the date he left the old department. If an employee should successfully bid from a department in which he has attained departmental seniority and before he attains departmental seniority in the new department transfers to a third department, he shall cease to accumulate seniority in the first department. Furthermore, his established departmental seniority in the first department will revert back to the date he transferred from it. An employee laid off from his department to the Yard Department will continue to earn departmental seniority in the department he was laid off from until at least one of the following things happens: a. He gets a job in a department other than the one he was laid off from as a result of being the successful bidder on a posted job. b. By using the provision of paragraph 6-D or 6-E of Article XI, he rolls into another department. c. He declines to bid on a posted permanent opening in the department from which he was laid off. All employees laid off from the plant will continue for the length of time set forth in paragraphs 6-H (a) and 6-H (b) to earn plant seniority and departmental seniority in the last department they were laid off from and had reached departmental seniority status in. 13 A Yard employee for the length of time that he remains in a department as a result of being drafted to fill a posted vacancy as set forth in the third paragraph of Section 6-G below, shall not reach departmental seniority status in keeping with Section 6-B above. Insofar as the provisions 6-C (a) and 6-C (b) above are concerned he shall be considered a Yard employee. Any Yard employee who gets a job in a department other than the one he was laid off from as a result of being the successful bidder on a posted vacancy and gets laid off from it before attaining departmental seniority status shall have the time spent in the last department added to his departmental seniority in the department other than the Yard he was laid off from. 6-D. An employee who has no established departmental seniority in accordance with paragraph "B" above may be displaced by another employee who has been laid off from his department provided the laid off employee possesses a greater amount of plant seniority. 6-E. An employee who is assigned to a department and has attained departmental seniority in accordance with Section "B" above and who holds also departmental seniority in another department, or in other departments will not be allowed to displace another employee in such other department even though the other employees may have less department seniority unless he is laid off from his department. 6-F. The Company will post in the gatehouse and in each department, notice of permanent openings to be filled. The Company will also post in the gatehouse and in each department, notices for vacancies resulting from employees expected to be off for a period longer than thirty (30) days due to their own illness or injury to themselves. Employees who become successful bidders on these latter vacancies will be handled as temporary employees in all respects except distribution of overtime. On this they will be treated as a new permanent employee coming into the department. In the Pack Department only, successful bidders on these latter vacancies will have the right to bid over employees from the Yard Department on temporary assignment in the Pack Department. Employees will have five (5) full days, exclusive of Saturdays, Sundays and holidays to bid for such vacancies. Bidding will be done when an employee registers his request, for a particular assignment, with the Personnel Office. Employees going on vacations or authorized leaves of absence must notify the Personnel Office in advance of their desire to be considered as applicants or "bidders", for any openings which may be advertised while they are away. Upon their return such employees will have forty-eight (48) hours, exclusive of Saturdays, Sundays and holidays, to accept or reject any assignment which may be theirs as a result of having been successful bidders. In cases of rejection, the second highest bidder will be declared the successful bidder. Bidding will be accomplished when an employee registers his request for a particular assignment in the Human Resource Department (Department Office if applicable). All vacancies (permanent, temporary or vacation) shall be posted, and the person bidding shall complete a bid sheet in triplicate with distribution as follows: 1. Copy to employee 2. Copy to Department Steward 3. Copy to Human Resources Department/Department Manager 14 This paragraph pertains to all departments (including maintenance). Employees away from the job as a result of their own illness or having received an injury for all of the period that any opening was posted shall have the right to request and get such a job provided they are entitled to it by seniority and they make their request known within forty-eight (48) hours, exclusive of Saturdays, Sundays and holidays, after their return to work. In the event the Personnel Office receives no bids for a posted opening, the job will be filled by making an assignment from the Yard Department. This assignment will be made by drafting the most junior employee. (Exception: If this results in the assignment of an employee who has not qualified as a furnace tapper, this will not occur but rather the most junior employee who has qualified at the furnace will be drafted. Note: In this instance, when the more junior employee has completed tapper qualification, he shall replace the previously drafted employee on the posted opening). Should he refuse he shall be considered terminated. Any employee so drafted will make a good faith effort to qualify on the required jobs. Should the Company award a job to an employee in the belief that he or she was the successful bidder and it is later found that the job was awarded incorrectly, the change will be made to award the job to the proper person. In this case, the person first awarded the job shall not forfeit his or her right to the job he or she left. 6-G. Temporary assignments will be made from the Yard Department on the basis of plant seniority except for those employees who hold departmental seniority in the departments where the vacancies exist. In such cases departmental seniority will govern. In any individual case an employee, in keeping with the above seniority rights, will be assigned on the basis of his preference as on file with the Personnel Department as explained below. Yard employees will be allowed to register choices of six (6) departments; namely, Maintenance, Acetylene, Furnace, Lime, Pack and Yard. They will have the option of omitting any of the above named departments from the preference list and will only be considered for jobs on their preference list except as stated in the following paragraph. An employee may change his preferences after being offered an assignment or while working on an assignment but he must take assignments offered to him based on his current preference and must fill such assignment for its duration or at least until the beginning of the next pay period following the start of an assignment. An employee who has been assigned for more than one (1) week to a department which was not his first choice may transfer to the department of his first choice at the end of any week should an opening in his first choice department develop for the following week and he is entitled to it by seniority. Yard employees Weekly Preference Sheets shall be kept current and posted in Yard Office. Permanent Yard Department employees will have the option of training on all bid jobs. It is agreed that the practical application of provisions of this paragraph is not intended to alter the Company's policy of making effective use of the Yard Department as a labor pool for the entire plant and particularly the production departments. The Company will therefore have the right to fill any and all jobs which cannot be filled on a normal seniority basis, by drafting a 15 sufficient number of junior employees on a reverse seniority basis. Should they refuse they shall be considered terminated. The Company may make temporary assignments from the yard for which the need develops after the start of the shift and, which last less than one (1) day, without regard to seniority. In order to minimize the number of times these job holders are transferred to other departments, the following will apply: a. The Company will continue its practice of requiring newly-hired Yard employees to qualify as a furnace tapper. b. Non-bid job holders may be sent to the furnace for cleanup even if not otherwise qualified. (Includes disqualified employees) c. The employees holding these jobs will not be considered a part of the Yard Labor Pool until all other Yard employees have been assigned from the Yard. d. The Company shall have, in its discretion, the right to assign the most junior qualified employee in the plant to temporary duty not exceeding seven (7) calendar days rather than assigning a bid-job employee from the Yard. It is agreed that the Yard foreman will not assign junior employees to fill temporary assignments of shorter duration than one (1) day when it is just as convenient to send a senior employee and other foremen will not deliberately hold back on getting Yard employees needed until after the start of the shift in order to evade the obligation to take employees who have been assigned on a seniority basis. 6-H. Employees will be called back to work when needed on the basis of plant seniority provided: a. They have not been on layoff longer than the length of plant seniority they had when they were laid off up to two years of seniority. This applies to all employees hired after 7/1/84. b. They have not been on layoff longer than two (2) years if they had less than five (5) years of plant seniority when they were laid off. c. They have not been on layoff longer than three (3) years if they had five (5) years or more of plant seniority when they were laid off. d. They can rate acceptable after taking a physical examination by the plant physician. This examination may be dropped on the option of the Company if the layoff has been of shorter duration than thirty (30) days. 16 Any employee who may fail to pass the above referred to physical examination will be handled in accordance with the provisions of paragraph 9 of this Article, provided they are eligible to return under the requirements set forth in Sections 6-H (a-b-c) above. 7. An employee shall lose his seniority rating: (a) where he quits voluntarily or is absent from work without a reasonable excuse for a period of three (3) working days; (b) where he has been discharged for cause; (c) where the layoff has lasted longer than the time limits set forth above in Section 6- H, where, after having been laid off, he fails to return to work within five (5) working days after day of notice given by the Company to return to work. Additionally, for employees hired after 7/1/87, an employee will lose his/her seniority rating if such employee is drafted to a department and fails to qualify in that department. 8. Employees laid off and desiring to avail themselves of the opportunity to be recalled must inform the Company of any change in address as notice will be sent only to the last known address by certified mail. 9. In consideration of those employees who are and who become handicapped by physical disability or old age, it is agreed that such employees will be transferred to jobs the requirements of which are so limited as to permit such employees to qualify to perform, providing such jobs are in existence. It is agreed that the practical application of this provision will be as follows: An employee who becomes handicapped as set forth above will be given and will accept a job in the department he is currently working in if there is one that he can perform satisfactorily without modification. This will be done even though the handicapped person has less departmental seniority, but this is not intended to give the handicapped person any preferential treatment in case of layoff or call-back. In the event there is no job in this department that he can satisfactorily perform, the following will apply: He will be transferred to the Yard Department or any other department provided: a. He has enough departmental seniority to entitle him to hold a job in that department. b. There is in that department a job which he can do without modification. If it should happen in the course of seeking a place for a physically handicapped employee, that in his own department or the department into which he is being transferred, there is a job which he can do but it is already filled with a physically handicapped employee who holds less seniority rights, the senior employee shall be given the job. The employee thus replaced will be handled in the same manner as though this one job had never been given him. Any handicapped employee transferred to another department will have the right to bid for a permanent opening in a different department in accordance with Article XI, Section 6-F, provided there is in the department where the vacancy exists a job the requirements of which are so limited as to permit such employee to qualify to perform. 17 It is agreed that in the event a handicapped employee is faced with layoff outside the gate he shall be allowed to exercise his plant seniority to get in any department a job that he is capable of immediately performing without modification. It is further agreed that the employee to be moved to make room for any handicapped employee must be the most junior non-handicapped on the basis of departmental seniority in the department who holds the job the handicapped employee is deemed able to perform without modification. The employee who is removed from his job by a handicapped employee shall have the right to exercise his seniority to secure a job. It is understood that employees who become handicapped, physically or adjudged temporarily or permanently partially disabled by a ruling of the Compensation Commission or by agreement between the party and the company will be allowed to continue in their regular job or on any other job their seniority may entitle them to provided they have the mental and physical ability to perform the work of such job without modification. In the event there is a disagreement between the parties with respect to the mental or physical ability of such handicapped or disabled employees to perform the work of any job to which he is entitled by seniority, he will be given a trial period if so recommended by the board of doctors. During this trial, when one is recommended, a decision will be reached on the disagreement. The board of doctors will consist of three (3) doctors; one selected by the employee, one selected by the Company and the third selected by their first two (2) doctors. The decision of this board will be final and binding on whether a trial period should be made and the duration of the trial. The fees will be shared equally by the Company and the Union. 10. Any employee who may become physically handicapped to the extent that he is unable to hold a job in the bargaining unit will retain his seniority rights until such time that he would lose, or would have lost, his seniority as a result of a layoff made on a regular seniority basis in accordance with the provisions of this agreement. 11. Shifts shall be given to employees holding permanent assignments according to their preference and departmental seniority. For the purpose of moving to a preferred shift, departmental seniority shall be the deciding factor. In making such moves a maximum of three (3) moves shall be permitted to fill one (1) vacancy. The final vacancy is to be filled by transferring or hiring a person directly into the department. The Company will give all yard people opportunity to file a shift preference along with their departmental preferences. It is understood that no Yard employee will continue for a second full week on a temporary assignment on a shift not in keeping with his shift preference unless it becomes necessary because of one or more of the following reasons: a. Giving priority to departmental preference as provided in paragraph 6-G of this Article. b. There were additional vacancies in the department and the Personnel people did not become aware of them until after Wednesday of the previous week. 18 For the purpose of assuring adequately trained employees, a period of sixty (60) days shall be allowed for training new employees in the Mechanical Maintenance Department on the day shift prior to assigning them to vacancies on shifts other than the day shift. In any other departments a period up to four (4) weeks training is to be used if five (5) or more vacancies exist at the same time within that department. The new employees will be distributed as nearly equal as possible. Resulting vacancies may be filled temporarily by assigning employees in the department with more seniority to the shift on which these vacancies occur. 12. The jobs of leader and regularly scheduled alternate leader are considered separate promotions and each shall be filled on the basis of departmental seniority. 13-A. Any employee in the bargaining unit who may be promoted to a supervisory job outside the bargaining unit may within one (1) year following promotion elect to return to a job in the bargaining unit. Such employee shall continue to accumulate departmental and plant seniority for a period of six (6) months after the date of his promotion. During this twelve (12) month period, he shall continue membership in the Union by paying the regular inactive dues of the Union. After one (1) year, the supervisor will give up all seniority rights in the bargaining unit. This means that he could only return to the bargaining unit as a new employee. Any supervisory employee in the Louisville Plant who may be transferred to another of the Company's operation shall forfeit all seniority rights in the bargaining unit. 13-B. The Union recognizes that the Company has a policy of promoting from within and in the practical application of this policy does from time to time appoint Acting Foremen to fill temporary vacancies in the supervisory force or to enlarge the supervisory force to meet a temporary need. It is, therefore, agreed that such Acting Foremen do not lose any seniority right by having so served. The Company's policy in regard to the use of Acting Foremen is as follows: a. To fill in for regular foremen who are not on the job because of vacations, illnesses, leaves of absences, or other such reasons, plus the utilization of Acting Foreman to fill in situations where schedule considerations leave a day or so in a week which is impossible to efficiently schedule. b. To cover temporary needs due to fluctuations in production schedules or other temporary needs which the Company is not able to definitize. In carrying out these policies, the Company will make assignments of Acting Foremen in such a fashion that no one person shall be allowed to act as a foreman in excess of forty-five (45) days in any contract year, either consecutive or cumulative, unless no other qualified employee agrees to take the assignment. The Company will prepare a list on July 1st of each year of all employees deemed qualified to be Acting Foremen in each department. Such person must be permanently assigned to the department in which he acts as foreman at the time he is given the Acting Foremen assignment. Any employee desiring to have their name deleted from the list may do so by notifying 19 their supervisor by July 15th of each year. If employees become qualified for Acting Foremen they may be added to the eligible list at the times of their qualification. If any employee is used as Acting Foremen in excess of forty-five (45) days in any contract year and there are other qualified employees whose name have not been deleted from the list, the Company will pay the most senior eligible employee on the qualified Acting Foremen list the straight time rate for all hours worked after the Company has been notified that an employee has exceeded the forty-five (45) days. The Company will charge any overtime worked by an Acting Foremen to his department. In lieu of using Acting Foremen, the Company may elect to utilize a leader and pay such leader responsibility pay. 13-C. Any employee appointed or elected to Union duties in the International Brotherhood of Firemen and Oilers shall be granted a leave of absence with seniority accumulative while in such service. Renewal will be considered automatically granted each year for a one-year extension of such leave upon application in writing requesting such renewal. 14. The Company will in case of layoff give three (3) days notice to employees with six (6) months, but less than five (5) years, of plant seniority. The Company will, in case of layoff, give seven (7) days notice to employees with five (5) or more years of plant seniority. The notice of obligations set forth above will be fulfilled by posting the proper notice on the plant bulletin boards. The days referred to above will be counted as the calendar days following the day of posting. 15. The Company will post seniority lists for all employees twice each year at intervals of six (6) months. The employees shall have sixty (60) days from date of posting to question accuracy of the seniority shown if the seniority listing is questioned by an employee after sixty (60) days and it is found the seniority date is incorrect the Company will make necessary corrections. It is further agreed that the Company will not be held liable for losses of any nature suffered by an employee as a result of mistakes in the seniority posting called to the attention of the Company after the sixty (60) day period has elapsed. The letter of agreement on this subject dated May 26, 1971, outlines the total and complete understanding between the parties. It is agreed that the Company will keep posted or otherwise readily available in the gatehouse and in all departments a copy of the master seniority sheets. 16. Employees who are disabled and unable to work for a continuous period of two (2) or more years will be deleted from the Seniority list and company rolls. Should such employee later produce medical evidence that indicates they have recovered to the extent they can satisfactorily return to active duty, they will be placed back on the Seniority list in the place they would have been had they not been disabled. They would also be reentered on the Company rolls. 20 JOB PREFERENCE Yard Department A. The normal bid jobs in the Yard department are hauler, alternate hauler, sweeper operator, paste handler and bobcat operator. B. Alternate Hauler - will perform the Hauler job on the Hauler's off days. C. Flatbed truck, dump trucks, water trucks, and bush hog, are operated on an as needed basis. The jobs will be bid out to the most senior employees in the department. D. When temporary vacancies occur they will be offered to the most senior qualified employee. For the purpose of job preference, a temporary vacancy is defined as absence of less than thirty (30) days created by a leave of absence, vacation, absenteeism, illness or injury. E. In the Yard department, seniority is plantwide seniority. F. The "Bobcat" in the Yard Department will be operated by a Yard employee on any job normally done by the Yard. G. The coke plant dust truck may be emptied by coke plant employees when there is no yard hauler on the shift. H. Permanent job holders may roll outside the Yard Department when they are permanently displaced from their job. Furnace Department All regular jobs in the Furnace Department that require performance of five (5) days or more per week will be filled on the basis of preference by departmental seniority. Regularly scheduled relief jobs of less than five (5) days per week will be filled on the basis of preference by departmental seniority. In the event such jobs are not selected by persons holding department seniority then those who have been in the department the longest will be given the opportunity to fill such jobs. In filling permanent vacancies the following shall be utilized: 1. Jobs will be posted on the department bulletin board for five (5) days and those interested shall sign for such openings in the Department Manager's office. 2. In the filling of permanent vacancies, furnace employees may bid to other shifts in the Furnace Department. 21 3. Three additional permanent postings shall be considered the maximum to be posted as the result of the original permanent vacancy. 4. The remaining permanent vacancy will be filled in accordance with the appropriate portions of Article XI, Section 6-F (dealing with permanent vacancies). Once an employee has selected a permanent job, he cannot be rolled by a senior employee except that an employee displaced from his selected job by a reduction in force or for any other reason beyond his control may exercise his departmental seniority and roll a junior employee. If the Furnace is expected to be down for four or more hours during a shift, employees may exercise seniority for that shift. All employees entering a department on a permanent basis after July 1, 1978, will be required to qualify for all jobs or be removed from that department. All employees who are permanent members of a department prior to July 1, 1978, shall have the option to qualify for jobs in their department. When temporary vacancies occur, they will be offered to the most senior qualified employee on the shift. For the purpose of job preference, a temporary vacancy is defined as a vacancy of less than thirty (30) days, created by leave of absence, vacation leave, absentee, illness or injury. When it is definitely known that temporary vacancy will exist for thirty (30) days or more, job preference, in accordance with the principles set forth above for permanent openings, will be immediately applied. However, when the temporary absentee returns, he will be permitted to go back to the job that he left, providing that his right to the job has not been changed as a result of changes in production levels or other unforeseeable circumstances. If his rights have been changed then he will return to a job which his departmental seniority entitles him to. In the event that he returns to the job he held when he left, then other people in the department who moved into other jobs as a result of his first leaving his job will also return to the jobs they held prior to the time of the temporary vacancy, provided that their job rights have not changed. In filling a temporary vacancy which is determined to exist for thirty (30) days or longer, each employee on a shift will be permitted to make one (1) move only for each original vacancy. Succeeding vacancies caused by employees moving as the result of the original vacancy will not be considered as additional vacancies entitling employees on the shift to make more than one (1) move as a result of the first opening. In the filling of temporary vacancies for less than thirty (30) days, only one move will be permitted. In the event that the filling of temporary vacancies of less than thirty (30) days in accordance with the above procedure results in the Company being unable to fill the remaining vacancy with an experienced qualified employee then the Company must assign the least senior, qualified, experienced employee to the vacancy. If in complying with the above it is necessary for a leader to perform a non-leader job he shall be paid leader pay. Furnace department employees working overtime will fill the open position necessitating the overtime. Jobs will be posted on the bulletin board for five (5) days and those interested will sign for them. 22 During the annual furnace shutdown, a number of employees will be allowed to exercise their seniority to work as maintenance helpers instead of remaining at the furnace. This procedure shall operate according to the following rules: A. One choice shall govern the entire shutdown period. B. Furnace department employees must register their choice with the Human Resources Department at least one month prior to the start of the shutdown. C. If there are insufficient volunteers to remain in the furnace the most junior employees will stay in the furnace department. New Hot Chill crane operators will be given two (2) weeks training prior to being left alone on the job. Effective July, 1993, the two tappers on each shift shall be paid leader's pay rate. Changes made to fill any permanent vacancy will be put into effect at the beginning of calendar weeks and if such permanent openings occur in the middle of the week they will be filled on a temporary basis until the start of the calendar week. Nothing in all of the above will be construed or interpreted to mean that anything in this entire statement on job rights will add to or subtract from an employee's rights under Section 9, Article XI of the existing Agreement. PACKING DEPARTMENT The Packing Department is divided into four (4) units; namely, Raw Materials, Crusher, Packing and Ball Mill. The employees in this department will be allowed to exercise departmental seniority or if they have not attained departmental seniority they will exercise seniority based on length of service in the department in obtaining employment in their preferred unit. Pack employees have exclusive rights to the hauling and packaging of carbide for shipment. Once an employee has selected a unit, he cannot be rolled from such unit by a senior employee from another unit except that an employee displaced from his selected unit by reduction in force or for any other reason beyond his control, will exercise his seniority within 30 days and roll a junior employee in another unit unless said employee returns to his old job on a permanent basis within the 30 day period. A non-leader or non-alternate leader may not roll a leader on a day-to-day basis, if the leader or alternate leader has been on the job for as much as four hours. An employee displaced from his chosen shift by a reduction in force or other reasons beyond his control will be allowed to displace any junior employee in any unit. The employees in each of the four (4) units will be allowed to exercise departmental seniority in selecting a job on a daily basis at the start of each shift. The primary Crushing Unit will follow their present rotating frequencies which are of less than one (1) day. New employees entering the unit will be expected to learn all the jobs in the unit in a reasonable length of time. 23 All employees that come into the department on a permanent basis after November 1, 1959, and after having been in the department for a four (4) week period will be required to learn all of the jobs in all of the units or be removed from the Department. Exceptions to this are the leader's jobs in the Pack and Primary Crusher Units. When a vacancy occurs for a temporary leader, the job will first be offered to permanently assigned employees in the department by seniority and qualifications. If the job is refused by permanently assigned employees, it would then be offered to employees temporarily assigned to the department. If the job is refused by temporarily assigned employees, it will be assigned to the least senior qualified temporarily assigned employee, if one is in the department, or to the least senior qualified permanently assigned employee, if there is no qualified temporarily assigned employee in the department. Company will train two (2) leaders for each shift over and above the employees holding those jobs. These employees will be available to replace the regular leaders on their shift. The leader-trainees will be offered training by shift seniority. If all employees on the shift refuse, the least two (2) senior employees will be trained. Pack employees entering Pack Department prior to November 1, 1959 will be exempt from being drafted as a leader-trainee. With its present operation, the Company agrees to maintain leaders in the Ball Mill. It is understood that no more than one (1) employee will be trained at a time and that he will be trained within a period of eight (8) weeks. During this training period he will be a member of the Packing unit if this should be necessary to expedite the training and the junior qualified employee will take his place. For the purpose of job or unit preference, a temporary vacancy is defined as a vacancy of less than thirty (30) days, created by a leave of absence, vacation leave, absentee, illness or injury. When it is definitely known that a temporary vacancy will exist for thirty (30) days or more, job preference in accordance with the above permanent job rules will be immediately applied. However, when the temporary absentee returns he will be permitted to go back to the job he left, providing that his right to the job has not changed as a result of changes in production levels or other unforeseeable circumstances. If his rights have been changed then he will return to a job which his departmental seniority entitles him to. In the event that he returns to the job he held when he left, then other people in the department who moved into other jobs as a result of his first leaving his job will also return to the jobs they held prior to the time of the temporary vacancy, provided, that their job rights have not changed. In filling a permanent vacancy or a temporary vacancy which is determined to exist for thirty (30) days or longer, each employee on a shift will be permitted to make one (1) move only for each original vacancy. Succeeding vacancies caused by employees moving as a result of the original vacancy will not be considered as additional vacancies entitling employees on the shift to make more than one (1) move as a result of the first opening. In the filling of temporary vacancies for less than thirty (30) days, only one move will be permitted. In the event that the filling of temporary vacancies of less than thirty (30) days in accordance with the above procedure results in the Company being unable to fill the remaining vacancy with an experienced, qualified employee, then the Company may assign the least senior, qualified experienced employee to the vacancy. 24 Jobs in the Packing, Crushing, Raw Materials and Ball Mill Departments will be posted on the Bulletin Board for five (5) days and those interested will sign for them. Changes made to fill any permanent vacancy will be put into effect at the beginning of calendar weeks and if such permanent openings occur in the middle of the week they will be filled on a temporary basis until the start of the calendar week. Any employee who reports for work late and has not called in prior to the start of the shift or has called but is more than two (2) hours late, will accept the job available at the time. The cold chill crane operator will be posted as a five day job. Nothing in all the above will be construed or interpreted to mean that job preference rights include the right to move from shift to shift (except for successful bidders on posted openings) or that anything in this entire statement on job rights will add to or subtract from an employee's rights under Section 9, Article XI of the existing Agreement. A. Training 1. To ease the training backlog, four (4) summer students will be added to the Pack Department to assist the training effort. Since these personnel are intended to facilitate training, no extra vacation shall be permitted as a result of their presence, nor shall the ensuing training be interrupted by borrowing such personnel to avoid draft overtime. 2. In future summers, if the training deficit continues, summer students will again be added under the same rules. One summer student shall be added for each twenty (20) weeks of training lag, up to a maximum of four (4) students. 3. When the students return to school, current practices shall apply to ongoing trainees. 4. Bargaining unit employees currently disqualified from the Pack Department shall (as openings occur) be allowed to rebid into the Pack Department. They shall be allowed to rebid into the Pack Department. They shall be allowed one (1) successful bid. If they are again disqualified, they may not rebid. ACETYLENE DEPARTMENT The normal and accepted job assignments in the Acetylene Department are: Dry Generator Control Room and Dry Generator Outside Employee. The Utility Employee performs all miscellaneous work assignments on a day to day basis. All regular jobs in the Acetylene Department that require performance five (5) days or more per week and regularly scheduled relief jobs will be filled on the basis of preference by departmental seniority. In the event such jobs are not selected by persons holding departmental seniority then those employees who have completed the training described below will be given the opportunity to fill such jobs. When new employees are needed and taken into the department they will be trained by rotating them over regularly scheduled relief jobs until they have spent a maximum of two (2) weeks on each of the jobs 25 mentioned above, plus an additional two (2) weeks in the Compressor Room. A Control Room Operator can become qualified only after having had two (2) weeks training. An exception to this is when an employee possesses a handicap which prevents him from performing the necessary duties. In no event will the training period exceed twenty-six (26) weeks of active working time in the department. All employees that enter the Department on a permanent basis will be required to learn all of the jobs or be removed from the Department. Employees who are holding these regularly scheduled relief jobs will be expected to take the permanent assignment of the new employee for the two (2) week or four (4) week period necessary to complete the training and at the completion of that period will return to their regularly assigned jobs. An employee permanently assigned to the Acetylene Department may bid on a job any time he wishes, but the contract obligations to assign only qualified people to fill permanent openings will be adhered to. Once an employee has selected a job, he cannot be rolled by a senior employee except that an employee displaced from his selected job by reduction in force or for any other reason beyond his control, may exercise his departmental seniority and roll a junior employee and with the exception that a non-leader or non- alternate leader may not roll a leader or alternate leader. The above covers permanent vacancies. For the purpose of job preference, temporary vacancy is defined as a vacancy of less than thirty (30) days, created by a leave of absence, vacation leave, absentee, illness or injury. When it is definitely known that a temporary vacancy will exist for thirty (30) days or longer, job preference in accordance with the permanent opening rules will be immediately applied. However, when the temporary absentee returns he will be permitted to go back to the job that he left, provided that his right to the job has not been changed as a result of changes in production levels or other unforeseeable circumstances. If his rights have been changed then he will return to a job which his departmental seniority entitles him to. In the event that he returns to the job he held when he left, then other people in the department who moved into other jobs as result of his first leaving his job will also return to the jobs they held prior to the time of the temporary vacancy, provided that their job rights have not changed. Employees in the Acetylene Plant who temporarily are prevented from performing their regular jobs because of injury or recovery from illness will be allowed to displace employees who are performing jobs which the injured employees or the employees who are recovering from illness are capable of performing. For a known temporary vacancy of one calendar week or more, the vacancy will be posted within the department and will be filled by departmental seniority. If no permanent departmental employees bid on the vacancy, the Utility Employee or Relief Utility Employee will be assigned to fill the vacancy. Temporary vacancies of less than one calendar week will be filled on a day by day basis by the Utility Employee or Relief Utility Employee in accordance with departmental seniority. If the employee scheduled to fill a temporary vacancy is not qualified for the job, the Company will assign the least senior qualified employee, on the shift, to the vacancy. 26 When there are both regular and full-time employees and regularly scheduled relief employees working on the same work assignment and the crew of that particular assignment has to be reduced, the employees will be taken off in accordance with their departmental seniority. An employee reporting for work late will be allowed to fill his regular job unless he is more than two (2) hours late, provide he reports such tardiness. Employees trading off days will trade jobs for the days involved in the trade. Should the trade involve a person in the Utility Group, the one coming into the Utility Group due to the trade will not be allowed to bid out of the Utility Group but will use the seniority of the person with whom he traded only for the purpose of remaining in the Utility Group. In filling a permanent vacancy or a temporary vacancy which is determined to exist for thirty (30) days or longer, each employee on a shift will be permitted to make one (1) move only for each original vacancy. Succeeding vacancies caused by employees moving as the result of the original vacancy will not be considered as additional vacancies entitling employees on the shift to make more than one (1) move as a result of the first opening. In the filling of temporary vacancies for less than thirty (30) days, only one (1) move will be permitted. In the event that the filling of temporary vacancies of less than thirty (30) days in accordance with the above procedure results in the Company being unable to fill the remaining vacancy with an experienced, qualified employee then the Company may assign the least senior qualified, experienced employee on the shift in the department. For the purpose of an orderly and expedient administration of all of the above rules and regulations, job preference listings for each shift in the above department will be maintained on bulletin boards. Employees will be expected to keep their preferences current on this list so that if a vacancy occurs, the foreman can go to the list and immediately make the necessary job changes. The most senior employee expressing a preference for the open job will be assigned to and must accept the job. When an employee submits a bid for a job he shall specify whether he is bidding on a five (5) day job or a relief job. When new and permanent openings in the Acetylene Department develop as a result of starting a new operation or of the Company deciding that more employees are required to satisfactorily meet the work demands of existing operations, the Company will advertise to fill such openings. Beginning with the first full pay period in November in each year of this agreement, employees shall be permitted to exercise their department seniority for the purpose of assignment to jobs (including, but not limited to, leader jobs and alternate leader jobs) of their preference. To administer the foregoing provision, the Company on October 10, of each year will begin to ask employees, in the order of their department seniority on each shift, to express their job choices. Each employee must express his choice at the time of this contact and his expressed choice shall be final. Any employee who fails to express a choice at the time of this contact shall forfeit his choice and will be assigned, on the basis of seniority, to any jobs that are left after assignments have been made in accordance with the 27 preferences expressed in the completed inquiry. This procedure will be completed not later than October 20 of each year. Employees on vacation or on authorized leaves of absence shall register their first three (3) choices with their foreman before they go on vacation or on leave. The choices registered with their foreman will be considered their choices as of October 10. All alternate leaders will replace the leaders for temporary absence of thirty (30) days or less. In the Dry Generator Plant the person regularly scheduled to cover the off days of the leader and alternate leader will replace the alternate leader for temporary absences of thirty (30) days or less. Temporary vacancies of alternate leaders in the Acetylene pipe line section will be filled by departmental seniority. The Company and the Union will endeavor to work out satisfactory procedures so that employees in the Acetylene pipe line section will be filled by departmental seniority. The Company and the Union will endeavor to work out satisfactory procedures so that employees in the Acetylene Plant who have served six (6) months or more but who have not worked on all jobs in the department will be given the same training opportunities as a new employee, so that the said older employees will be qualified to exercise their job preference when future openings develop in the Acetylene Plant. Changes made to fill any permanent vacancies in any of the departments mentioned above will be put into effect at the beginning of calendar weeks and if such permanent openings occur in the middle of the week they will be filled on a temporary basis until the start of the calendar week. Nothing in all the above will be construed and interpreted to mean that job preference rights include the right to move from shift to shift or that anything in this entire statement on job rights will add to or subtract from an employee's rights under Section 9, Article XI of the existing Agreement. LIME DEPARTMENT The normal and accepted job assignments in the Lime Department are: Silo, Barge, Pond Material, Lime Handling and Lime Truck Driver. Jobs in the Lime Department will be filled on the basis of departmental seniority. In the event departmental seniority is equal, jobs will be awarded on the basis of plant seniority. All regular jobs in the Lime Department that require performance five (5) days or more per week will be filled on the basis of preference by departmental seniority. Regularly scheduled relief jobs of less than five (5) days per week will be filled on the basis of preference by departmental seniority. In the event departmental seniority should be equal, plant seniority will prevail. Once an employee has selected a job, he cannot be rolled by a senior employee except an employee displaced from his selected job by reduction in force or for any other reason beyond his control, may exercise his 28 departmental seniority and roll a junior employee but with the exception that a non-leader or non-alternate leader may not roll a leader or alternate leader. All employees entering a department on a permanent basis after July 1, 1978, will be required to qualify for all jobs or be removed from that department. All employees who are permanent members of a department prior to July 1, 1978, shall have the option to qualify for jobs in their department. For the purpose of job preference, when it is definitely known that temporary vacancies will exist for thirty (30) days or more, job preference as set forth above for permanent openings, will be immediately applied. However, when the temporary absentee returns, he will be permitted to go back to the job that he left providing that his right to the job has not been changed as a result of changes in production levels or other unforeseeable circumstances. If his rights have been changed then he will return to a job which his departmental seniority entitles him to. In the event that he returns to the job he held when he left then other people in the department who moved into other jobs as a result of his first leaving his job will also return to the jobs they held prior to the time of the temporary vacancy, provided that their job rights have not changed. In filling a permanent vacancy or a temporary vacancy which is determined to exist for thirty (30) days or longer, each employee on a shift will be permitted to make one (1) move only for each original vacancy. Succeeding vacancies caused by employees moving as a result of the original vacancy will not be considered as additional vacancies entitling employees on the shift to make more than one (1) move as a result of the first opening. In the filling of temporary vacancies of less than thirty (30) days, only one move will be permitted. In the event that the filling of temporary vacancies less than thirty (30) days in accordance with the above procedure results in the company being unable to fill the remaining vacancy with an experienced, qualified employee, then the Company must assign the least senior, qualified experienced employee to the vacancy. If in complying with the above it is necessary for a leader to perform a non-leader job he shall be paid leader pay. With its present operations, the Company agrees to maintain leaders in the Lime Department. When a vacancy occurs for a temporary leader, the job will first be offered to permanently assigned employees in the department by seniority and qualifications. If the job is refused by permanently assigned employees, it would then be offered to employees temporarily assigned to the department. If the job is refused by temporarily assigned employees, it will be assigned to the least senior qualified temporarily assigned employee, if one is in the department, or to the least senior qualified permanently assigned employee, if there is no qualified temporarily assigned employee in the department. Employees on permanent assignment will not be allowed to bid on vacancies of shorter duration than thirty (30) days, except for vacation vacancies. If the employee scheduled to fill a temporary vacancy is not qualified for the job, then the Company will assign the least senior qualified employee to the vacancy. Lime employees who are removed from the Lime Department for lack of work, will be moved to the Yard Department. They will retain the right to return to their job in the Lime Department for a period of six (6) months unless they exercise their seniority to move into another job. Their wages will be maintained 29 at their Lime Department rates for a period of two weeks. After this two week period, their wages will be adjusted to the job they are assigned to while working out of the Yard department. For the purpose of an orderly and expedient administration of all of the above rules and regulations, job preference listings for each shift will be maintained on bulletin boards. Employees will be expected to keep their preferences current on this list so that if a vacancy occurs, the foreman can go to the list and immediately make the necessary job changes. The most senior employee expressing a preference for the open job will be assigned to and must accept the job. When permanent employees are needed and taken into the department they will be trained by rotating them over regularly scheduled jobs until they have spent a maximum of two (2) weeks on each job. Employees who hold these regularly scheduled jobs will be expected to take the permanent assignment of the new employee for the two (2) week period necessary to complete the training and at the completion of that period will return to their regularly assigned jobs. The Company and the Union will endeavor to work out satisfactory procedures so that employees in the Lime Department who have not worked on all jobs in the department will be given the same training opportunities as a new employee so that the said older employees will be qualified to exercise their job preferences, according to seniority, when future openings occur. Changes made to fill any permanent vacancy will be put into effect at the beginning of calendar weeks and if such permanent openings occur in the middle of the week they will be filled on a temporary basis until the start of the calendar week. Nothing in all of the above will be construed and interpreted to mean that job preference rights include the right to move from shift to shift or that anything in this entire statement on job rights will add to or subtract from an employee's rights under Section 9, Article XI of the existing Agreement. ARTICLE XII Grievance Procedure and Arbitration 1. In the adjustment of all grievances, the following procedure shall apply: Step 1: Any employee having a grievance shall within five (5) days of the time that the event took place take the matter up with his foreman with or without his departmental Steward or the Plant Chairman of the Union being present. In case the matter cannot be satisfactorily settled within twenty- four (24) hours, resort will be had to Step 2. It was brought out that under certain circumstances an employee could fail to become aware of a misapplication of contract terms within the five (5) day time limit set forth above. The Company and the Union agreed that in such a case, the beginning of the five (5) day period would be immediately after the time that the employee had reasonably clear evidence that the complained of act had taken place. Step 2: The grievance shall be reduced to writing by the employee or his departmental Steward (on forms mutually satisfactory to the Union and the Company and furnished by the Union) and the 30 parties mentioned in Step 1 above shall submit the same to the Department Head involved within two (2) days after the time mentioned in Step 1 has expired. In case the matter be not satisfactorily settled at this Step within two (2) days after its submission to the Department Head, resort will be had to Step 3. Step 3: Within two (2) days after the time mentioned in Step 2 above has expired, the grievance shall be submitted to the Plant Manager or a designated representative, by the parties mentioned in Step 1 and Step 2 above, including a Union Business Representative or his designated representative. The parties will use their best efforts to settle the matter at this Step; however, if they are unable satisfactorily to settle the matter at this Step within seven (7) days after submission to the Step, resort shall be had to conciliation as provided in Step 4, or the parties may mutually agree to omit Step 4 of the grievance procedure and resort shall be had to arbitration as provided in Step 5. Step 4: In the event a grievance is not settled in Step 3, the parties will immediately contact the Louisville Labor-Management Committee and request that a conciliator be furnished. If it should happen that the Louisville Labor-Management Committee were unable to furnish a conciliator, the Federal Mediation and Conciliation Service would be contacted. The person thus designated to hear the dispute would contact both the Union and the Company for the purpose of arranging a meeting. It is understood that an earnest effort would be made to speedily settle the grievance at this level, but the time used in Step 4 would not exceed ten (10) days unless the Company and the Union should mutually agree that more time was needed. If the parties fail to settle the grievance in the manner set forth in this Step, resort shall be had to arbitration as provided in Step 5. Step 5: The Company and the Union shall agree upon an arbitrator who will hear his dispute or grievance, but who shall not have authority to amend or modify this Agreement. The decision of the arbitrator shall be final and binding upon the Parties. The arbitrator shall be selected within ten (10) days following the receipt by either party from the other or the request for the appointment of an arbitrator to hear the matter and settle the dispute. In case the Parties cannot agree upon an arbitrator within such period, they shall make a mutual request to the Director of the Louisville Labor-Management Committee for a panel of five (5) available arbitrators. The Parties will select an arbitrator from this panel or a second one obtained in the same manner as the first. The fees and expenses of the arbitrator shall be shared equally between the parties. It is specifically understood that only matters involving the application or interpretation of this contract go to arbitration. 2. Saturdays, Sundays, and holidays shall not be counted as days for the purpose of this Article. 3. At any step of the Grievance Procedure, the employee affected may be called in by the Shop Committee and the employee shall be compensated at his straight time rate for all reasonable time 31 spent in discussing his grievance with the Shop Committee and for the time spent in any of the steps. 4. If an employee is discharged and he feels he has been unjustly discharged the matter may be submitted to Grievance Procedure, starting with the second Step, providing the employee makes his claim within five (5) days after his discharge. 5. The time limits mentioned in this Article are specified for the purpose of expeditiously disposing of grievances and disputes, but may be extended by mutual agreement. however, the waiver by the Company or the Union of any such time limits in any case shall not constitute a waiver by the Company or the Union of any such time limits or its right to insist on adherence thereto in any subsequent case. 6. The Shop Committee shall consist of any five (5) of the duly elected Plant Officers or Stewards of the Union. 7. Any and all grievances presented to the Company in writing shall be answered in writing by the Company. 8. It is agreed that the Plant Chairman of the Union and the Departmental Stewards will notify their respective foremen before leaving the job to handle or discuss grievances. It is agreed further that Departmental Stewards on duty at the Plant are forbidden to handle grievances or related matters for any employees outside of their own department. 9. Unless an additional number is agreed to in advance by the Company, the maximum number of employees who may attend a grievance meeting, in addition to the Plant Chairman or his designee and the Steward, shall be two (2). Witnesses may be called in addition to the above maximum. 10. The Company agrees that an employee has the right to union representation in disciplinary actions. 11. Shop Chairman. In order to allow the Union shop chairman to be present for ordinary day-to-day collective bargaining matters, he or she shall work the day shift without regard to his seniority. Recognizing that this may cause scheduling difficulties the Company may transfer the shop chairman to the Yard providing however, A. The shop chairman shall continue to be paid his/her base rate. (Includes Leader rate). B. He/She shall continue to accrue seniority in his/her department. C. He/She shall have the opportunity to work overtime in his/her normal department. ARTICLE XIII 32 Strikes and Lockouts All disputes and grievances arising hereunder shall be peaceably settled in accordance with procedure provided by this Agreement which the parties recognize as adequate and fair. Pending the settlement of any grievance or dispute, there shall be no lockout by the Company and neither the Union nor any of the employees will engage in strikes, picketing, slowdowns, work stoppages, sit- downs, or sit-ins that would interfere with the Company's normal operation. ARTICLE XIV Safety and Health 1. The Company shall maintain all reasonable and necessary precautions for safeguarding the health and safety of its employees, and all employees will cooperate in the implementation thereof. Both the Company and the Union recognize the Company's primary responsibility to provide for the prevention, correction, and elimination of all unhealthy and unsafe working conditions and practices. The Union agrees that it will encourage all employees to work in a safe manner. The Company further agrees that it will continue to comply with all applicable state and federal health and safety standards. 2. Employees will at all time exercise safety in the operation and performance of their duties and will immediately report all injuries to the First Aid Department; and the Company will, on all shifts, provide first aid equipment and supplies, together with a qualified person familiar with standard first-aid practices, for the purposes of first-aid to the injured. Effective July 1, 1984, the qualifications for a first aid attendant are as follows: A. Must be dependable and reliable. B. Must have a high school education or G.E.D. C. Must have had at least twenty-four (24) consecutive months of practical experience in emergency first aid work within the last three (3) years. D. Must have and maintain current Emergency Medical Technician Certification. E. Must develop working knowledge of fire-fighting and fire-fighting equipment. 3. In consideration for those employees whose duties are such that burns are sustained and clothing is burned and damaged by heat the Company agrees to furnish protective helmets, heat shields and goggles, consistent with its ability to obtain such equipment. The Company expects to issue such equipment to employees and maintain such equipment but will continue to deduct from an employee's pay when he is separated from the employ of the Company, the value of any such equipment not turned back to the Company. 33 It is further agreed that a commonly accepted type of welder's jacket will be bought by the Company and furnished to all welders who spend a major portion of their time welding and more particularly overhead welding work. The employees are obligated to the extent of giving a reasonable amount of care to these jackets while in their possession. 4. Each major department will have a Safety Committee which will meet at least once a month. Each committee will consist of at least one supervisor and no more than three (3) hourly employees. The Safety Director and the Union Plant Chairman will serve on all the department safety committees and will rotate as Plant Safety Committee Chairman on a monthly basis. It will be their responsibility to correlate the safety activities in compliance with general company policy. These departmental safety committees are to review regularly both existing plant safety rules and safety rules of their own departments. They are to evaluate the rules and the performance of the departmental working force on carrying out the rules. This may result in specific recommendations that some rules be deleted and/or modified and specific steps be taken to insure compliance with all safety rules and regulations. A second important task is for each department safety committee to make a careful and intensive study of all working procedures in its own department and recommend changes that are deemed necessary. They are to consider ways and means of insuring that everyone cooperates fully to carry on the work in keeping with the adopted rules and procedures. The safety committees do not have final authority on any matter and, therefore, their activities are advisory in nature. Recommendations that receive a majority vote of a safety committee will be considered sufficiently important to warrant the attention of the Plant management. Questions which cannot be settled by the local plant management will be scheduled for an explanation to the Union International Representative in a meeting with the shop committee. 5. Any employee who suffers a compensable injury at work shall be given, upon his request, a copy of the pertinent accident report and the resultant first report of injury sent to worker's compensation. 6. An employee shall have the right to request and get a review from the foreman's immediate superior when and if he is ordered to perform or continue to perform an assignment which involves danger over and above which is normal for that particular work under the then prevailing conditions. The employee in making the request may do so with or without his steward or other Union official. 7. Employees off from work for four (4) days or more because of illness or injury with no time limits who have advised the Company that he has written doctor's release to return to work may also be required to obtain a release from the Company doctor. The doctor's release must be brought to the Personnel Department after the employee's last medical appointment prior to returning to work. The Company is obligated to allow the employee to return to work no later than his first regularly scheduled shift after the expiration of forty-eight (48) hours, exclusive of holidays, from the time the release from his physician is received by the Company. This in no way modifies the Company's rights to require proof of absence from employees with poor attendance records. 34 8. The wearing of safety shoes is a condition of employment and the Company will pay $95.00 a year effective July 1, 1993 toward the purchase of these shoes. Employees working less than six (6) months shall not be entitled to any rebate on the purchase of safety shoes. After the employee has completed six (6) months of service, the Company will refund to him up to the above listed amount toward the purchase of safety shoes. 9. The Company will furnish appropriate gloves for the performance of assignments. 10. The Company shall provide prescription ground safety glasses to employees requiring them, if they have completed six (6) months of continuous service with the Company. These glasses will conform to Federal Specifications and be made as a result of an examination by an Optometrist or Ophthalmologist approved by the Company. The employee will choose a preferred frame from an approved selection. The Company is not to pay for eye examinations or glasses when such examinations show that prescription ground safety glasses are not needed in performing the employee's job at the plant. It is understood that the examination and prescription will be for safety glasses only and not more than one (1) pair of glasses per Contract year for any one employee be given. The limit on glasses will not be the controlling factor when they become broken or their effectiveness impaired during the course of the employee's work on the job. The Company will not be responsible for replacing or repairing safety glasses or frames for safety glasses unless they were damaged or lost during the course of the employee's work on Company premises and unless there is reasonable proof that the employee was exercising a reasonable amount of care and diligence in protecting the equipment. The Company will provide five (5) pairs of flame retardant clothing to furnace and maintenance employees upon their entry into the department. In addition, the Company will replace flame retardant clothing for the employees in the Furnace and Maintenance Departments as needed when the clothing is burnt or destroyed by their normal process. Employees requesting replacement clothing must turn in their damaged clothing. ARTICLE XV Compensable Injuries 1. In case an employee sustains a compensable injury and it is necessary to secure for him or send him to a doctor, the following shall apply: A. If the doctor sends him back to work that day with a statement to the effect that his injury was bona fide and required medical attention, he shall be credited with the time required for the visit to the doctor, otherwise, he shall be given an opportunity to make up time lost through his visit to the doctor. 35 B. If the doctor sends him home, he shall be paid for the full number of hours in his shift on the day on which the injury occurred at his rate on that day. 2. In case an employee, in the course of his work, suffers a compensable injury under the Kentucky Workers Compensation Board; after the four (4) day waiting period has elapsed, the Company will pay to such employee an amount of money as determined by multiplying the number of hours of employment lost during the four (4) day waiting period by the employee's straight-time rate per hour, provided, however, that if such disability shall continue for more than three (3) weeks and the employee is compensated by such Board for such four (4) day waiting period, then the amount to be paid by the Company shall be reduced by the difference between the amount received by the employee and the amount the Company would have paid as provided above. If time lost as result of such compensable injury extends beyond the four (4) day waiting period, then the Company; in addition to the above payment, will make up the difference between what the employee would have earned at his straight time rate per hour and the amounts of money received by the employee from the Kentucky Worker's Compensation Board as payment for time lost as a result of a compensable injury. The Company will only make up such difference up to a period of twenty-six (26) weeks beyond the initial four (4) day waiting period. The basic intent of this paragraph is to provide that the employees sustaining a compensable injury shall not suffer any diminution in his normal straight time hourly earnings for an aggregate period of twenty-six (26) weeks as a result of such injury. After the initial twenty-six (26) weeks payment will be made on the following basis: The next twenty (20) weeks (27-46) the Company will make up the difference between the compensation payment and 80% of the employee's base weekly earnings. ARTICLE XVI Control Lab 1. There shall be two (2) jobs in the Control Lab -- Analyst and Sr. Analyst. 2. The Analyst position will perform a variety of tests to assure product quality. The Analyst shall also perform related job responsibilities. 3. The Sr. Analyst will be responsible for covering scheduled day shift vacancies unless covering vacancies due to employee absence, vacation or other items where there is a need for additional manpower. 4. The normal shift for the Sr. Analyst is days. 5. The Sr. Analyst draws the equivalent of Leader pay. 6. To qualify as a Sr. Analyst, an employee must be a qualified analyst. If no Analyst bids for Sr. Analyst, the most junior analyst must fill the position. 36 ARTICLE XVII Overtime The company will, insofar as is practical, distribute any necessary overtime work within a department as equally as is possible among the employees in that department. The Union recognizes that the Company can only carry out this principle if all employees cooperate by working overtime when requested. It is agreed further that the Company will maintain, post and keep current a list of all employees in each department for the purpose of determining who is next entitled to overtime. Any employee who voluntarily passes up his turn to work overtime which was offered by the Company will have such refusal marked against him on the overtime sheet; and it will be counted for distribution purposes as overtime worked. The Company will make a reasonable effort to call in employees who are not scheduled to work when the overtime occurs if they are next due for overtime and the Company becomes aware of the need at least two (2) hours before the overtime work is to be done. It is understood that if the Company is aware that a shift will be short of its normal crew at least two (2) hours in advance of its beginning and overtime develops on such shift the Company will call in the employees who are next due for overtime. In the event the Company is not aware of the need for overtime at least two (2) hours in advance, they will have the option to calling people in for overtime work right up to the time that the work begins or to hold employees over. If the Company decides to call in employees, the call must be made in the order indicated by the department overtime sheets. Reasonable effort, as used in this section, will be a single telephone call using the last telephone number that the employee has registered on the overtime sheet in his department. In the event such call produces a busy signal or no answer then the persons next entitled to overtime will be called until the opening is filled or the list is exhausted. If the list is exhausted and when making the first calls a person's telephone was found busy, another single call will be made to such person or persons. It is agreed that when an employee is next entitled to overtime under the provisions of this section and through error is not allowed to work, he will be given the next opportunity to work overtime. In the event he is passed over the second time and he has prior to this called the first error to his foreman's attention, he shall be paid the amount of money he would have earned had he been allowed to work. An employee working with limitations on hours (either hours per day or days per week) shall be charged with an overtime refusal for each occasion he/she would have been asked to work if not for the work limitation. The following procedure on distribution of overtime are recognized as being acceptable in all departments: 1. All overtime, either worked or refused, will be recorded on the overtime sheet. 2. Any new permanent employee coming into a department will be assigned hours of overtime equal to the highest overtime, worked or refused, of the then present permanent employees. 3. Any employee paid at the time and one half (1-1/2) rate for hours worked as a result of going from his old assignment on Saturday to his new assignment on Sunday, will not have such hours charged to the overtime board. 37 4. All permanent employees names in each department will be listed on the departmental overtime sheet by departmental seniority. All employees who desire to be called for overtime shall list a telephone number on the sheet. Any employee who does not have a phone number listed on the sheet will be charged as if worked whenever his name is reached as phone calls are being made for overtime. If an employee is offered at least five overtime opportunities offered by phone call at home and fails to work a minimum of one such occasion during a period of thirty days, that employee shall have his/her phone number removed from the overtime list for a period of six months and thereafter until they request their phone number be placed back on the overtime list. Such employees will still be eligible for overtime while they are working in the plant. If the overtime list of employees on the shift preceding the shift on which the overtime occurs has been exhausted and no one is willing to work, the qualified employee on the preceding shift with the lowest number of hours on the overtime sheet will be drafted. However, the Company will continue to call other employees on the list until the entire departmental overtime sheet is exhausted. With respect to drafting employees only, each department will maintain a separate sheet for use when drafting becomes necessary. Drafting will continue to be based on the number of overtime hours. When an employee is drafted, their name and the date will be placed on the draft sheet. On the next occurrence when drafting is needed, the person with the next lowest hours will be drafted instead of the first person. This procedure will continue until all employees on the shift involved have been drafted, at which time the procedure will start over again. Qualifications will need to be considered, as always, and all procedures for offering overtime to employees prior to drafting remains unchanged. The object of this change is so that drafting will be on a rotating basis. The union membership voted on accepting the above procedure in a joint effort between the Union and the Company to distribute overtime drafting in such a way that a few individual does not bear all the burden. It is further agreed that when the Company is faced with drafting employees for overtime in any department and there are Yard employees on the shift assigned to that department on a temporary basis, the Yard employees may be offered the opportunity to work overtime, in accordance with their individual plant seniority, during the period that the entire overtime sheet is being exhausted and for the remainder of the overtime period provided the entire departmental overtime sheet has been exhausted. 5. New permanent maintenance employees will not be allowed to work overtime until they complete their probationary period unless the overtime list has been exhausted. 6. A Yard employee who has previously registered a request for overtime in the yard will be considered for Yard overtime if he is available at the time the Yard overtime occurs. 7. When a Yard employee on temporary assignment to another department accepts overtime in the Yard Department, he will not give up his regularly scheduled hours for that week. 38 8. Handicapped employees who are unable to perform the work on which overtime occurs due to physical reasons will not be charged with refusing the overtime. Employees with long term medical restrictions regarding overtime will be required to update verification of such restrictions at least every six months. 9. When an employee works a double shift either voluntarily or drafted the employee will be given a fifteen (15) minute break sometime near the end of the first shift or the beginning of the second shift. 10. OVERTIME RENEWAL: The Company agrees to renew the overtime list of all departments on August 1 of each year. ARTICLE XVIII SCHEDULE A/WAGE RATES
7/1/96 7/1/97 7/1/98 7/1/99 7/1/00 Yard Department Start.............................. $13.84 $14.34 $14.89 $15.49 $16.09 End of 30 Days..................... 15.85 16.35 16.90 17.50 $18.10 Truck Driver....................... 16.31 16.81 17.36 17.96 18.56 Sweeper Operator................... 16.31 16.81 17.36 17.96 18.56 Paste Handler...................... 16.31 16.81 17.36 17.96 18.56 Bobcat Operator.................... 16.31 16.81 17.36 17.96 18.56 Tester Department/Control Lab Analyst Start...................... 16.25 16.75 17.30 17.90 18.50 End of 30 days..................... 16.59 17.09 17.64 18.24 18.84 Sr. Analyst........................ 16.59 17.09 17.64 18.24 18.84 Crush, Packing & Raw Materials Start.............................. 16.15 16.65 17.20 17.80 18.40 End of 30 Days..................... 16.23 16.73 17.28 17.88 18.48 End of 60 Days..................... 16.31 16.81 17.36 17.96 18.56 Chill Crane Operator............... 16.59 17.09 17.64 18.24 18.84 Furnace Department Start.............................. 16.35 16.85 17.40 18.00 18.60 End of 30 Days..................... 16.43 16.93 17.48 18.08 18.68 End of 60 Days..................... 16.51 17.01 17.56 18.16 18.76 Electrode Paste.................... 16.51 17.01 17.56 18.16 18.76
39 Chief Utility...................... 17.09 17.59 18.14 18.74 19.34 Tapper............................. 16.62 17.12 17.67 18.27 18.87 Hot Chill Crane Operator........... 16.74 17.24 17.79 18.39 18.99 Control Room Operator.............. 17.03 17.53 18.08 18.68 19.28 Acetylene Start.............................. 16.15 16.65 17.20 17.80 18.40 End of 30 Days..................... 16.23 16.73 17.28 17.88 18.48 End of 60 Days..................... 16.31 16.81 17.36 17.96 18.56 Lime Department Start.............................. 16.15 16.65 17.20 17.80 18.40 End of 30 Days..................... 16.23 16.73 17.28 17.88 18.48 End of 60 Days..................... 16.31 16.81 17.36 17.96 18.56 Mechanical Maintenance First Class From............................... 17.59 18.29 18.94 19.54 20.14 7/1/96 7/1/97 7/1/98 7/1/99 7/1/00 To................................. 17.94 18.64 19.29 19.89 20.49 *Welder adjustment will be .15/hr Second Class Start.............................. 16.59 17.29 17.94 18.54 19.14 End of 30 Days..................... 16.65 17.35 18.00 18.60 19.20 End of 60 Days..................... 16.73 17.43 18.08 18.68 19.28 End of 90 Days..................... 16.79 17.49 18.14 18.74 19.34 Helpers Start.............................. 16.33 17.03 17.68 18.28 18.88 End of 30 Days..................... 16.39 17.09 17.74 18.34 18.94 End of 60 Days..................... 16.44 17.14 17.79 18.39 18.99 Maintenance Painters Beginner........................... 16.79 17.49 18.14 18.74 19.34 Class B............................ 17.03 17.73 18.38 18.98 19.58
40 Class A............................ 17.29 17.99 18.64 19.24 19.84 Top................................ 17.94 18.64 19.29 19.89 20.49 Safety & First Aid................. 17.09 17.59 18.14 18.74 19.34
Any employee hired after July 1, 1984, will be paid $3.00 less than the current appropriate wage rate in Schedule A for his/her first year of employment. Upon his/her first employment anniversary, he/she will receive a $1.00 wage increase and will earn $2.00 less than the current appropriate wage rate in Schedule A for his/her second year of employment. Upon his/her second employment anniversary, he/she will receive a $1.00 wage increase and will earn $1.00 less than the current appropriate wage in Schedule A for his/her third year of employment. Upon his/her third employment anniversary he/she will receive the current appropriate wage rate as listed in Schedule A. ARTICLE XIX General 1. The Company will furnish bulletin boards for the posting of notices of Union meetings and other Union announcements. All such notices pertaining to or making reference to the Company shall be subject to approval by the Company before posting. 2. No employee shall engage in any Union activities on the property of the Company during working hours or in any manner which shall interfere with production, except as provided in Article on Grievance Procedure. 3. It is understood and agreed that the Company, subject to the provisions of Article XII, has the right to discipline or discharge any employee for any just cause, failure or refusal to comply with any of the provisions of this Agreement, and violations of any reasonable published or posted rules. 4. As long as present operating conditions exist in the Generators, Coke Drying, Pack and Carbide Crusher and the Lime Department, the Company will continue a leader in each. 5. All notices required to be given hereunder shall be made in writing, sent certified mail and addressed as follows: If to the Company: The Carbide/Graphite Group, Inc. P.O. Box 3727 Louisville, K 40201-3727 If to the Union: International Brotherhood of Firemen & Oilers Local 320 6801 Dixie Highway, Suite 122 Louisville, KY 40258 41 The above addresses are subject to change. Notification of such change will be given to the other party prior to the change. If the Company decides to close the plant or a department within the plant, they will give as much notice as possible to the Union. ARTICLE XX Maintenance Department The Maintenance Department will continue to do the same work in all of the departments except the Acetylene Department that they have in the past. All mechanical maintenance employees will be included in weekend rotation. In the Acetylene Department, Maintenance will continue to do the work they have done in the past, and will do all cutting and threading of pipe to be used in the Acetylene Department. The Acetylene Plant foremen will not start their people on a job that will require more than two (2) man-hours to complete, excepting production maintenance, included among which are jobs such as: the cleaning of generators and allied equipment, pipes, and the changing of orifices. The Acetylene Plant Foremen will not start their people on a piping job that will require more than one and one-half (1-1/2) man-hours to complete, excluding cutting and threading of pipe. 1. The Company will get new employees for the Maintenance Department by one of the following methods: A. If the need is temporary and can be met by taking on unskilled employees they will be taken from the Yard Department in accordance with paragraph 6-G of Article XI. B. If the need is permanent and can be met by taking on Helpers, the Company will first recall any Helpers who may be on layoff from the department. In the event there are no Helpers on layoff, the Company will advertise and accept bids for the needed numbers of Helpers. In addition it will be considered proper for the Company to ascertain whether or not these employees are able to do climbing required to do plant maintenance and painting work. There will be a probationary requirement of a maximum of sixty (60) calendar days when entering Maintenance for transferred employees. If such transferred employee is disqualified from the Maintenance Department, he shall be allowed to return to his department and exercise his seniority. The employee bumped as a result of the return of an employee to the department may also exercise his seniority. C. If the need is such that in the opinion of the Company it can only be met by taking on skilled employees, the Company will first call back laid off employees who possess the required skills. In event there are no such people on layoff, and in the opinion of management, the nature of the work involved will permit the utilization of other than first- class maintenance skills, the Company will post and accept bids from employees within the plant who possess qualifications which, in the opinion of Management, meet a second-class maintenance 42 standard. Those employees who bid and are selected as a result of their qualifications, will be given a written test and in some situations, a welding test. The most senior employee or employees who pass the test will be awarded the job. 2. Shifts shall be given to employees holding permanent assignments according to their preference and department seniority. For the purpose of moving to a preferred shift, department seniority shall be the deciding factor. In making such moves, a maximum of three (3) moves shall be permitted to fill one (1) vacancy. 3. The starting rate for Mechanical Maintenance employees shall be in accordance with their apparent ability. 4. The Maintenance Painters will be paid according to the rate given in Schedule "A"/Wage Rates. The Maintenance Painters will progress through the listed rates in the following manner. Beginning Painters Top Second Class Maintenance Class B After working on a painting assignment for a period of six (6) months. Class A Twelve (12) Months Top Eighteen (18) Months Any skilled painters who may be hired and brought into the Mechanical Maintenance Department direct from the outside or who may bid into the department from other departments shall be started at a rate in accordance with their apparent ability. The Maintenance Painting Crew will be expanded in the same manner as the Maintenance Department as provided in Article XVI, Paragraph 1. When the need is temporary, workers from the Yard can be transferred to the Maintenance Painting Crew provided there are no Maintenance Department employees who desire this work. 5. When and if it should become necessary to reduce the size of the Maintenance Painting Crew, it will be accomplished in the following manner and in the order given: A. Any employee who may be working on a temporary assignment shall be taken off first. B. The employees, other than workers currently in the crew working on permanent assignments, shall be taken off in accordance with their Maintenance Department Seniority. Reductions that affect workers currently in the Painting Crew will be made in accordance with their departmental seniority. 43 The rates of any maintenance employees who may be cut back in Steps 1 and 2 above would be based on their regular classification in the Maintenance Department. The Company shall consider the normal complement of the Maintenance Painting Crew to be two (2). Once the Painting Crew has been reduced below the normal complement of two (2), the Company shall offer any of the painters on cut back the opportunity to return to the Maintenance Painting Crew when the Company needs to add workers again. Such offers will be made on the basis of departmental seniority. The Company will make a special effort to keep any employees who were regular members of the Maintenance Painting Crew in June, 1981, who become involved in a cut-back, assigned for the maximum amount of time, to work that is deemed most appropriate to enable the employee to pass the merit tests for advancement. Merit tests will be given to these particular cut- back painters no later than three (3) months after they are cut back from painting. Any such cut-back painter who fails this first test shall be given another test at the end of a second three (3) months period. Once any of these painters gets a permanent maintenance classification as high as bottom first class, he shall be considered eligible to receive the painting rate through any length of cut back from the Painting Crew. No cut-back in the Maintenance Painting Crew that involves one (1) of the four (4) June, 1981, painters shall be considered permanent until it has lasted for a continuous period of one (1) year. Should any regular member of the Painting Crew of June, 1981, be permanently cut back and then be recalled to painting before the expiration of a year from the date of cut back, the cut back will be considered "temporary" and the employee shall be protected against any loss of pay he may have had because he worked at a rate lower than his painting rate. 6. The Company will give tests which are designated to show the qualifications of maintenance employees who feel entitled to promotion. Exceptions are noted in paragraph (a) below. The tests will consist of oral and written questions and also work demonstrations. A passing grade will be 70%. Any employee who has taken a promotion test may take another after a period of six (6) months. He shall have the right to make a second attempt on a test leading to a particular promotion after a period of three (3) months, if he came within 15% of making a passing mark on the first attempt. A. Any employees who came into the Painters groups after July 1, 1981, will not be permitted to take any promotion tests as set forth in this section of the Contract until they have moved out of these special jobs and served at least six (6) months in their permanent classifications. The employees presently (November 1, 1968) assigned to oiling may take their promotion tests on schedule every three (3) or six (6) months. 7. The Company will continue to be guided by past practice in assigning employees to operate the various pieces of heavy equipment such as bulldozers, cranes, tractors, etc. In the event any change in the assigning of employees to the operating of heavy equipment is contemplated, it should be made 44 by mutual agreement between the Company and the Union. If unable to reach such an agreement, the issue will be taken to arbitration. Any maintenance employee trained on the payloader may be used to operate the payloader for any assignment lasting no more than three hours. 8. There shall be a Leader and Alternate Leader in the Oiling Crew. 9. The Company agrees to provide a $100.00 tool allowance a year to the Maintenance Department effective July 1, 1993. Employees entering the Department between January 1 and June 30 will be given half the present tool allowance for that year. The tool allowance is payable on July 15th. 10. The (primary*) bid jobs in the Maintenance Department are as follows: 1. Casings 6. Painter 1a. Alternate Casings 7. Furnace 2. Chill Car Make-Up* 8. Pack 3. Container Repair* 9. Baghouse 4. Garage* 10. Pond* 5. Oiler*(2) 11. Machinist 5a. Alternate Oiler Alternate leader bid jobs shall be utilized when the leader is not available for assignment; therefore, the alternate leader and the leader cannot occupy the same days off. Bid jobs effective 7-1-93 will include the following positions: - Two baghouse employees (in addition to leader) - One garage job beside leader - One Pack-bid person beside leader - Preventative maintenance jobs (if and when established) The following pertains to primary bid jobs: 1. When their bid job is operating: A. Primary job incumbents can not be rolled. B. Primary job incumbents can not bid out. Additional primary bid jobs can be created during the life of this agreement by mutual consent of the Company and the Union. If in any department not all employees are needed (i.e., only one man is needed) the additional employees will be eliminated before the leader(ie: that leaders will be the last to be cut out from each bid job and the last to be rolled). 45 If any of these new jobs is not bid upon by any employee, no one will be forced to take such job. Management will assign available employees when such work is required, but rebid on quarterly basis. When a bid job is eliminated for an entire shift, management will allow rolling rights on such temporary cutbacks not to exceed one move. (Note: If anyone rolls into the oiler job(there presently are 3) the individual displaced will be the non-primary employee. The employee rolling-in will not be allowed to pick the area). The above listing shall not restrict the Company's prerogative to establish, modify or delete bid jobs which are no longer applicable. ARTICLE XXI Group Insurance 1. The benefits set forth below and described in the Group Benefit Plan Booklet for Firemen and Oilers, Local 320 effective July 1, 1996, shall be in effect for the term of this agreement. 2. Life Insurance Life insurance, effective July 1, 1993, increase Life Insurance amount to $27,000. Effective July 1, 1999, increase Life Insurance amount to $28,000. Effective July 1, 2000, increase Life Insurance amount to $29,000. A. Employees who retire on or after July 1, 1972 shall be provided with $2,000 Life Insurance policy provided that they have fifteen (15) years service. B. Accidental Death and Dismemberment, effective July 1, 1993, increase Accidental Death and Dismemberment to $13,500. Effective July 1, 1999, increase to $14,000. Effective July 1, 2000, increase to $14,500. 3. Medical Insurance - As of August 1, 1996, medical insurance will be provided under Option 2000 Advantage POS Enhanced Plan - High Option as described in the Anthem Blue Cross and Blue Shield proposal. Specific terms, coverages and procedures are listed in said proposal. The Company reserves the right to change carriers if costs increase too much. In such instance the benefits will be unchanged. The monthly employee contributions for medical plan coverage shall be: Employee only........................................ 10.00 Employee and one dependent........................... 16.00 Employee and two or more dependents.................. 22.00 4. Dental: Effective July 1, 1993, those employees and eligible dependents shall have Dental Insurance in accordance with the following plan at no additional cost. 46 Lifetime Maximum................................ None except orthodontics Calendar Year Maximum........................... 1,000 Calendar Year Deductible*....................... $25/per person $50/per family (Aggregate Max.) Covered Expenses................................ 80% Reasonable & Customary (except orthodontics) Orthodontics.................................... 50%-$1,000 lifetime maximum per individual (eff. 8/1/93) *Deductible will not be applied against any diagnostic or preventive expenses. 5. The weekly Sick and Accident Benefit for active employees who may become disabled and prevented from working as a result of a non-occupational accident or disease shall be as follows for twenty-six (26) weeks: Employees actively at work who go out on Accident and Sickness Benefits after July 1, 1996: A. Effective July 1, 1996, Accident and Sickness Benefits are $295.00 per week. Effective July 1, 1999, Accident and Sickness Benefits are $300.00 per week. Effective July 1, 2000, Accident and Sickness Benefits are $305.00 per week. B. An employee who is off 21 consecutive days as a result of being ill will be paid the weekly sick benefit for the initial seven (7) day waiting period. C. The Company will pay insurance premiums for employees on sick leave for a period not to exceed twelve (12) months from the date the sick leave began as long as the employee makes the appropriate monthly contributions. 6. The benefits for laid off employees who have two (2) or more years of plant seniority at the time of layoff are as follows: 1. Full coverage will be continued through the end of the calendar month following the month in which the layoff occurs. 2. For an additional period of three calendar months beyond the time set forth in paragraph No. 1 above, coverage for employees and dependents including: A. Life Insurance B. Option 2000 Advantage POS Enhanced Plan - High Option C. Maternity benefits (9 months from date of layoff) 47 In the last three (3) calendar months period only the sick and accident benefit is excluded. Employees will have the option of continuing these benefits for an additional period of three calendar months by paying the weekly cost in advance. ARTICLE XXII Retirement The Union recognizes and agrees that it is essential to the efficient operation of the plant that a retirement age be established, and that the Company's established age of sixty-five (65) is reasonable. The parties agree that the new law that will be in effect January 1, 1979 allows an employee to postpone their retirement until age seventy (70). However, both parties agree that normal retirement for all employees will still be reached at age sixty-five (65). The present Retirement Income Plan provides that employees who work beyond age sixty-five (65) will not accrue any credited service beyond age sixty-five (65) nor will they receive any benefit from changes in the pension plan made after their sixty-fifth (65th) birthday. The Union gives recognition to the fact that the Company has a Retirement Income Plan to provide financial assistance to retired employees and the Union agrees to use its good offices in urging employees to participate in this plan. Effective July 1, 1981, employees in this bargaining unit will be eligible to participate only in the Non-Contributory Retirement Income Plan for Bargaining Unit Employees according to its terms and conditions. Employees who are presently enrolled in the Contributory Retirement Income Plan may continue in that Plan but if they drop out they will automatically go into the Non- Contributory Retirement Income Plan for Bargaining Unit Employees and may not then re-enter the Contributory Plan. It is further agreed that the minimum pension payable under the Company's Non- Contributory Retirement Income Plan will be computed as follows: 1. Effective July 1, 1996, $27.00 per month per year of service for employees retiring on or after July 1, 1996. 2. Effective July 1, 1997, $28.50 per month per year of service for employees retiring on or after July 1, 1997. 3. Effective July 1, 1998, $30.00 per month per year of service for employees retiring on or after July 1, 1998. 4. Effective July 1, 1999, $31.50 per month per year of service for employees retiring on or after July 1, 1999. 48 5. Effective July 1, 2000, $33.00 per month per year of service for employees retiring on or after July 1, 2000. This total pension shall be comprised of payments from the present plan (C/G) and the prior plan (BOC). The C/G plan shall pay the portion of the total payment which is not the responsibility of the BOC. Effective 7/1/96, there shall be no reduction for early retirement if the employees age and years of service total eighty(80) years or greater. C/G non-contributory pension plan benefits effective July 1, 1975 for employees retiring on or after such date are as follows: Eligibility - First of month following employment. Vesting - Five (5) years of continuous service. Should legislation be passed to require an immediate change in vesting rights, this plan shall be so changed to comply with such law. Joint Annuity - Three (3) months for election. Disability Pension - Ten (10) years of continuous service. Maximum Participation - Forty-two (42) years credit. Include - Social Security Adjustment Option. Early Retirement - Actuarial reduction six (6) percent per year (1/2 percent per month). Effective July 1, 1978, active employees on the payroll who have ten (10) years of continuous service will be eligible for early retirement at age 62 with no actuarial reduction in their pension. Disability - Employees who qualify for disability retirement will not be actuarially reduced. Social Security - No offset for any retirement above benefit paid in addition to Social Security. 49 401(K) PLAN In addition to the defined benefit plan, the Company will establish a 401(k) Plan for the Bargaining Unit. The Company will pay the recordkeeping, trustee, and IRS filing fees associated with the plan. Plan provisions will include the following: 1. Employee contributions will be permitted up to 15% before tax or IRS limits, whichever is lower. 2. A loan feature will be incorporated into the plan. The employees will pay any fees (loan origination or maintenance, etc) associated with loans. 3. There shall be no Company match. RETIREES INSURANCE - Part I Employees who retire after July 1, 1987 (either disability retirement or early retirement) under the terms of the Retirement Income Plan may elect to continue themselves and their eligible dependents in the Option 2000 Advantage POS Enhanced Plan - High Option health plan. Employees retiring during the life of the Agreement will pay $50/month per covered individual. Once an employee retires his contribution will not be increased. RETIREES INSURANCE - Part II For retirees eligible for Medicare, the Company will offer Blue Cross/Blue Shield of Kentucky's Option 2000 - Plan H. For employees retiring 8/1/93 or later, the contribution will be $20/month per covered individual. Employees retiring before 8/1/93, the contribution rate will be unchanged. If you are a retired employee eligible for Medicare and your dependents are not eligible for Medicare, you will be covered under Part 2 of the plan and your dependents will be covered under Part 1. Similarly, if you are a retired employee not eligible for Medicare, and your spouse is eligible for Medicare, you will be covered under Part 1 of the plan and your spouse will be covered under Part 2. When an insured individual becomes eligible for Medicare, the coverage for that individual will be changed from Part 1 to Part 2. 50 WHEN COVERAGE STOPS FOR YOU OR YOUR DEPENDENTS - When the maximum benefits have been paid. - When dependent children reach limiting age. - On the last day of the month for which contributions have been made. This premium ($20.00), will be fixed for the life of this contract (7/1/96 - 6/30/2001), but will be subject to adjustment for employees who retire after 6/30/2001. Active employees who work beyond age 65 will continue while actively employed to be covered by the active employees medical insurance program. If the spouse of an employee actively at work becomes 65 she/he will continue to be covered as a dependent by the active employees medical insurance program, but the benefits will be coordinated with Medicare. Surviving dependents may continue their coverage after the death of a retiree by paying the appropriate contributions. ARTICLE XXIII Make-up Pay for Jury Service and Funeral Leave 1. Any employee required to serve on a jury will receive from the Company an amount of money when added to that which he received for such service will equal wages he would have earned had he not been performing such jury service. If any such employee is permanently assigned to the second or third shifts, he shall be reassigned to the day shift, on a week to week basis, for that period he is serving as a juror. Employees must promptly notify the Company when they are called for jury service. Any time paid for under this provisions is not time worked and will not be counted in computing overtime. 2. An employee shall be protected against loss of pay for such time as may be needed for purpose of attending the funeral of a member of his immediate family up to a maximum of three (3) scheduled working days at his then regular straight time hourly rate during the period beginning with the day of death and ending with the day after the funeral. Immediate family is interpreted to cover husband, wife, father, mother, child, brother, sister, father-in-law, and mother-in-law. The three scheduled working days shall also apply for grandparents and grandchildren of employees only. One day funeral leave for stepchild, stepmother, stepfather, brother-in-law and sister-in-law of employees only. Any time paid for under this provision is not time worked and will not be counted in computing overtime. ARTICLE XXIV Severance Pay 51 The Company will provide a severance pay policy for employees on the payroll provided the following conditions are met: A. Severance pay will be paid only for a complete plant shutdown. B. Employees must be actively employed by the Company, or have been laid off during the ninety (90) day period before the plant is shut down. C. Receipt of severance pay will completely cancel an employee's seniority and continuous service with the Company. D. Employee will receive forty (40) hours at their straight time rate for each week of severance pay. E. Severance payment to any employee shall not exceed twenty-six (26) weeks. The following graduated schedule will apply to all employees: One (1) year but less than three (3) years - 1 weeks pay. Three (3) years but less than five 5) years - 2 weeks pay. Five (5) years but less than seven (7) years - 3 weeks pay. Seven (7) years but less than ten (10) years - 4 weeks pay. Ten (10) years but less than twenty (20) years - 4 weeks pay plus one-half (1/2) weeks pay for each year of service between ten (10) and twenty (20). Twenty (20) years or more - 9 weeks pay plus 1 weeks pay for each year of service after twenty (20) years. ARTICLE XXV Management Function The management of the COMPANY and the direction of the working force, including the right to plan, direct, and control plant operations; to schedule and assign work to employees; to determine the means, methods, processes, and schedules of production, including the contracting out of work with prior notification; to determine the products to be manufactured, the location of its plants, and the continuance of its operating departments; to establish and require employees to observe COMPANY rules and regulations; to hire, promote, transfer, lay off, or relieve employees from duties; and to maintain order and to suspend, demote, discipline, and discharge employees for just cause are the sole rights of the COMPANY. The exercise by the COMPANY of any of the foregoing rights shall not alter any of the specific provisions of this Agreement, nor shall they be used indiscriminately against any member of the UNION. The foregoing enumeration of Management's rights shall not be deemed to exclude other rights or functions of Management not specifically set forth. The COMPANY therefore retains all rights not otherwise specifically covered by this Agreement. ARTICLE XXVI Termination and Duration Appendices 52 This Agreement and Appendices express the full and complete understanding of the Parties on the subject of working conditions, hours of work and other conditions of employment, including method of wage payment. Each party agrees that the other shall not be obligated to bargain collectively with respect to any subject or matter not specifically referred to or covered in this agreement. It, therefore, is agreed that this Agreement will become effective as of July 1, 1996, and remain in effect until 11:00 p.m., July 1, 2001,and for annual periods running from June 30 to June 30, thereafter unless sixty (60) days prior to the expiration date either party notifies the other in writing of its desire to terminate on the expiration date. It is further agreed that the terms and conditions of the Agreement may, by mutual consent, be altered, added to, deleted or modified. Any such change or modification will be covered by an addendum, properly executed by both parties, which then becomes part of the Agreement. IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to be signed this June 30, 1996 by their duly authorized Representatives. THE CARBIDE/GRAPHITE GROUP, INC. CARBIDE DIVISION, LOUISVILLE, KENTUCKY PLANT - ---------------------------------------------------------- Walter Damian, Vice President of Human Resources - ---------------------------------------------------------- Ara Hacetoglu, Vice President and Plant Manager - ---------------------------------------------------------- Mike Eicher, Manager of Human Resources - ---------------------------------------------------------- Rhonda Rinker, Human Resource Administrator - ---------------------------------------------------------- Don Willinger, Engineering Manager LOCAL 320, INTERNATIONAL BROTHERHOOD OF FIREMEN AND OILERS - ---------------------------------------------------------- Mike Moses, Business Manager - ---------------------------------------------------------- Robert Gunter, Plant Chairperson - ---------------------------------------------------------- Ralph Cissell, Vice Chairperson 53 - ---------------------------------------------------------- Gary Davenport, Committeeman - ---------------------------------------------------------- Jeffery Duke, Committeeman - ---------------------------------------------------------- Gerald Gallagher, Committeeman - ---------------------------------------------------------- Gerry Madden, Committeeman - ---------------------------------------------------------- John Mayhew, Committeeman - ---------------------------------------------------------- Doug McDonald, Committeeman 54 ADDENDUM August 14, 1978 Mr. Charles R. Adwell, Business Manager International Brotherhood of Firemen & Oilers Local 320 Suites 110-112, Dixie Manor Building Louisville, KY 40258 Dear Mr. Adwell: Based on conversation with the Firemen & Oilers Union during our recent negotiations, we offer this letter for clarification and record purposes. During the negotiations the Union presented a proposal regarding additional pay for the leaders on the two night shifts in the Maintenance Department. The Company did not agree at the close of negotiations to accept the Union's proposal. In conversations since negotiations closed, apparently the Union was under the impression that the Company had agreed to take some action regarding the proposal. In response to this request, the Company agrees to the following: "The Company will pay the leaders on the 3-11 shift and the 11-7 shift in the Maintenance Department the same rate of pay as that of an acting foreman. This agreement is contingent on the following conditions: 1. This agreement applies to the Maintenance Department only. 2. The Firemen & Oilers Union signs the Contract ratified by their membership on June 29, 1978. 3. Time worked by these leaders does not count as acting foreman time and will not be so recorded. 4. Agreement is for the term of this current Contract. 5. This additional rate of pay is to be paid only during the time they are acting as leaders on their shift and does not apply to overtime situations or other times when they may not be working as leaders." Please sign below to indicate Union agreement to the above stipulations. Sincerely yours, 55 Gordon A. Worster GWS/dc Industrial Relations Coordinator Charles R. Adwell Vaughn Bennett Norman Kaiser P.S. Condition in above letter renewed thru June 30, 2001. 56 July 1, 1984 Mr. Charles R. Adwell, Business Manager International Brotherhood of Firemen & Oilers Local 320 Suite 122, Dixie Manor Building Louisville, Kentucky 40258 Dear Mr. Adwell: A lengthy discussion was held on the subject of drafting. Both parties acknowledge that drafting should be a last resort to be used when sufficient volunteers for overtime are not available to do essential work. Essential work would be defined as covering 1) absenteeism, 2) work to cover unanticipated customer production orders, 3) necessary maintenance repair, 4) work necessary to keep production continuing, 5) work to correct unsafe conditions requiring immediate attention, etc. Drafting is not appropriate for non-essential work. When employees are drafted, the reasons why the draft is necessary will be explained to them. If an employee feels the work is non-essential or that he is not the appropriate person according to proper drafting procedure to be selected, he may request the presence of an on-shift union steward to discuss the issue with the Supervisor. After an employee is drafted, the foreman doing the drafting will continue to exhaust the overtime list to seek volunteers if he has not already done so. Once the essential work for which an employee was drafted is completed, a supervisor will offer the employee the opportunity to leave. Pack Department employees who are drafted over to the next full shift (8 hours) will be allowed to exercise their seniority for available job openings on that shift in the daily shape-up. Both parties recognize that drafting can be greatly reduced by: 1) More voluntary overtime being worked. 2) Seeking volunteers for non-essential overtime over a period of days with the hours to be worked out at the employee's choice (two hour minimum) before the overtime becomes essential. The content of this letter will be discussed with all supervisors by the Plant Manager and the Industrial Relations Manager. The Union agrees to discuss this letter with all Union Stewards. Sincerely, Sue H. Carney SHC/gkm Plant Manager 57 July 1, 1993 Mr. Ronald Ashton, Business Agent International Brotherhood of Firemen & Oilers Local 320 6801 Dixie Highway, Suite 122 Louisville, KY 40258 Dear Mr. Ashton: The company agrees to continue its practice of training Furnace, Pack, Lime, and Acetylene department employees in order to maximize the number of employees available to handle the work. Senior employees who desire the training will be trained first. Sincerely yours, Ara Hacetoglu Plant Manager 58 July 1, 1996 Mr. Ronald Ashton, Business Manager INTERNATIONAL BROTHERHOOD OF FIREMEN & OILERS Local 320 6801 Dixie Highway, Suite 12 Louisville, KY 40258 Dear Mr. Ashton: This letter will summarize our negotiating agreement concerning incidental maintenance: Operating departments may, on occasion, perform simple minor maintenance (for example, replace boot on screen, adjust packing gland) using basic hand tools (screwdriver, pliers, wrench, etc.) or perform simple, routine lubrication of department equipment. Those responsibilities will be limited to thirty (30) minutes in duration. This Agreement will become ineffective whenever any maintenance employee is cut out of the department. Very truly yours, Ara Hacetoglu Vice President and Plant Manager 59 July 1, 1996 Mr. Mike Moses, Business Agent INTERNATIONAL BROTHERHOOD OF FIREMEN & OILERS Local 320 6801 Dixie Highway, Suite 122 Louisville, KY 40258 Dear Mr. Moses: The parties agree the following practices will continue through the term of this agreement. 1. The Company will discontinue its present practice of adjusting seniority dates for absences exceeding (3) months. Seniority dates will continue to be amended for events breaking continuous service (e.g. quits, discharges, expiration of time on lay-off, etc). 2. The Company agrees to offer container work to Maintenance employees before sending Company owned containers out for repair or painting. If the response is insufficient to fully meet the need, then some part of the work may be contracted in addition to our Maintenance employees' work. It is understood that containers not actually owned by the Company are sometimes sent out for repair or painting and sometimes done in the plant by our Maintenance people. This practice will remain unchanged. 3. The Company intends to maintain its policy of limiting employees to 16 hours of continuous work. However, should a situation arise where an employee volunteers to work over 16 consecutive hours, those hours over 16 will be paid at the double time rate. 4. If the Company is contracting any janitor work, before someone is put out of the plant because of a physical handicap that renders them unable to perform any bargaining unit job and they could do a janitor job, then a janitor job would be reestablished up to three regular janitor positions. The pay rate would be $3.00 less than the Yard rate. If the handicap is the result of an on-the-job compensable injury, the pay rate would be the Yard rate. Should the Company decide to bid any janitor jobs, the pay rate would be $3.00 less than the Yard rate. The current janitor is not affected by this agreement and will continue to be paid the Yard rate. Sincerely, Mike Eicher Manager, Human Resources 60 July 1, 1996 Mr. Mike Moses, Business Agent INTERNATIONAL BROTHERHOOD OF FIREMEN & OILERS Local 320 6801 Dixie Highway, Suite 122 Louisville, KY 40258 Dear Mr. Moses: The Company and the Union agree to jointly develop a state approved Mechanical Maintenance Apprenticeship Program. The provisions of the program will be developed by a committee consisting of two Company representatives and two Union representatives. Upon completion, the program developed will be submitted to the Kentucky Labor Cabinet for state certification. Upon approval, the program will be implemented on a mutually agreeable schedule. Sincerely, Mike Eicher Manager, Human Resources 61 INDEX (by subject)
PAGE Agreement............................................... 2 Acting Foremen.......................................... 20 Acetylene Department.................................... 27 Arbitration............................................. 34 Accident Reports........................................ 38 Addresses............................................... 46 Bargaining Unit......................................... 2 Bulletin Boards......................................... 46 Bereavement Leave....................................... 57 Call-in Pay & Exceptions................................ 8 Call Back From L/O...................................... Clothing................................................ 37 Compensable Injuries.................................... 39 Control Lab............................................. 40 Departments............................................. 12 Disability & Seniority.................................. 19 Disciplinary Action..................................... 36 Discharge............................................... 35 Discipline.............................................. 66 Duration................................................ 58 EMT Qualifications...................................... 37 Furnace Department...................................... 23 Funeral Leave........................................... 57 Grievance Procedure..................................... 34 Grievance Procedure - Compensation...................... 35 Glasses................................................. 37 Garnishments............................................ 45 Hold Over Pay........................................... 5 Holiday Pay/Eligibility................................. 6 I.B.F. & O Appointment.................................. 21 Insurance............................................... 52 Job Vacancies - Permanent............................... 15 Job Vacancies - While Absent............................ 16 Job Vacancies - No Bidders.............................. 16 Jury Service............................................ 57 Leader Pay.............................................. 6 Lay-off................................................. 13 Lay-off Notice.......................................... 21 Lime Department......................................... 30 Leader Continuation..................................... 46 Maintenance............................................. 47
62 Maintenance Tests....................................... 49 Maintenance Bid Jobs.................................... 50 Non-Discrimination...................................... 3 New Jobs................................................ 3 No Lay Off to Avoid Overtime............................ 5 Overtime Provisions..................................... 40 Overtime Renewal........................................ 43 Purpose................................................. 2 PAC..................................................... 4 Pay Day................................................. 6 Preference Sheets....................................... 16 Physical Disability..................................... 18 Promotion to Supervision................................ 20 Pack Department......................................... 25 Reporting Pay........................................... 9 Retirement.............................................. 54 Retirees Insurance...................................... 56 Sunday Premium.......................................... 7 Shift Premium & Exceptions.............................. 7 Seniority............................................... 12 Shift Preference........................................ 19 Seniority Lists......................................... 21 Shop Chairman........................................... 36 Strikes & Lockouts...................................... 36 Safety & Health/Committees.............................. 36 Safety Shoes (January).................................. 38 Trading Days Off........................................ 5 Temporary Transfer...................................... 6 Temporary Assignments................................... 16 Time Limits............................................. 34 Tool Allowance.......................................... 50 Union Security.......................................... 3 Union Activity Restriction.............................. 46 Vacations............................................... 9 Vacations - Prorated.................................... 10 Work Day/Week........................................... 4 Work Over 16 Hours...................................... 4 Wage Rates.............................................. 44 Wage Progression........................................ 45 Yard Transfers.......................................... 17 Yard Department......................................... 23
63 EX-11.4 9 CALCULATION OF EARNINGS PER SHARE EXHIBIT 11.4 THE CARBIDE/GRAPHITE GROUP, INC. AND SUBSIDIARIES CALCULATION OF EARNINGS PER SHARE For the Fiscal Year and Each of the Quarters in the Fiscal Year ended July 31, 1996 (in thousands, except share and per share information)
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Fiscal 1996 ----------- ----------- ----------- ----------- ----------- Earnings Information: - --------------------- Income from continuing operations $ 2,659 $ 3,693 $ 3,980 $ 3,987 $ 14,319 Extraordinary loss on early extinguishment of debt, net (828) (1,105) (67) (177) (2,177) ----------- ----------- ----------- ----------- ----------- Net income applicable to Common Stock $ 1,831 $ 2,588 $ 3,913 $ 3,810 $ 12,142 =========== =========== =========== =========== =========== Common and Common Equivalent Shares: - ------------------------------------ Weighted average shares outstanding 6,678,920 7,390,738 7,873,503 8,201,837 7,545,334 Common shares assumed issuable under Performance Unit Plan 125,358 125,438 23,389 42,852 79,259 Common shares issuable upon exercise of outstanding stock options: Primary 1,341,600 1,145,286 802,761 512,379 952,858 Fully diluted 1,347,523 1,156,755 808,860 512,379 958,057 ----------- ----------- ----------- ----------- ----------- Common and common equivalent shares outstanding for the period: Primary 8,145,878 8,661,462 8,699,653 8,757,068 8,577,451 Fully diluted 8,151,801 8,672,931 8,705,752 8,757,068 8,582,650 =========== =========== =========== =========== =========== Earnings per Share Information: - ------------------------------- Income from continuing operations: Primary $ 0.33 $ 0.43 $ 0.46 $ 0.46 $ 1.67 Fully diluted $ 0.33 $ 0.43 $ 0.46 $ 0.46 $ 1.67 Net income applicable to Common Stock: Primary $ 0.22 $ 0.30 $ 0.45 $ 0.44 $ 1.42 Fully diluted $ 0.22 $ 0.30 $ 0.45 $ 0.44 $ 1.41
EX-13.1 10 1996 ANNUAL REPORT TO STOCKHOLDERS Exhibit 13.1 Management's Discussion & Analysis The Carbide/Graphite Group, Inc. Overview - -------- In September 1995, the Company completed an initial public offering of its $.01 par value common stock (the Common Stock). 5,375,750 shares of Common Stock were sold to the public by certain selling stockholders in a secondary underwritten offering (the Initial Offering). The initial public offering price was $15.00 per share. The underwriters also exercised an option to purchase 806,363 primary shares of Common Stock to cover over-allotments which resulted in $11.1 million in net proceeds to the Company. In March 1996, the Company completed a secondary public offering of its Common Stock. 1,032,236 shares of Common Stock were sold to the public by certain management and former management stockholders in an underwritten offering (the Offering). 590,000 Common Stock options were exercised by certain selling shareholders in connection with the Offering, resulting in $0.8 million in cash proceeds to the Company. During fiscal 1996, in open market transactions, the Company repurchased $19.2 million in aggregate principal amount of 11.5% Senior Notes due 2003 (the Senior Notes) (the Repurchase). In addition, the Company completed the redemption of $9.0 million in aggregate principal amount of Senior Notes (the Redemption). The Redemption was initiated pursuant to the Senior Note Indenture which permits the redemption of a limited amount of Senior Notes with proceeds obtained from the Initial Offering. In fiscal 1996, earnings from continuing operations were $14.3 million, or $1.67 per share, compared to $12.3 million, or $1.59 per share in fiscal 1995. Weighted average common and common equivalent shares outstanding increased 10.7% during fiscal 1996 principally due to the Initial Offering. The following table sets forth certain financial information for the periods discussed below and should be read in conjunction with the financial statements, including the notes thereto, appearing elsewhere in this report:
(dollar amounts in thousands) Year Ended July 31, 1996 1995 1994 - ----------------------------------------------------------------------------------------------- Net sales: Graphite electrode products $179,925 $160,610 $136,390 Calcium carbide products 79,469 80,846 71,146 - ----------------------------------------------------------------------------------------------- Total net sales $259,394 $241,456 $207,536 - ----------------------------------------------------------------------------------------------- Percentage of net sales: Graphite electrode products 69.4% 66.5% 65.7% Calcium carbide products 30.6 33.5 34.3 - ----------------------------------------------------------------------------------------------- Total net sales 100.0% 100.0% 100.0% - ----------------------------------------------------------------------------------------------- Gross profit as a percentage of segment net sales: Graphite electrode products 16.2% 16.9% 18.1% Calcium carbide products 19.9 20.0 14.6 Percentage of total net sales: Total gross profit 17.3 17.9 17.0 Selling, general and administrative 4.9 5.8 7.7 Operating income margin percentage, before other compensation 12.5 13.6 9.3 Operating income 11.8 12.6 6.6 Income from continuing operations 5.5 5.1 1.2 - -----------------------------------------------------------------------------------------------
9 The Carbide/Graphite Group, Inc. Fiscal 1996 Versus Fiscal 1995 - ------------------------------ Net sales for fiscal 1996 were $259.4 million, versus $241.5 million in fiscal 1995, a 7.4% increase. Graphite electrode product sales increased 12.0% over the prior year to $179.9 million for fiscal 1996, while calcium carbide product sales decreased 1.7% to $79.5 million for the current year. Within the graphite electrode products segment, graphite electrode net sales for fiscal 1996 were $134.0 million, versus $119.4 million in fiscal 1995, a 12.2% increase. Graphite electrode sales were higher due to a 7.6% increase in the average net sales price of graphite electrodes which resulted from price increases which took effect during the second half of fiscal 1996. Also, graphite electrode shipments for fiscal 1996 increased to 105.3 million pounds, a 4.5% increase over fiscal 1995. Domestic and foreign electrode shipments as a percentage of total electrode shipments for fiscal 1996 were 49.6% and 50.4%, respectively. Needle coke sales for fiscal 1996 were $16.5 million, versus $18.6 million in fiscal 1995, an 11.3% decrease. The decline in needle coke sales was the result of the Company using more needle coke internally for electrode production. The effect of lower shipments was partially offset by an 8.3% increase in needle coke prices, which resulted from price increases implemented in January 1996. Other graphite specialty sales increased 30.2% in fiscal 1996 to $29.5 million, principally due to increased sales of bulk graphite to SGL Carbon Corporation ("SGL Corp."). Sales to SGL Corp. were $15.6 million in fiscal 1996 versus $9.9 million in fiscal 1995. Sales to SGL Corp. are at cost under a supply agreement which began in January 1995 and has a term of approximately three years (the "SGL Supply Agreement"). The SGL Supply Agreement was entered into in connection with the sale of substantially all of the Company's graphite specialty business (Specialty Products) to SGL Corp. (the Specialty Products Sale). Within the calcium carbide products segment, pipeline acetylene sales were $28.1 million, an increase of 3.2% compared to fiscal 1995, on a 3.1% increase in shipments. Desulfurization sales decreased 3.9% to $24.7 million due to a 2.6% decrease in shipments and a 1.7% decrease in the net sales price, which were due to increased competition in this market. In addition, sales of electrically calcined anthracite coal in fiscal 1996 decreased 20.8% to $2.6 million due to a 24.1% decrease in shipments. Calcium carbide sales to generating customers of $20.9 million were essentially unchanged from last year. Gross profit as a percentage of graphite electrode product sales for fiscal 1996 was 16.2%, versus 16.9% in fiscal 1995. Benefits derived from increased graphite electrode shipments and higher selling prices for graphite electrodes and needle coke were offset by sales under the SGL Supply Agreement, lower needle coke shipments and higher operating costs in the graphite electrode products business, principally decant oil costs. The SGL Supply Agreement, which was entered into in connection with the Specialty Products Sale, requires the Company to supply certain graphite products at prices which approximate the Company's manufacturing costs, which negatively impacted the graphite electrode product gross margin to a larger degree during fiscal 1996. Also, feedstock costs for needle coke, on average, were approximately 11.4% higher during fiscal 1996. Gross profit as a percentage of calcium carbide product sales for fiscal 1996 was 19.9%, versus 20.0% in fiscal 1995. As previously reported, the Company received a $1.0 million favorable settlement during the quarter ended January 31, 1996 from a utility rate dispute with one of its electric power suppliers. The $1.0 million payment received has been reflected as a reduction to cost of goods sold for fiscal 1996. Exclusive of this settlement, gross profit as a percentage of calcium carbide product sales for fiscal 1996 was 18.6%. Calcium carbide products' gross margin was lower in fiscal 1996 due primarily to the decreases in shipments and prices of desulfurization products and the lower shipments of electrically calcined anthracite coal. 10 The Carbide/Graphite Group, Inc. Selling, general and administrative costs for fiscal 1996 were $12.8 million, versus $13.9 million in fiscal 1995. The decrease was principally due to lower employee, marketing and consulting expenditures, as well as a $0.3 million reduction in amortization expense associated with intangibles. Other compensation for fiscal 1996 was $1.8 million and included $1.0 million in charges for the vesting of benefits earned under a non-qualified incentive compensation plan for eligible employees (PUP II). Other compensation for fiscal 1996 also includes a $0.3 million non-cash charge for the revaluation of PUP II in connection with the Initial Offering. The revaluation resulted from the increase in the fair market value of the Company's Common Stock which was a result of the Initial Offering. Other compensation in fiscal 1996 also includes $0.4 million in payroll taxes associated with the exercise of compensatory stock options during the period. Other compensation in fiscal 1995 includes a $1.7 million non-cash charge representing a pro rata accrual for vested benefits earned under PUP II and $0.6 million in charges for the repurchase of stock options granted under the Company's various management stock option plans and agreements (collectively, the MSOP). In October 1994, the Company formally entered into a long-term contract with an engineering design and consulting firm to provide process design expertise and training services related to the construction of a graphite electrode plant in The People's Republic of China. Revenue related to the contract was recognized as services were performed for the process-design-expertise portion of the contract, and using a percentage-of-contract-completed approach for the training services stage of the contract. Other income for fiscal 1996 represents revenues earned under the process-design-expertise portion of the contract, less applicable expenses. Total revenues under the contract were expected to be approximately $5.2 million, $4.1 million of which has been recognized through July 31, 1996. At this time, the project has been delayed by the Chinese government and management cannot determine whether or not the balance of the revenue expected under the contract will be realized. Net interest expense for fiscal 1996 was $9.1 million and included $10.5 million of interest expense associated with the Senior Notes and $0.4 million of debt issue cost amortization, less $1.8 million in interest income associated with the Company's cash, cash equivalents and short-term investments. The average outstanding balance of Senior Notes during fiscal 1996 was approximately $91 million. On a consolidated basis, interest expense for fiscal 1995 was $12.6 million and included $12.9 million of interest expense associated with Senior Notes and $0.8 million of debt issue cost amortization, less $1.4 million in interest income. The average outstanding balance of Senior Notes during fiscal 1995 was approximately $112 million. In fiscal 1995, $2.0 million in net interest expense was allocated to discontinued operations. Interest expense was allocated to discontinued operations based on the ratio of net assets of the discontinued business to consolidated equity plus corporate indebtedness. Special financing expenses in fiscal 1996 and 1995 represent charges for accounting, legal, printing and other fees related to the Company's public stock offerings. The Company's effective income tax rate for fiscal 1996 was 30.9%, versus 36.9% in fiscal 1995. The decrease in the effective rate was due primarily to benefits derived from the Company's foreign sales corporation and adjustments to prior year estimates. 11 The Carbide/Graphite Group, Inc. Fiscal 1995 Versus Fiscal 1994 - ------------------------------ Net sales for fiscal 1995 were $241.5 million, versus $207.5 million in fiscal 1994, a 16.3% increase. Graphite electrode product sales increased 17.8% over the prior year to $160.6 million for fiscal 1995, while calcium carbide product sales increased 13.6% to $80.8 million for the current year. Within the graphite electrode products segment, graphite electrode net sales for fiscal 1995 were $119.4 million, versus $105.6 million in fiscal 1994, a 13.0% increase. Graphite electrode sales were higher due to a 9.2% increase in the average net sales price of graphite electrodes which resulted from price increases which took effect during the second half of fiscal 1994 and during fiscal 1995. Also, graphite electrode shipments for fiscal 1995 increased 4.3% over fiscal 1994. A 39.4% increase in foreign electrode shipments more than offset an 18.7% decrease in domestic electrode shipments. Domestic and foreign electrode shipments as a percentage of total electrode shipments for fiscal 1995 were 47.2% and 52.8%, respectively. The decline in domestic electrode shipments during fiscal 1995 was due to tightened credit terms imposed by the Company on certain customers, a plant shutdown of a major electrode customer and the impact of a product quality disruption, together with more demanding performance standards for electrodes in the EAF steel making industry. Needle coke sales for fiscal 1995 were $18.6 million, versus $21.8 million in fiscal 1994, a 14.8% decrease. The decline in needle coke sales was the result of a 12.0% decrease in outside customer shipments during fiscal 1995, as current year production levels were lower by 7.7%. Also included in graphite electrode product net sales for fiscal 1995 was approximately $9.9 million in sales at cost to SGL Corp. Calcium carbide product net sales for fiscal 1995 were $80.8 million, versus $71.1 million in fiscal 1994, a 13.6% increase. Increases in shipments of desulfurization products and pipeline acetylene of 24.6% and 13.1%, respectively, resulted in the increase during fiscal 1995. Gross profit as a percentage of graphite electrode product sales for fiscal 1995 was 16.9%, versus 18.1% in fiscal 1994. Benefits derived from increased graphite electrode sales prices were offset by lower margins generated on needle coke sales and the impact of sales under the SGL Supply Agreement. Needle coke margins were lower due primarily to lower production and shipments during fiscal 1995, as well as slightly lower selling prices. Prices under the SGL Supply Agreement approximate the Company's manufacturing costs, which also negatively impacted the graphite electrode product gross margin for fiscal 1995. Gross profit as a percentage of calcium carbide product net sales for fiscal 1995 was 20.0%, versus 14.6% in fiscal 1994. Higher sales volume and increased calcium carbide production efficiencies have resulted in the improved margins during fiscal 1995. Selling, general and administrative costs for fiscal 1995 were $13.9 million, versus $16.0 million in fiscal 1994. The prior year amount includes a $0.7 million charge to the graphite electrode product allowance for doubtful accounts related to a customer bankruptcy. The current year amount 12 The Carbide/Graphite Group, Inc. includes a $0.4 million benefit for the recovery of a customer receivable previously written off. These two items, coupled with a $1.1 million reduction in amortization expense associated with calcium carbide product intangibles, accounted for the decrease in costs. Other compensation for fiscal 1995 was $2.3 million, versus $5.5 million for fiscal 1994. Included in the current year expense was $0.6 million in charges for the repurchase of stock options granted under the MSOP from former employees of the Company and a $1.7 million charge for vested compensation incurred under PUP II. Included in the fiscal 1994 expense was a $5.1 million bonus paid to certain key employees in the first quarter of fiscal 1994. Other income for fiscal 1995 represents $3.7 million in revenue earned under the process design portion of the consulting contract with the Chinese Government, less applicable expenses. On a consolidated basis, interest expense for fiscal 1995 was $12.6 million, versus $13.4 million in fiscal 1994. Interest expense included in continuing operations for fiscal 1995 was $10.5 million, versus $9.6 million for fiscal 1994. The Senior Notes were outstanding for all of fiscal 1995, while they were outstanding for only eleven months during fiscal 1994, resulting in the higher interest expense from continuing operations for fiscal 1995. Interest expense for fiscal 1995 was reduced by $1.4 million of interest income earned on investments purchased with proceeds from the Specialty Products Sale. Interest expense allocated to discontinued operations was based on the ratio of net assets of the discontinued business to consolidated equity plus corporate indebtedness. Special financing expenses of $0.4 million for fiscal 1995 represent fees and costs incurred in connection with the Initial Offering. The Company's effective income tax rate for fiscal 1995 was 36.9%, versus 39.3% in fiscal 1994. The decrease in the effective rate is due primarily to lower state income taxes and increased benefits derived from the Company's foreign sales corporation. Discontinued operations includes the $15.7 million net gain on the Specialty Products Sale and the operating results of Specialty Products, net of applicable income taxes. Recently Issued Accounting Pronouncements - ----------------------------------------- In March 1995, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards #121, "Accounting for the Impairment of Long- Lived Assets and for Long-Lived Assets to be Disposed of" (SFAS #121). SFAS #121 must be implemented for the Company's fiscal year ending July 31, 1997. Management estimates that implementation of SFAS #121 will not have a material effect on the Company's financial statements. In October 1995, the FASB issued Statement of Financial Accounting Standards #123, "Accounting for Stock-Based Compensation" (SFAS #123). SFAS #123 establishes compensation recognition alternatives and disclosure requirements for stock-based compensation plans. The Company is currently evaluating the provisions of SFAS #123 and its potential impact on the Company's various stock- based compensation plans. The Company must adopt SFAS #123 for its fiscal year ending July 31, 1997. At this time, management has not finalized its evaluation of SFAS #123 and has not made a decision regarding its implementation. 13 The Carbide/Graphite Group, Inc. Liquidity and Capital Resources - ------------------------------- The Company's liquidity needs are primarily for debt service, capital expenditures and working capital. The Company has undertaken a substantial modernization program with respect to its graphite electrode production facilities which is expected to result in approximately $34 million in capital improvements during fiscal 1997 and 1998 (the Modernization Program). The Company believes that its liquid assets, capital resources and cash flows from operations will be sufficient to fund all of its liquidity needs, including the Modernization Program, through at least the expiration of its revolving credit facility on December 1, 1998. Also, the deferral of principal payments until 2003 under the Senior Note Indenture significantly reduces the Company's short- term debt service requirements. In the event that the Company's cash flows from operations and working capital are not sufficient to fund the Company's expenditures and service its indebtedness, the Company would be required to raise additional funds. There can be no assurance that sources of funds would be available in amounts sufficient for the Company to meet its obligations. On December 1, 1995, the Company entered into an agreement with PNC Bank for a new revolving credit facility (the 1995 Revolving Credit Facility), which replaced a revolving credit facility previously entered into in August 1993 (the 1993 Revolving Credit Facility). The 1995 Revolving Credit Facility, which expires on December 1, 1998, provides a $25 million line of credit, with a $10 million sub-limit for letters of credit. Borrowings under the 1995 Revolving Credit Facility are collateralized by the Company's accounts receivable and inventory. Interest under the 1995 Revolving Credit Facility is calculated, at the option of the Company, based upon either the greater of PNC Bank's prime rate, or an adjusted Eurodollar Rate, which is adjusted based upon the Company's interest coverage ratio. The most restrictive financial covenants under the 1995 Revolving Credit Facility include a minimum Consolidate Tangible Net Worth, as defined in the agreement, a minimum Interest Coverage Ratio (earnings before interest, taxes, depreciation and amortization to interest expense) of 2.25 to 1 and a minimum liquidity (working capital less borrowings under the new facility) of $30.0 million. Cash, cash equivalents and short-term investments were $26.7 million as of July 31, 1996, which were down from $42.7 million as of July 31, 1995 principally due to the Repurchase and capital expenditures of $15.7 million. Also, the Company had approximately $19 million of availability under the 1995 Revolving Credit Facility as of July 31, 1996. No borrowings were outstanding under the 1995 Revolving Credit Facility; however, approximately $6.0 million of letters of credit were outstanding. During fiscal 1996, total assets decreased $1.5 million. Current assets decreased $7.9 million principally as a result of a $15.9 million decrease in cash, cash equivalents and short-term investments, partially offset by an increase in inventory and income taxes receivable. Long-term assets increased $6.4 million, which was principally the result of capital expenditures, less depreciation. Total liabilities decreased from $171.4 million to $138.1 million as of July 31, 1996 principally due to the Repurchase and Redemption. Stockholders' equity increased $31.8 million during fiscal 1996 as a result of $12.4 million of net income and a $19.2 million increase, $13.0 million of which was a cash increase, resulting from transactions associated with the Company's stock offerings and option exercises during fiscal 1996. $4.8 million of the increase in stockholders' equity during fiscal 1996 resulted from tax benefits derived from the exercise of stock options during the period. Cash provided by operations for fiscal 1996 was $17.5 million, versus $7.5 million in fiscal 1995. Operating cash inflows during fiscal 1996 included 14 The Carbide/Graphite Group, Inc. $28.8 million from net income before adjustments to reconcile net income to cash provided by operating activities. These cash inflows were partially offset by an $11.4 million net cash outflow due to changes in working capital items, including an increase in inventory of $3.8 million. Interest and income taxes paid in fiscal 1996 were $10.3 million and $2.9 million, respectively. Cash provided by operations for fiscal 1995 was $7.5 million, versus $4.6 million in fiscal 1994. Operating cash inflows during fiscal 1995 included $11.0 million from net income before adjustments to reconcile net income to cash provided by operating activities. These cash inflows were partially offset by a $6.7 million net cash outflow due to increases in inventories during the year. Interest and income taxes paid in fiscal 1995 were $13.7 million and $18.0 million, respectively. During fiscal 1995, the Company paid approximately $10.2 million in income taxes and $0.9 million in other costs and fees associated with the Specialty Products Sale, both of which were classified as operating cash outflows in the consolidated statement of cash flows for fiscal 1995. Cash provided by operations for fiscal 1994 was $4.6 million, which resulted primarily from $13.0 million in net loss before adjustments to reconcile net loss to cash provided by operating activities. This was partially offset by a net cash outflow of $8.4 million from working capital items, including a $9.1 million increase in trade accounts receivable which resulted primarily from increased electrode sales. Interest and income taxes paid during fiscal 1994 were $7.8 million and $2.9 million, respectively. The Company's investing activities have historically included capital expenditures ranging from $9.0 million in fiscal 1994 to $15.7 million in fiscal 1996, including capital expenditures for Specialty Products in fiscal 1995 and 1994. The Company believes that most of its future investing activity cash flow requirements will be for capital expenditures, including the Modernization Program. The Modernization Program will be funded with a substantial portion of the net proceeds from the Specialty Products Sale, such proceeds being included in investing activities in the consolidated statement of cash flows for fiscal 1995. The Company believes that cash flow provided by operations, together with borrowings under the 1995 Revolving Credit Facility, will be adequate to fund the balance of its current investing needs. Exclusive of a refinancing in fiscal 1994, the Company's financing activities have principally represented short-term draw downs and repayments on its revolving credit facilities. During fiscal 1996, financing activities included the effects of the Initial Offering, the Repurchase and the Redemption, as well as cash inflows from exercises of stock options. The Company regularly enters into forward foreign currency contracts to help mitigate foreign currency exchange rate exposure on customer accounts receivable and firm sales commitments denominated in foreign currencies. These contracts generally mature within 12 months and are principally unsecured exchange contracts with commercial banks. Gains and losses related to forward foreign currency contracts are deferred and recognized in income at the same time as the sale of the product. Gains and losses deferred as of July 31, 1996 and 1995 were not material. The cash flows from these contracts are classified in a manner consistent with the underlying nature of the transactions. See Note 4 to the consolidated financial statements for a detailed description of the Company's foreign currency exposure, including customer accounts receivable denominated in foreign currencies and forward foreign currency contracts outstanding. In the past, the Company has also entered into crude oil and heating oil futures contracts. Such contracts are accounted for as hedges of the Company's decant oil purchases, the primary raw material of its needle coke plant. Gains and losses related to these contracts are capitalized as an adjustment to the decant oil purchase price and are recognized as a component of cost of goods sold as the raw materials are used. As of July 31, 1996 and 1995, there were no oil futures contracts outstanding. 15 The Carbide/Graphite Group, Inc. Selected Consolidated Financial and - ----------------------------------- Operating Information - ---------------------
(in thousands, except per share amounts, percentages and pricing information) Year Ended July 31, 1996 1995 1994 1993 1992 - ---------------------------------------------------------------------------------------------------------------------------- Statements of Operations Data(1): Net sales $259,394 $241,456 $207,536 $193,918 $182,667 Cost of goods sold 214,396 198,160 172,323 167,475 158,438 Selling, general and administrative 12,837 13,932 15,959 15,678 13,900 Other compensation(2) 1,772 2,315 5,471 900 1,924 Early retirement/severance charges(3) - - - 1,389 - Other income(4) (308) (3,358) - - - - ---------------------------------------------------------------------------------------------------------------------------- Operating income 30,697 30,407 13,783 8,476 8,405 Interest expense, net 9,073 10,518 9,604 3,374 4,022 Special financing expenses 889 357 - - 759 Provision for income taxes 6,416 7,206 1,644 1,712 1,533 - ---------------------------------------------------------------------------------------------------------------------------- Income from continuing operations $ 14,319 $ 12,326 $ 2,535 $ 3,390 $ 2,091 - ---------------------------------------------------------------------------------------------------------------------------- Per share income (loss) from continuing operations applicable to common stock(5): $ 1.67 $ 1.59 $ (0.17) $ 0.34 $ 0.05 Balance Sheet Data (at period end)(6): Working capital $104,825 $106,449 $ 77,456 $ 70,028 $ 67,433 Property, plant and equipment, net 65,177 58,370 64,350 63,803 64,106 Total assets 212,870 214,409 192,434 171,870 173,107 Current portion of long-term debt - - - - 6,750 Long-term debt 81,763 110,000 115,000 67,750 66,750 Convertible redeemable preferred stock - - - 5,000 5,000 Stockholders' equity 74,808 43,012 15,439 51,556 50,124 Other Operating Data: Gross profit margin percentage 17.3% 17.9% 17.0% 13.6% 13.3% Operating income margin percentage, before other compensation 12.5 13.6 9.3 4.8 5.7 Operating income margin percentage 11.8 12.6 6.6 4.4 4.6 EBITDA(7) $ 41,332 $ 37,686 $ 28,259 $ 19,393 $ 19,723 Depreciation and amortization(7) 9,171 8,322 9,004 8,616 9,394 Capital expenditures(8) 15,670 10,526 8,950 7,738 6,088 Quantity of graphite electrodes sold (in thousands of pounds) 105,279 100,775 96,659 100,101 96,269 Graphite electrode average net price per pound $ 1.27 $ 1.19 $ 1.09 $ 0.97 $ 0.92 Calcium carbide average net price per ton $ 460 $ 450 $ 441 $ 431 $ 423 - ----------------------------------------------------------------------------------------------------------------------------
(1) Excludes the historical operating results of Specialty Products, which have been classified as income (loss) from operations of discontinued business, net of the related income tax effects. See the consolidated financial statements, including the Notes thereto, appearing elsewhere in this report. (2) Represents other compensation expense related to the MSOP and performance unit plans and a $5.1 million special bonus paid to certain key employees in fiscal 1994. (3) Represents costs associated with a Company-wide early retirement/severance program. (4) Represents income related to process design and training services. See "Management's Discussion and Analysis." (5) Loss per share from continuing operations applicable to common stock for fiscal 1994 includes the after-tax effect of the $5.1 million special bonus paid to certain key employees. Dividends on convertible redeemable preferred stock were excluded from income applicable to common stock for fiscal 1992 and fiscal 1993. Income (loss) per share from continuing operations applicable to common stock in fiscal 1992 and fiscal 1994 was adjusted for the 16 The Carbide/Graphite Group, Inc. redemption of convertible redeemable preferred stock and warrants in excess of carrying value. Fully diluted earnings per share were not presented as the dilution was not material. (6) Except for July 31, 1996 and 1995, includes working capital items, property, plant and equipment and assets related to Specialty Products. (7) EBITDA is defined as operating income before depreciation and amortization, other compensation, early retirement/severance charges and other income. EBITDA is not presented as a measure of operating results under generally accepted accounting principles. However, management believes that EBITDA is an appropriate measure of the Company's ability to service its cash requirements. Depreciation and amortization included in the computation of EBITDA includes amortization of certain intangibles and does not include depreciation and amortization related to Specialty Products. (8) Prior to fiscal 1996, includes capital expenditures related to Specialty Products. Quarterly Stock Price Information - ---------------------------------
Year Ended July 31, 1996 High Low - ------------------------------------------------------------------------------ First* $17 1/4 $12 3/4 Second 16 1/4 12 1/4 Third 19 1/2 13 1/2 Fourth 19 3/4 15 1/4 - ------------------------------------------------------------------------------ Fiscal Year $19 3/4 $12 1/4 - ------------------------------------------------------------------------------
* The Company's Common Stock began trading on the NASDAQ National Market System on September 14, 1995. No Common Stock dividends were declared in fiscal 1996 or fiscal 1995. As of September 27, 1996, there were 94 record holders of the Company's Common Stock. Report of Independent Accountants We have audited the accompanying consolidated balance sheets of The Carbide/Graphite Group, Inc. and Subsidiaries (the Company) as of July 31, 1996 and 1995 and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended July 31, 1996. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of July 31, 1996 and 1995, and the consolidated results of its operations and its cash flows for each of the three years in the period ended July 31, 1996 in conformity with generally accepted accounting principles. As discussed in Note 11 to the consolidated financial statements, the Company changed its method of accounting for postretirement benefits other than pensions in fiscal 1994. /s/ Coopers & Lybrand L.L.P. Coopers & Lybrand L.L.P. Pittsburgh, PA 15219 September 10, 1996 17 Consolidated Statements of Operations The Carbide/Graphite Group, Inc.
(in thousands, except share and per share information) Year Ended July 31, 1996 1995 1994 - --------------------------------------------------------------------------------------------------------------------- Net sales $ 259,394 $241,456 $ 207,536 Operating costs and expenses: Cost of goods sold 214,396 198,160 172,323 Selling, general and administrative 12,837 13,932 15,959 Other compensation (Note 11) 1,772 2,315 5,471 Other income (Note 14) (308) (3,358) - - --------------------------------------------------------------------------------------------------------------------- Operating income 30,697 30,407 13,783 Other costs and expenses: Interest expense, net (Note 8) 9,073 10,518 9,604 Special financing expenses (Note 2) 889 357 - - --------------------------------------------------------------------------------------------------------------------- Income before income taxes, discontinued operations, and extraordinary loss and accounting change 20,735 19,532 4,179 Provision for taxes on income from continuing operations (Note 6) 6,416 7,206 1,644 - --------------------------------------------------------------------------------------------------------------------- Income from continuing operations 14,319 12,326 2,535 Discontinued operations (Note 3): Gain on Specialty Products Sale, net of $9,069 tax provision - 15,723 - Income from operations of discontinued business, net of provision for income taxes of $387 in 1995 and $236 in 1994 - 659 352 - --------------------------------------------------------------------------------------------------------------------- Income before extraordinary loss and accounting change 14,319 28,708 2,887 Extraordinary loss on early extinguishment of debt, net of tax benefit of $1,451 in 1996 and $668 in 1994 (Note 8) (2,177) - (1,002) - --------------------------------------------------------------------------------------------------------------------- Income before accounting change 12,142 28,708 1,885 Cumulative effect of accounting change, net of $1,297 tax benefit (Note 11) - - (1,945) - --------------------------------------------------------------------------------------------------------------------- Net income (loss) $ 12,142 $ 28,708 $ (60) - --------------------------------------------------------------------------------------------------------------------- Earnings per share information (Note 1): Income (loss) from continuing operations $1.67 $1.59 $(0.17) Gain on Specialty Products Sale, net - 2.03 - Income from operations of discontinued business, net - 0.09 0.06 Extraordinary loss on early extinguishment of debt, net (0.25) - (0.17) Cumulative effect of accounting change, net - - (0.32) - --------------------------------------------------------------------------------------------------------------------- Net income (loss) $1.42 $3.71 $(0.60) - --------------------------------------------------------------------------------------------------------------------- Common and common equivalent shares 8,577,451 7,747,756 6,040,833 - ---------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial statements. 18 Consolidated Balance Sheets The Carbide/Graphite Group, Inc.
(in thousands) July 31, 1996 1995 - ---------------------------------------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents (Note 1) $ 16,586 $ 42,656 Commercial paper (Note 4) 10,138 - Accounts receivable - trade, net of allowance for doubtful accounts: $1,896 in 1996 and $5,152 in 1995 (Note 4) 45,392 45,247 Inventories (Note 5) 54,779 51,021 Income taxes receivable (Note 6) 4,228 - Deferred income taxes (Note 6) 4,704 5,599 Other current assets 5,107 4,300 - ---------------------------------------------------------------------------------------------------- Total current assets 140,934 148,823 Property, plant and equipment, net (Note 7) 65,177 58,370 Other assets 6,759 7,216 - ---------------------------------------------------------------------------------------------------- Total assets $ 212,870 $ 214,409 - ---------------------------------------------------------------------------------------------------- Liabilities and Stockholder's Equity Current liabilities: Accounts payable, trade $ 17,171 $ 17,377 Income taxes payable (Note 6) - 662 Accrued expenses: Interest (Note 8) 3,920 5,308 Vacation 3,305 3,073 Workers' compensation 3,972 4,673 Accrued expenses for Specialty Product Sales (Note 3) - 1,134 Other 7,741 10,147 - ---------------------------------------------------------------------------------------------------- Total current liabilities 36,109 42,374 Long-term debt (Notes 4 and 8) 81,763 110,000 Deferred income taxes (Note 6) 8,834 6,349 Retirement benefit plans and other (Note 11) 8,571 9,754 Deferred revenue (Note 1) 2,785 2,920 - ---------------------------------------------------------------------------------------------------- Total liabilities 138,062 171,397 - ---------------------------------------------------------------------------------------------------- Commitments and contingencies (Note 10) - ---------------------------------------------------------------------------------------------------- Stockholders' equity: Common Stock, $.01 par value; shares authorized: 18,000,000 in 1996 and 11,200,000 in 1995; shares issued: 9,397,670 in 1996 and 7,249,375 in 1995 (Note 2) 94 72 Additional paid-in capital, net of equity issue costs: $1,398 in 1996 and $408 in 1995 (Note 2) 30,153 7,560 Treasury stock, at cost: 1,120,000 shares (4,895) (4,895) Retained earnings 48,381 36,239 Common stock to be issued under options (Note 11) 1,151 4,501 Unfunded pension obligation (Note 11) (76) (465) - ---------------------------------------------------------------------------------------------------- Total stockholders' equity 74,808 43,012 - ---------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $ 212,870 $ 214,409 - ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial statements. 19 Consolidated Statements of Cash Flows The Carbide/Graphite Group, Inc.
(in thousands) Year Ended July 31, 1996 1995 1994 - ------------------------------------------------------------------------------------------------------------------------ Net income (loss) $ 12,142 $ 28,708 $ (60) Adjustments to reconcile net income (loss) to cash provided by operating activities: Depreciation and amortization 8,853 8,213 8,367 Amortization of debt issuance costs 422 764 570 Amortization of interest rate cap agreement - 10 41 Amortization of intangible assets 318 632 1,748 Deferred revenue (135) (135) (135) Provision for common stock to be issued under options 86 632 178 Adjustments to deferred taxes 2,870 (3,154) (3,416) Provision for loss - accounts receivable 120 166 1,168 Gain on disposition of discontinued business - (24,792) - Extraordinary loss on early extinguishment of debt 3,628 - 1,320 Effect of change in accounting principle - - 3,242 Increase (decrease) in cash from changes in: Accounts receivable (265) (148) (9,088) Inventories (3,758) (6,689) (6,487) Income taxes (4,890) 175 454 Other current assets 3,746 (1,107) 235 Accounts payable and accrued expenses (3,729) 3,066 5,852 Net change in other non-current assets and liabilities (1,937) 1,126 592 - ------------------------------------------------------------------------------------------------------------------------ Net cash provided by operations 17,471 7,467 4,581 - ------------------------------------------------------------------------------------------------------------------------ Investing activities: Capital expenditures (15,670) (10,526) (8,950) Proceeds from disposition of discontinued business - 56,371 - Proceeds from purchase of short-term investments (10,000) - - Other - - 17 - ------------------------------------------------------------------------------------------------------------------------ Net cash provided by (used for) investing activities (25,670) 45,845 (8,933) - ------------------------------------------------------------------------------------------------------------------------ Financing activities: Payments on revolving credit facilities and term loans - (13,800) (78,350) Proceeds from revolving credit facilities and Senior Notes - 13,800 125,600 Repurchase of Senior Notes, including premium of $2,604 in 1996 (30,841) (5,000) - Net change in cash overdraft - (3,451) 2,228 Common Stock dividend, $5.00 per share - - (31,725) Repurchase of preferred stock and extension of non-compete agreement - - (8,553) Debt issuance costs - - (4,226) Proceeds from exercise of stock options 1,864 158 700 Repurchase of stock options - (1,323) - Purchase of treasury stock - (1,020) (1,225) Issuance of common stock, net of equity issue costs of $990 11,106 - - - ------------------------------------------------------------------------------------------------------------------------ Net cash provided by (used for) financing activities (17,871) (10,636) 4,449 - ------------------------------------------------------------------------------------------------------------------------ Effect of exchange rate changes on cash - (20) (97) - ------------------------------------------------------------------------------------------------------------------------ Net change in cash and cash equivalents (26,070) 42,656 - Cash and cash equivalents, beginning of period 42,656 - - - ------------------------------------------------------------------------------------------------------------------------ Cash and cash equivalents, end of period $ 16,586 $ 42,656 - - ------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial statements. 20 Consolidated Statements of Stockholders' Equity The Carbide/Graphite Group, Inc.
(in thousands, except share and per share information) Common Stock to Foreign Additional be Issued Currency Unfunded Common Stock Paid-In Treasury Retained Under Translation Pension Shares Amount Capital Stock Earnings Options Adjustments Obligation - --------------------------------------------------------------------------------------------------------------------------------- Balance at July 31, 1993 7,000,000 $70 $ 6,522 $(2,650) $ 42,869 $5,016 $ (100) $(171) Net loss (60) Common Stock dividend, $5.00 per share (31,725) Retirement of preferred stock (3,553) Stock option compensation 178 Translation adjustment (97) Purchase of treasury stock (1,225) Exercise of stock options 200,000 2 698 Increase in unfunded pension obligation (335) - --------------------------------------------------------------------------------------------------------------------------------- Balance at July 31, 1994 7,200,000 72 7,220 (3,875) 7,531 5,194 (197) (506) Net income 28,708 Stock option compensation 632 Elimination of translation adjustment 197 Purchase of treasury stock (1,020) Repurchase of stock options (1,323) Exercise of stock options 49,375 160 (2) Tax benefit on exercise of stock options 180 Decrease in unfunded pension obligation 41 - --------------------------------------------------------------------------------------------------------------------------------- Balance at July 31, 1995 7,249,375 72 7,560 (4,895) 36,239 4,501 - (465) Net income 12,142 Stock option compensation 86 Issuance of common stock 806,363 8 11,098 Exercise of stock options 1,341,932 14 6,650 (3,436) Tax benefit on exercise of stock options 4,845 Decrease in unfunded pension obligation 389 - --------------------------------------------------------------------------------------------------------------------------------- Balance at July 31, 1996 9,397,670 $94 $30,153 $(4,895) $ 48,381 $ 1,151 - $ (76) - ---------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial statements. 21 Financial Notes The Carbide/Graphite Group, Inc. 1. Summary of Significant Accounting Policies Basis of Consolidation - ---------------------- The consolidated financial statements include the accounts of The Carbide/Graphite Group, Inc. and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated. The preparation of the consolidated financial statements in accordance with generally accepted accounting principles requires management to make certain estimates and assumptions. These may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements. They may also affect the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from those estimates upon resolution of certain matters. Organization - ------------ The Company was formed on August 1, 1988 through the leveraged buyout of certain assets and liabilities of the carbide and graphite business units and a wholly- owned Canadian subsidiary, Speer Canada, Inc. (Speer Canada), of The BOC Group plc (BOC), a British corporation, and named The Carbon/Graphite Group, Inc. The name of the Company was subsequently changed to The Carbide/Graphite Group, Inc. in May 1992. During fiscal 1996, the Company completed two secondary underwritten public offerings of its Common Stock. See Note 2. On January 17, 1995, the Company and SGL Corp. consummated the Specialty Products Sale. See Note 3. Recently Issued Accounting Pronouncements - ----------------------------------------- In March 1995, the FASB issued Statement of Financial Accounting Standards #121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" (SFAS #121). SFAS #121 must be implemented for the Company's fiscal year ending July 31, 1997. Management estimates that implementation of SFAS #121 will not have a material effect on the Company's financial statements. In October 1995, the FASB issued Statement of Financial Accounting Standards #123, "Accounting for Stock-Based Compensation" (SFAS #123). SFAS #123 establishes compensation recognition alternatives and disclosure requirements for stock-based compensation plans. The Company is currently evaluating the provisions of SFAS #123 and its potential impact on the Company's various stock- based compensation plans. The Company must adopt SFAS #123 for its fiscal year ending July 31, 1997. At this time, management has not finalized its evaluation of SFAS #123 and has not made a decision regarding its implementation. Inventories - ----------- Substantially all inventories are stated at the lower of cost or market, with cost determined under the last-in, first-out (LIFO) method. The supplies inventories are valued at the lower of average cost or market. Property, Plant and Equipment - ----------------------------- Property, plant and equipment is stated at cost and depreciated on a straight- line basis over the estimated useful service lives of the related assets. Interest costs associated with the construction of capital additions are capitalized as part of the cost of the related assets. Gains or losses from the sale or retirement of assets are included in income. Repairs and maintenance are expensed as incurred. 22 The Carbide/Graphite Group, Inc. Revenue Recognition - ------------------- Net sales to customers are recognized when products are shipped. Deferred Revenue - ---------------- The Company has entered into a long-term supply contract to deliver carbide lime to a customer for which it has received the contract amounts in advance. The Company is recognizing revenue associated with the agreement over the life of the contract. Cash Equivalents - ---------------- The Company considers all highly liquid debt instruments, purchased with a maturity of three months or less, to be cash equivalents. Foreign Currency Translation - ---------------------------- The functional currency for Speer Canada was the local currency and, accordingly, revenues, expenses, gains and losses were translated at the weighted average exchange rate for fiscal 1995 and 1994. Accounts receivable denominated in foreign currencies are valued based on the prevailing spot rate as of the balance sheet date. See Notes 3 and 4. Environmental Expenditures - -------------------------- The Company expenses or capitalizes environmental expenditures that relate to current operations, as adjusted for indemnity claims against BOC, as appropriate. Expenditures which do not contribute to future revenues and that relate to existing conditions caused by past operations are expensed. Liabilities are recorded when remedial efforts are probable and the costs can be reasonably estimated. See Note 10. Earnings Per Share - ------------------ Primary earnings (loss) per share were computed by dividing net income (loss) applicable to common stock by the common and common equivalent shares outstanding during the respective periods. The dilutive effect of common share equivalents was considered in the primary earnings per share computation utilizing the treasury stock method. Common share equivalents outstanding during fiscal 1994 would have had an antidilutive effect and, accordingly, were not considered in the computation of primary loss per share for that period. Net loss applicable to common stock for the fiscal year ended July 31, 1994 was adjusted for the redemption of 5% Cumulative Convertible Redeemable Preferred Stock and attached warrants in excess of its carrying value. Fully diluted earnings per share were not presented since the dilution was not material. Intangibles and Deferred Charges - -------------------------------- Deferred charges and intangibles are recorded at historical cost and amortized on a straight-line basis over the estimated economic life of the agreement or contract underlying the assets. 2. Public Offerings of Common Stock On September 19, 1995, the Company completed the Initial Offering during which 5,375,750 shares of Common Stock were sold to the public by certain selling stockholders in a secondary underwritten offering. The initial public offering price was $15.00 per share. The underwriters also exercised an option to purchase 806,363 primary shares of Common Stock to cover over-allotments, which resulted in $11.1 million in net proceeds to the Company. The majority of these proceeds were used to complete the Redemption (see Note 8), with the balance being used for general corporate purposes. In connection with the Initial Offering, 455,000 Common Stock options were exercised, resulting in $0.6 million in cash proceeds to the Company. On March 12, 1996, the Company completed the Offering during which 1,032,236 shares of Common Stock were sold to the public by certain management and former management stockholders in a secondary underwritten offering. In connection with the Offering, 590,000 Common Stock options were exercised by certain selling stockholders, resulting in $0.8 million in cash proceeds to the Company. 23 The Carbide/Graphite Group, Inc. During the fiscal years ended July 31, 1996 and 1995, the Company recorded $0.9 million and $0.4 million, respectively, of charges for accounting, legal, printing and other fees related to its public stock offerings. These charges have been reflected as "special financing expenses" in the consolidated statements of operations for those years. 3. Sale of Graphite Specialty Products Business On January 17, 1995, the Company and SGL Corp. consummated the Specialty Products Sale. In exchange for $62.0 million, less certain graphite specialty working capital items retained by the Company, SGL Corp. acquired the Company's graphite machine shop and related processing equipment located at its St. Marys facility, isostatic processing equipment located at its facility in Niagara Falls, the related graphite specialty product inventory at each of the above locations and all of the operating assets of MTC Corporation located in Dallas. In addition, a wholly-owned subsidiary of SGL Corp. acquired the Company's subsidiary, Speer Canada, which has graphite machining facilities located in Montreal, Quebec and Kitchner, Ontario. The Specialty Products Sale resulted in a net gain of $15.7 million for the Company. Included in the gain on the Specialty Products Sale was (i) a $0.5 net charge for the partial curtailment of the St. Marys defined benefit pension plan which resulted from the Specialty Products Sale, (ii) a $0.5 million net charge for severance benefits to be paid to certain employees terminated as a result of the Specialty Products Sale, and (iii) a $0.8 million net charge for legal and other costs incurred as a direct result of the Specialty Products Sale. The gain on the Specialty Products Sale and the operating results of Specialty Products have been reclassified as a discontinued operation in the consolidated statement of operations for the fiscal year ended July 31, 1995. As appropriate, previously issued financial statements have been reclassified to conform with fiscal 1995 presentation. Net sales applicable to discontinued operations were $24.9 million and $50.0 million for the years ended July 31, 1995 and 1994, respectively. Interest expense allocated to discontinued operations was based on the ratio of net assets of the discontinued business to consolidated equity plus corporate indebtedness. Interest expense allocated to discontinued operations was $2.0 million and $3.8 million for the years ended July 31, 1995 and 1994, respectively. The Company received $56.4 million in cash from SGL Corp. in connection with the Specialty Products Sale. Also, the Company paid approximately $10.2 million in taxes and $0.9 million in other costs and fees associated with the Specialty Products Sale, both of which were classified as operating cash outflows in the consolidated statement of cash flows for the fiscal year ended July 31, 1995. 4. Financial Instruments The Company's financial instruments as of July 31, 1996 and 1995 include its Senior Notes, with a carrying value of $81.8 million and $110.0 million, respectively, and an estimated fair value of $87.5 million and $114.1 million, respectively, as determined by an investment banking and trading company. As of July 31, 1996, the Company held $10.0 million of GE Capital Corporation commercial paper with a maturity value of $10.4 in January 1997. Subsequent to July 31, 1996, the Company purchased an additional $5.0 million of GE Capital Corporation commercial paper with a maturity value of $5.2 million in May 1997. As of July 31, 1995, the Company held three month U.S. Treasury Bills with a carrying value and fair value of $5.4 million. In addition, the Company purchases and currently holds certain derivative financial instruments as hedging vehicles, as more fully described below. The Company regularly enters into forward foreign currency contracts to help mitigate foreign currency exchange rate exposure on customer accounts receivable and firm sales commitments denominated in foreign currencies. The Company's accounts receivable as of July 31, 1996 and 1995 24 The Carbide/Graphite Group, Inc. included the following foreign currency balances (in thousands):
July 31, 1996 1995 - ----------------------------------------- Japanese Yen $ 5,915 $ 6,625 British Sterling 4,401 522 French Francs 3,797 3,669 German Marks 1,548 3,462 Belgian Francs 1,220 810 Italian Lira 859 2,885 Other 1,949 1,613 - ----------------------------------------- Total Foreign Accounts Receivable $19,689 $19,586 - -----------------------------------------
As of July 31, 1996 and 1995, the Company held forward foreign currency contracts in the following foreign denominations (in thousands):
1996 1995 Contract Fair Contract Fair July 31, Value Value Value Value - ----------------------------------------------------------- Japanese Yen $13,191 $12,549 $ 8,557 $ 8,898 French Francs 9,193 9,223 6,051 6,586 German Marks 6,839 6,903 6,881 7,494 British Sterling 6,316 6,393 665 678 Italian Lira 4,326 4,498 2,681 2,757 Belgian Francs 2,761 2,770 2,486 2,583 Other 1,125 1,131 1,727 1,967 - ----------------------------------------------------------- Total Foreign Currency Contracts $43,751 $43,467 $29,048 $30,963 - -----------------------------------------------------------
These contracts generally mature within 12 months and are principally unsecured exchange contracts with commercial banks. Gains and losses related to forward foreign currency contracts are deferred and are recognized in income at the same time as the sale of the product. Gains and losses deferred as of July 31, 1996 and 1995 were not material. The cash flows from these contracts are classified in a manner consistent with the underlying nature of the transactions. In the past, the Company has also periodically entered into crude oil and heating oil futures contracts. Such contracts are accounted for as hedges of the Company's decant oil purchases, the primary raw material of its needle coke facility. Gains and losses related to these contracts are capitalized as an adjustment to the decant oil purchase price and are recognized as a component of cost of goods sold as the raw materials are used. The Company did not have any oil futures contracts outstanding as of July 31, 1996 and 1995. 5. Inventories Inventories were as follows (in thousands):
July 31, 1996 1995 - ---------------------------------------------------------------- Finished Goods $11,986 $ 9,660 Work in Process 29,880 26,820 Raw Materials 9,132 8,273 - ---------------------------------------------------------------- 50,998 44,753 LIFO Reserve (6,602) (2,981) - ---------------------------------------------------------------- 44,396 41,772 Supplies 10,383 9,249 - ---------------------------------------------------------------- $54,779 $51,021 - ----------------------------------------------------------------
As of July 31, 1996 and 1995, approximately 83.1% and 82.9%, respectively, of the Company's inventory was valued on a LIFO basis. If valued on a current cost basis, total inventories would have been $6.6 million and $3.0 million higher as of July 31, 1996 and 1995, respectively. During fiscal 1996, the Company received a $1.0 million favorable settlement from a utility rate dispute with one of its electric power suppliers. The $1.0 million payment received has been reflected as a reduction to cost of goods sold for the fiscal year ended July 31, 1996. 25 The Carbide/Graphite Group, Inc. 6. Income Taxes Income before income taxes, discontinued operations, extraordinary loss and accounting change for the years ended July 31, 1996, 1995 and 1994 were derived entirely from domestic operations. The components of the provision (benefit) for income taxes related to continuing operations included the following (in thousands):
Year Ended July 31, 1996 1995 1994 - -------------------------------------------------------------------------------------------------------------------- Current: Federal $3,360 $ 8,239 $ 2,659 State 186 490 878 - -------------------------------------------------------------------------------------------------------------------- 3,546 8,729 3,537 Deferred 2,870 (1,523) (1,893) - -------------------------------------------------------------------------------------------------------------------- $6,416 $ 7,206 $1,644 - --------------------------------------------------------------------------------------------------------------------
A reconciliation of the federal statutory income tax rate to the effective tax rate for continuing operations follows:
Year Ended July 31, 1996 1995 1994 - -------------------------------------------------------------------------------------------------------------------- Federal Statutory Rate 35.0% 35.0% 34.0% Effect of: State Income Taxes, Net of Federal Benefit 1.5 1.0 6.3 Current Year Foreign Sales Corporation Benefit (3.2) (1.8) (5.2) Prior Year Foreign Sales Corporation Adjustment (1.9) - - Non-Deductible Expenses 0.3 0.7 1.8 Other (0.8) 2.0 2.4 - -------------------------------------------------------------------------------------------------------------------- Effective Tax Rate 30.9% 36.9% 39.3% - --------------------------------------------------------------------------------------------------------------------
The components of deferred tax assets and liabilities follow (in thousands):
1996 1995 Deferred Tax Deferred Tax Deferred Tax Deferred Tax July 31, Assets Liabilities Assets Liabilities - --------------------------------------------------------------------------------------------------------------------- Depreciation - $10,371 - $10,390 Employee Retirement Benefits $1,034 - $1,128 - Management Incentive Plans 459 - 2,494 - Workers' Compensation 1,570 - 1,867 - Allowance for Doubtful Accounts 753 - 776 - Vacation Reserve 872 - 842 - Other 1,553 - 2,533 - - --------------------------------------------------------------------------------------------------------------------- $6,241 $10,371 $9,640 $10,390 - ---------------------------------------------------------------------------------------------------------------------
Provision had not been made for U.S. or additional foreign taxes on approximately $1.4 million of undistributed earnings of Speer Canada at July 31, 1994, as those earnings were intended to be permanently reinvested. As discussed in Note 3, the Company sold Speer Canada to a wholly-owned subsidiary of SGL Corp. during fiscal 1995. The Company paid $0.1 million in federal and foreign taxes due on the undistributed earnings of Speer Canada during the fiscal year ended July 31, 1996. All federal tax returns prior to fiscal 1993 have been settled with the Internal Revenue Service. Management does not believe that the settlement of its open tax years will have a material adverse effect on the Company's future operating results. 26 The Carbide/Graphite Group, Inc. 7. Property, Plant and Equipment Property, plant and equipment consisted of the following (in thousands):
July 31, 1996 1995 - ------------------------------------------------------------------------------------------------------------------ Buildings and Improvements $ 27,691 $ 26,614 Machinery and Equipment 195,951 186,834 - ------------------------------------------------------------------------------------------------------------------ 223,642 213,448 Less: Accumulated Depreciation 173,882 165,363 - ------------------------------------------------------------------------------------------------------------------ 49,760 48,085 Land 7,683 7,683 Construction in Progress 7,734 2,602 - ------------------------------------------------------------------------------------------------------------------ $ 65,177 $ 58,370 - ------------------------------------------------------------------------------------------------------------------
8. Long-Term Debt Long-term debt consisted of the following (in thousands):
July 31, 1996 1995 - ------------------------------------------------------------------------------------------- 11.5% Senior Notes Due 2003 (a) $ 81,763 $110,000 The 1995 Revolving Credit Facility (b) - - - ------------------------------------------------------------------------------------------- $ 81,763 $110,000 - -------------------------------------------------------------------------------------------
(a) In fiscal 1994, the Company issued $115.0 million of Senior Notes. The proceeds from this issuance, together with approximately $7.5 million under the 1993 Revolving Credit Facility, were used to (i) repay $65.3 million in outstanding indebtedness, together with accrued interest and fees associated with such repayment, (ii) repurchase 5,000 outstanding shares of its 5% Cumulative Convertible Redeemable Preferred Stock and attached warrants, (iii) cancel all outstanding performance units by payment of $4.1 million previously accrued, (iv) pay a dividend of $31.7 million to common stockholders, (v) pay a bonus to certain key employees aggregating approximately $5.1 million, and (vi) following the payment of the dividend referred to in (iv) above, repurchase 350,000 shares of common stock from one of its stockholders which were accounted for as treasury stock under the cost method (the Refinancing). The charge for the key employee bonus has been classified within other compensation in the fiscal 1994 consolidated statement of operations. In addition, the Company recorded a pre-tax charge of $1.3 million for the write-off of unamortized deferred financing fees and $0.4 million for the payment of bank fees related to the prepayment of the outstanding indebtedness. This $1.7 million charge has been reflected, net of a $0.7 million tax benefit, as an extraordinary item in the fiscal 1994 consolidated statement of operations. In fiscal 1994, the Company paid $4.2 million in debt issuance costs related to the Refinancing, $1.9 million and $3.1 million of which has been included in other assets in the July 31, 1996 and 1995 consolidated balance sheets, respectively. Interest payments on the Senior Notes are due semi-annually on March 1 and September 1, with the principal due in August 2003. Under the indenture governing the Senior Notes (the Senior Note Indenture), the Company is precluded from paying dividends and making other restricted payments, as defined in the Senior Note Indenture, unless certain conditions exist at the time of such payment. In addition, the Company is precluded from selling, assigning, transferring, leasing, conveying or otherwise disposing of all or substantially all of its properties or assets in one or more related transactions unless certain conditions stipulated in the Senior Note Indenture are met. Also, the Company is limited in the amount of additional indebtedness it may assume, it may not enter into certain transactions with affiliates of the Company, as defined in the Senior Note Indenture, and, with certain exceptions set forth in the Senior Note Indenture, it may not incur any liens on any assets presently owned or acquired in the future or any income or profits therefrom. The Company may redeem or may be required to redeem Senior Notes 27 The Carbide/Graphite Group, Inc. prior to their maturity at various premium rates up to 11.5% of the face amount of the Senior Notes, depending on the date and the conditions under which the redemption takes place. During fiscal 1996 and 1995, the Company repurchased, in open market transactions, $19.2 million and $5.0 million, respectively, in aggregate principal amount of Senior Notes. The Repurchase resulted in a $1.4 million net extraordinary charge for the fiscal year ended July 31, 1996 for the payment of the premiums associated with the Repurchase and the write-off of unamortized deferred financing fees related to the original issuance of the Senior Notes. Also in fiscal 1996, the Company completed the Redemption which resulted in a $9.0 million reduction in Senior Notes. The Redemption was initiated pursuant to the Senior Note Indenture which permits the redemption of a limited amount of Senior Notes with proceeds obtained from the Initial Offering. The Redemption resulted in a $0.8 net extraordinary charge recorded during the fiscal year ended July 31, 1996 for the payment of the premium associated with the Redemption and the write-off of deferred financing fees related to the original issuance of the Senior Notes. (b) On December 1, 1995, the Company entered into the 1995 Revolving Credit Facility, which replaced the 1993 Revolving Credit Facility. The 1995 Revolving Credit Facility, which expires on December 1, 1998, provides a $25 million line of credit, with a $10 million sub-limit for letters of credit. Borrowings under the 1995 Revolving Credit Facility are collateralized by the Company's accounts receivable and inventory. Interest under the 1995 Revolving Credit Facility is calculated, at the option of the Company, based upon either the greater of PNC Bank's prime rate, or an adjusted Eurodollar Rate, which is adjusted based upon the Company's interest coverage ratio. The most restrictive financial covenants under the 1995 Revolving Credit Facility include a minimum Consolidate Tangible Net Worth, as defined in the agreement, a minimum Interest Coverage Ratio (earnings before interest, taxes, depreciation and amortization to interest expense) of 2.25 to 1 and a minimum liquidity (working capital less borrowings under the new facility) of $30.0 million. As of July 31, 1996, scheduled principal payments under all long-term debt instruments for the next five years are as follows: 1997 through 2001 - $0; thereafter - $81.8 million. A portion of interest expense previously classified as a reduction of income from continuing operations has been reclassified to discontinued operations within the Company's consolidated statements of operations for the fiscal years ended July 31, 1995 and 1994. See Note 3. Interest expense for the fiscal years ended July 31, 1996 and 1995 was reduced by $1.8 million and $1.4 million, respectively, of interest income earned on cash, cash equivalents and short-term investments. 28 The Carbide/Graphite Group, Inc. 9. Preferred Stock In connection with the leveraged buyout transaction discussed in Note 1, the Company authorized and issued to BOC 10,000 shares of 5% Cumulative Convertible Redeemable Preferred Stock (the Preferred Stock). The corresponding value and liquidation preference of the Preferred Stock was $10.0 million. Each share of the Preferred Stock was convertible into 175 common shares and had attached warrants. These warrants, if exercised, enabled BOC to acquire an aggregate of an additional 490,000 common shares. On September 30, 1991, the Company entered into an agreement with BOC for the early redemption of 5,000 shares of the Preferred Stock and attached warrants for $6.4 million. The excess of the redemption price over the carrying value of the redeemed Preferred Stock of $1.4 million was recorded as a reduction of retained earnings. The Company also extended a non-compete agreement with BOC for an additional five years for $2.0 million. This amount has been classified within other assets in the consolidated balance sheet and is being amortized on a straight-line basis over the life of the non-compete agreement. In connection with the Refinancing discussed in Note 8, the Company repurchased the remaining 5,000 shares of the Preferred Stock and attached warrants during the fiscal year ended July 31, 1994 for $8.6 million. The $3.6 million excess of the redemption price over the carrying value of the redeemed Preferred Stock was recorded as a reduction of retained earnings. 10. Commitments and Contingencies The Company leases various types of machinery, equipment and real estate, which are accounted for as operating leases. Future minimum rental payments under operating leases are as follows (in thousands):
July 31, - ------------------------ 1997 $1,228 1998 884 1999 812 2000 384 Thereafter 39 - ------------------------
Consolidated rent expense for the years ended July 31, 1996, 1995 and 1994 amounted to approximately $2.4 million, $2.6 million and $2.4 million, respectively, and included rent expense of $0.1 million and $0.3 million related to discontinued operations during the fiscal years ended July 31, 1995 and 1994, respectively. The Company purchases electricity from various local producers under long-term contracts which expire at various dates through 2007. These contracts require the Company to make future minimum payments aggregating approximately $7.7 million through the end of the contracts, whether or not the Company takes power in the future. The Company has investigated the regulatory requirements related to closing a pond located on its Louisville, KY facility which was used to store non- hazardous production waste. In November 1993, the Company contacted the Kentucky Department of Environmental Protection (the Agency) and informed the Agency that, based on the Company's investigations of the historical facts related to the pond, the Company does not believe that any further remedial actions are required. The Agency has not yet responded to the Company's findings. The Company operates a permitted landfill for the disposal of residual wastes at its St. Marys facility. The adoption of new residual waste regulations in Pennsylvania, coupled with decreasing capacity, will require the upgrading or closure of this landfill by July 1997. The Company has decided to close the landfill and contract outside of the Company for disposal services. The Company's closure plan was approved by the Pennsylvania Department of Environmental Resources during fiscal 1995 and consists of ongoing stage closure activities through July 1997, followed by a 15 year monitoring commitment. Costs related to the landfill closure and monitoring process are expected to be approximately $0.8 million. Future closure and monitoring costs not accrued as of July 31, 1996 are not material. The timing of payments related to these activities, including payments for disposal services, is not expected to materially impact the Company's cash flow in the future. During fiscal 1995, the Company was named as a third-party defendant in a Superfund action in United States District Court in New Jersey relating 29 The Carbide/Graphite Group, Inc. to waste disposal at a landfill located in Sayreville, New Jersey (the Sayreville Litigation). Carbon/Graphite Group, Inc. was named as successor to Airco-Speer Company (Airco-Speer). Since this landfill was closed prior to the organization of the Company in 1988, the Company's only possible connection with the Sayreville Litigation would be if it were a successor to Airco-Speer, a claim which it disputes. Furthermore, in the Asset Purchase Agreement by which the Company acquired assets from BOC, BOC agreed to provide an indemnification for certain environmental matters. BOC has assumed and commenced the defense of the Sayreville Litigation and has agreed to indemnify the Company for certain losses associated therewith in accordance with the terms of the Asset Purchase Agreement. BOC in turn is being indemnified by certain plaintiffs in the litigation pursuant to a 1992 agreement. In addition, BOC asserts that the liability in this matter was settled by the 1992 agreement with the plaintiffs in the present case. A motion seeking summary judgement based upon the 1992 agreement is currently pending before the court. Based on the above, management does not believe that the Company will incur a material loss with respect to the Sayreville Litigation. The Company is also party to various legal proceedings considered incidental to the conduct of its business or otherwise not material in the judgement of management. Management does not believe that its loss exposure related to these cases is materially greater than amounts provided in the consolidated balance sheet as of July 31, 1996. As of July 31, 1996, a $0.4 million reserve has been recorded to provide for estimated exposure on claims for which a loss is deemed probable. 11. Employee Retirement and Benefit Plans Pension Benefits - ---------------- The Company maintains defined benefit pension plans covering substantially all of its hourly employees. The benefits under these plans are based primarily on years of service and benefit rates established by union contracts. The Company's funding policy is to contribute annually the amount recommended by its consulting actuary, subject to statutory provisions. Net periodic pension cost included the following components (in thousands):
Year Ended July 31, 1996 1995 1994 - ----------------------------------------------------------------------------------------------------------------------------- Service Cost - Benefits Earned During the Year $ 697 $ 736 $ 751 Interest Cost on Projected Benefit Obligation 1,009 940 854 Actual Return on Plan Assets (797) (1,190) (58) Deferral of Asset (Loss) Gain 87 602 (344) Net Amortization 237 390 411 - ----------------------------------------------------------------------------------------------------------------------------- Total Pension Cost 1,233 1,478 1,614 Less: Pension Cost in Discontinued Operations - 88 255 - ----------------------------------------------------------------------------------------------------------------------------- Pension Cost in Continuing Operations $ 1,233 $ 1,390 $1,359 - -----------------------------------------------------------------------------------------------------------------------------
30 The Carbide/Graphite Group, Inc. The funded status of the plans is reconciled to accrued pension cost as follows (in thousands):
July 31, 1996 1995 - -------------------------------------------------------------------------------------------------------------------- Accumulated Benefit Obligation, Including Vested Benefits of $13,102 and $10,995, Respectively $15,435 $13,208 Benefit Obligations for Estimated Future Service 1,752 605 - -------------------------------------------------------------------------------------------------------------------- Projected Benefit Obligation 17,187 13,813 Plan Assets at Fair Value 12,044 9,800 - -------------------------------------------------------------------------------------------------------------------- Projected Benefit Obligation in Excess of Plan Assets 5,143 4,013 Unrecognized Transition Obligation (821) (931) Unrecognized Net Actuarial Loss (407) (607) Unrecognized Prior Service Cost (4,883) (2,902) Additional Minimum Liability 4,359 3,835 - -------------------------------------------------------------------------------------------------------------------- Accrued Pension Cost $ 3,391 $ 3,408 - --------------------------------------------------------------------------------------------------------------------
Components of each plan's assets include primarily U.S. government obligations and common stocks. Significant assumptions used in determining net periodic pension cost and the related pension obligation as of and for the years ended July 31, 1996, 1995 and 1994 were: - -------------------------------------------------------------------------------- Discount Rate 7.5% Expected Long-Term Rate of Return on Plan Assets 8.0 - -------------------------------------------------------------------------------- The Company has recognized in the consolidated balance sheets a liability equal to the excess of the accumulated benefit obligation over the fair value of plan assets in accordance with Statement of Financial Accounting Standards #87, "Employers' Accounting for Pensions" (SFAS #87). The additional minimum liability was $4.4 million and $3.8 million at July 31, 1996 and 1995, respectively. The offset to this liability was a charge to an intangible asset equal to the unrecognized prior service cost. The intangible asset has been classified within other assets in the consolidated balance sheets. The excess additional minimum liability over the intangible asset has been reported as a reduction of stockholders' equity, in accordance with SFAS #87. As a result of the Specialty Products Sale, the St. Marys defined benefit pension plan was partially curtailed, resulting in a pre-tax charge of $0.8 million. This charge has been classified as a reduction of the gain on the Specialty Products Sale in the consolidated statement of operations for the fiscal year ended July 31, 1995. Postretirement Benefits - ----------------------- The Company adopted SFAS #106 on August 1, 1993. The implementation of SFAS #106 resulted in a one-time pre-tax charge to earnings of $3.2 million, $1.9 million after tax, recorded as a cumulative effect of a change in accounting principle. This accounting rule requires employers who provide postretirement health care and life insurance benefits to their employees to accrue the cost of such benefits over the period the employee provides services to the company. Previously, the Company expensed such benefits when they were paid. Such benefits are maintained for most hourly employees and the covered employees are required to pay a portion of benefit costs. The plans are currently unfunded. 31 The Carbide/Graphite Group, Inc. Postretirement benefit expense for the years ended July 31, 1996, 1995 and 1994 included the following components (in thousands):
Year Ended July 31, 1996 1995 1994 - ----------------------------------------------------------------------------- Service Cost $ 105 $ 111 $ 117 Interest Cost 187 216 253 Prior Service Cost (4) (4) - Amortization of Actuarial Gain (37) (15) - - ----------------------------------------------------------------------------- $251 $ 308 $ 370 - -----------------------------------------------------------------------------
Postretirement benefit expense related to discontinued operations for fiscal 1995 and fiscal 1994 was not material. A reconciliation of the accumulated postretirement benefit obligation to accrued postretirement benefit expense follows (in thousands):
July 31, 1996 1995 - ------------------------------------------------ Retirees $1,038 $ 843 Other Fully Eligible Plan Participants 884 712 Other Active Plan Participants 1,043 1,009 - ------------------------------------------------ Accumulated Postretirement Benefit Obligation 2,965 2,564 Unrecognized Prior Service Cost 42 46 Unrecognized Actuarial Gains 553 829 - ------------------------------------------------ Accrued Postretirement Benefit Expense $3,560 $3,439 - ------------------------------------------------
For estimated expense and liability measurement purposes, the health care cost trend rate was assumed to increase 8.0% in fiscal 1997, with the rate of increase declining evenly each year to 5% in fiscal 2004 and thereafter. The assumed discount rate for the valuation of the accumulated postretirement benefit obligation at July 31, 1996 and 1995 was 7.5%. For the estimation of post-retirement benefit expense for each of the fiscal years ended July 31, 1996 and 1995, the discount rate was 7.5%, and 8.0% for fiscal 1994. If the assumed health care cost trend rate was increased by one percent, the fiscal 1996 net periodic postretirement benefit cost would have increased 2.7%, while the accumulated postretirement benefit obligation as of July 31, 1996 would have increased approximately 2.3%. Savings Investment Plan - ----------------------- The Company has adopted a defined contribution Savings Investment Plan for substantially all salaried employees. Employee contributions up to a maximum of 6% of employee compensation are matched 50% by the Company. Additional employer contributions may be made at the discretion of the Board of Directors based on the Company's current year performance. The cost of these Company contributions approximated $1.6 million, $1.8 million and $1.5 million for the fiscal years ended July 31, 1996, 1995 and 1994, respectively. Management Stock Option Plan and Other - -------------------------------------- Performance Plans - ----------------- The Company has adopted the MSOP. The MSOP are incentive or non-qualified, compensatory stock option plans or agreements, participation in which is limited to officers, directors and/or key employees of the Company. The table on page 33 summarizes option activity for the periods indicated. 32 The Carbide/Graphite Group, Inc.
Year Ended July 31, 1996 1995 1994 - ---------------------------------------------------------------------------------------------- Options Outstanding, Beginning of Year: Number 1,745,000 2,079,375 1,859,375 Exercise Price $1.00 -- $3.50 $1.00 -- $3.50 $1.00 -- $4.70 Granted: Number 125,000 - 420,000 Exercise Price $15.75 - $3.50 Exercised: Number (1,252,500) (49,375) (200,000) Exercise Price $1.00 -- $3.50 $2.00 -- $3.50 $3.50 Options Expired or Repurchased - (285,000) - - ---------------------------------------------------------------------------------------------- Options Outstanding, End of Year: Number 617,500 1,745,000 2,079,375 Exercise Price $1.00 -- $15.75 $1.00 -- $3.50 $1.00 -- $3.50 - ----------------------------------------------------------------------------------------------
As of July 31, 1996, 481,250 options were fully vested and exercisable, and shares reserved for issuance under the MSOP were 1,883,125 at July 31, 1996. As a result of the Refinancing discussed in Note 8, the Company reduced the exercise price of options granted in fiscal 1993 and 1992 from $5.00 and $4.70, respectively, to $2.00. Options granted under the MSOP in the fiscal year ended July 31, 1996 were granted at the fair market value of the Company's Common Stock as quoted on the NASDAQ National Market System on the date of grant. Options granted under the MSOP in the fiscal years ended July 31, 1995 and 1994 were granted generally at the estimated fair market values of the Company's Common Stock, as determined by the Company's Board of Directors, at or around the dates of grant. The estimated fair market value of the Common Stock used to determine compensation expense related to the MSOP was determined after consideration of, among other things, (i) the current and expected future operations of the Company, (ii) the minority ownership interest in the Company represented by management's Common Stock and options, (iii) the restrictions on transfer of the Common Stock, and (iv) the lack of a public market for the Common Stock at that time. Such values approximate the values provided by an independent business brokerage and valuation firm retained by the Company. During fiscal 1994, the Company's Board of Directors approved PUP II. PUP II was adopted as of August 1, 1993 and provided for the granting of 3.0 million units to eligible employees. Awards under PUP II were paid if the Company's earnings before interest, taxes, depreciation and amortization, as determined in good faith by the Company's board of directors, exceed $105.0 million for the three year period ended July 31, 1996 (the Target). There was also an acceleration clause which provided for the early payment of a 33 The Carbide/Graphite Group, Inc. portion of the award if the Company completed a public offering of its Common Stock. Participants in PUP II had the option of receiving $1.00 in exchange for each unit granted, or $1.00 for 50% of the units granted and a number of shares of Common Stock determined by dividing the number of units not paid in cash by seven. As of July 31, 1995, 2.1 million units under PUP II were outstanding. As a result of the Initial Offering, the Company accelerated the payment of two-thirds of the units outstanding under PUP II. This early distribution resulted in an aggregate cash payment of $0.8 million and the issuance of 89,432 shares of Common Stock during the fiscal year ended July 31, 1996. The issuance of Common Stock resulted in a $1.4 million non-cash increase to stockholders' equity during the fiscal year ended July 31, 1996. As the Target had been met, the remaining one-third of the units outstanding were paid in August 1996, which resulted in an aggregate cash payment of $0.3 million and the issuance of 42,852 shares of Common Stock. Subsequent to this award, no units under PUP II were outstanding. 12. Business Segment Information The Company's operations consist of two segments: graphite electrode products and calcium carbide products. The graphite electrode products segment manufactures and markets graphite electrodes, primarily to electric arc steel producers. In addition, this segment manufactures needle coke, the principal raw material used in the manufacture of graphite electrodes, as well as certain other graphite specialty products. As more fully discussed in Note 3, Specialty Products was sold in fiscal 1995. Except for capital expenditures, the information on page 35 has been adjusted to reflect the effects of the Specialty Products Sale. The calcium carbide products segment manufactures and markets calcium carbide and its direct derivatives that are used in the further manufacturing of specialty chemicals, cutting and welding applications, and desulfurization in the ductile iron and steel industries. This segment also manufactures electrically calcined anthracite coal used in the aluminum industry. Sales of graphite electrodes to customers in the steel industry accounted for approximately 50% of customer net sales from continuing operations for the fiscal years presented. Amounts due from customers in the steel industry at July 31, 1996 and 1995 approximated $34.3 million and $32.2 million, respectively. 34 The Carbide/Graphite Group, Inc. Segment information is as follows (in thousands):
Year Ended July 31, 1996 1995 1994 - ------------------------------------------------------------------------------------------------------------------ Sales to Customers: Graphite Electrode Products $179,925 $160,610 $136,390 Calcium Carbide Products 79,469 80,846 71,146 Intersegment Sales, at Prevailing Market Prices: Graphite Electrode Products 308 206 341 Eliminations (308) (206) (341) - ------------------------------------------------------------------------------------------------------------------ Total Net Sales $259,394 $241,456 $207,536 - ------------------------------------------------------------------------------------------------------------------ Operating Income: Graphite Electrode Products $ 24,026 $ 21,225 $ 18,677 Calcium Carbide Products 13,623 13,655 7,468 Unallocated Corporate Expenses (6,952) (4,473) (12,362) - ------------------------------------------------------------------------------------------------------------------ Total Operating Income $ 30,697 $ 30,407 $ 13,783 - ------------------------------------------------------------------------------------------------------------------ Identifiable Assets: Graphite Electrode Products $141,019 $130,541 $126,150 Calcium Carbide Products 27,768 26,142 23,116 - ------------------------------------------------------------------------------------------------------------------ 168,787 156,683 149,266 Corporate Assets 44,083 57,726 11,754 Discontinued Operations - - 31,414 - ------------------------------------------------------------------------------------------------------------------ Total Assets $212,870 $214,409 $192,434 - ------------------------------------------------------------------------------------------------------------------ Depreciation and Amortization: Graphite Electrode Products $ 7,472 $ 6,449 $ 6,193 Calcium Carbide Products 1,381 1,240 1,022 - ------------------------------------------------------------------------------------------------------------------ 8,853 7,689 7,215 Discontinued Operations - 524 1,152 - ------------------------------------------------------------------------------------------------------------------ Total Depreciation and Amortization $ 8,853 $ 8,213 $ 8,367 - ------------------------------------------------------------------------------------------------------------------ Capital Expenditures: Graphite Electrode Products* $ 12,883 $ 8,231 $ 6,750 Calcium Carbide Products 2,787 2,295 2,200 - ------------------------------------------------------------------------------------------------------------------ Total Capital Expenditures $ 15,670 $ 10,526 $ 8,950 - ------------------------------------------------------------------------------------------------------------------ Sales Information: Total Customer Sales to Geographic Areas: United States $173,948 $156,086 $147,776 Other Americas 19,382 20,567 13,727 Europe 36,072 38,310 26,446 Asia/Far East 29,992 26,493 19,587 - ------------------------------------------------------------------------------------------------------------------ Total Net Sales $259,394 $241,456 $207,536 - ------------------------------------------------------------------------------------------------------------------
* Includes capital expenditures for Specialty Products in fiscal 1995 and 1994. 13. Cash Flow Information Cash payments for interest and income taxes were as follows (in thousands):
Year Ended July 31, 1996 1995 1994 - ------------------------------------------------------------------------- Interest $ 10,284 $ 13,706 $ 7,836 Income Taxes 2,882 17,957 2,866 - -------------------------------------------------------------------------
Included in income tax payments for fiscal 1995 were payments totaling approximately $10.2 million associated with the Specialty Products Sale. 35 The Carbide/Graphite Group, Inc. 14. Other Income In October 1994, the Company formally entered into a long-term contract with an engineering design and consulting firm to provide process design expertise and training services related to the construction of a graphite electrode plant in The People's Republic of China. The contract was expected to encompass a four- year period from its inception in November 1994. Revenue related to the contract was recognized as services were performed for the process-design-expertise portion of the contract, and using a percentage-of-contract-completed approach for the training services stage of the contract. Total revenues under the contract were expected to be approximately $5.2 million, $4.1 million of which has been recognized through July 31, 1996. Other income for the fiscal years ended July 31, 1996 and 1995 represents revenues earned under the process- design-expertise portion of the contract, less applicable expenses. At this time, the project has been delayed by the Chinese government, and management cannot determine whether or not the balance of the revenue expected under the contract will be realized. 15. Quarterly Results (Unaudited) The following table sets forth certain unaudited consolidated quarterly operating information of the Company:
(in millions, except per share information) Year Ended July 31, 1996: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Fiscal Year - ------------------------------------------------------------------------------------------------------------------------------------ Net Sales $63.9 $ 64.4 $65.2 $65.9 $259.4 Gross Profit 10.7 11.2 11.7 11.4 45.0 Operating Income 7.3 7.8 8.0 7.6 30.7 Income from Continuing Operations 2.7 3.7 4.0 3.9 14.3 Extraordinary Loss* 0.9 1.1 0.1 0.1 2.2 Net Income 1.8 2.6 3.9 3.8 12.1 Per Share: Income from Continuing Operations 0.33 0.43 0.46 0.46 1.67 Net Income 0.22 0.30** 0.45 0.44 1.42 - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended July 31, 1995: - ------------------------------------------------------------------------------------------------------------------------------------ Net Sales $54.1 $ 56.7 $66.7 $64.0 $241.5 Gross Profit 10.7 10.2 11.2 11.2 43.3 Operating Income 6.8 7.2 7.9 8.5 30.4 Income from Continuing Operations 2.7 2.9 3.1 3.6 12.3 Discontinued Operations 0.2 16.2 - - 16.4 Net Income 2.9 19.1 3.1 3.6 28.7 Per Share: Income from Continuing Operations 0.35 0.38 0.40 0.47 1.59 Net Income 0.38 2.47*** 0.40 0.47 3.71 - ------------------------------------------------------------------------------------------------------------------------------------
* Represents net charges associated with the Repurchase and Redemption. See Note 8. ** Includes a $1.0 million pre-tax favorable settlement from a utility rate dispute. See Note 5. ***Includes the gain on the Specialty Products Sale. See Note 3. 36 EX-21.1 11 SUBSIDIARIES OF THE COMPANY EXHIBIT 21.1 The subsidiaries of the Company are: Name Jurisdiction of Incorporation ---- ----------------------------- Carbide/Graphite Management Corporation Delaware C/G Specialty Products Management Corporation Delaware Carbon/Graphite International Barbados EX-23.1 12 CONSENT OF INDEPENDENT ACCOUNTANTS Coopers Coopers & Lybrand L.L.P. & Lybrand a professional services firm EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statements of The Carbide/Graphite Group, Inc. on Form S-8 (Registration No. 333-570) of our reports dated September 10, 1996 on our audits of the consolidated financial statements and financial statement schedule of The Carbide/Graphite Group, Inc. and Subsidiaries as of July 31, 1996 and 1995 and for each of the three years in the period ended July 31, 1996, which reports are incorporated by reference or included in this Form 10-K. Pittsburgh, Pennsylvania October 28, 1996 Coopers & Lybrand L.L.P., is a member of Coopers & Lybrand International, a limited liability association incorporated in Switzerland. EX-27 13 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY INCLUDED UNDER ITEM 8 OF THIS FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 12-MOS JUL-31-1996 AUG-01-1995 JUL-31-1996 16,586 0 47,288 (1,896) 54,779 140,934 239,059 (173,882) 212,870 36,109 81,763 0 0 94 74,714 212,870 259,394 259,394 214,396 227,113 2,353 120 9,073 20,735 6,416 14,319 0 (2,177) 0 12,142 1.42 1.41
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