Exhibit 10.5

ARTICLES OF AGREEMENT

BETWEEN

STERLING CHEMICALS, INC.
ITS SUCCESSORS AND ASSIGNS

AND

TEXAS CITY, TEXAS
METAL TRADES COUNCIL, AFL-CIO

TEXAS CITY, TEXAS

May 27, 2004

to

May 1, 2007

 

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TABLE OF CONTENTS

                  Page         No.
ARTICLE 1
  MANAGEMENT RIGHTS   2
ARTICLE 2
  UNION SECURITY   2
ARTICLE 3
  HOURS OF WORK   3
ARTICLE 4
  OVERTIME AND PREMIUM TIME REGULATIONS   5
ARTICLE 5
  VACATION   8
ARTICLE 6
  SENIORITY   10
ARTICLE 7
  SUPERVISORS DOING HOURLY WORK   15
ARTICLE 8
  WORK CLASSIFICATIONS   15
ARTICLE 9
  STAFFING OF NEW UNITS   15
ARTICLE 10
  STEWARDS   15
ARTICLE 11
  CONTRACT WORK   16
ARTICLE 12
  PAY DAY   16
ARTICLE 13
  PHYSICAL EXAMINATIONS   17
ARTICLE 14
  DISCRIMINATION   17
ARTICLE 15
  UNION REPRESENTATIVES   17
ARTICLE 16
  JURY SERVICE   17
ARTICLE 17
  ELECTION DAY REGULATIONS   18
ARTICLE 18
  REPLACEMENT OF CLOTHING   19
ARTICLE 19
  LAYOFF NOTICE - SEPARATION ALLOWANCE   19
ARTICLE 20
  LEAVE OF ABSENCE   20
ARTICLE 21
  SANITATION AND SAFETY   21
ARTICLE 22
  BULLETIN BOARDS   22
ARTICLE 23
  COMPANY RULES   22
ARTICLE 24
  PRODUCTIVITY STATEMENT   22
ARTICLE 25
  FUNERAL LEAVE   23
ARTICLE 26
  STRIKES AND LOCKOUTS   24
ARTICLE 27
  GRIEVANCE PROCEDURE AND DISCIPLINE RECORDS   24
ARTICLE 28
  ARBITRATION PROCEDURE   26
ARTICLE 29
  ABROGATION OF CONTRACT ARTICLES   26
ARTICLE 30
  OCCUPATIONAL & NON-OCCUPATIONAL ACCIDENT AND SICKNESS PLAN   27
ARTICLE 31
  WORK ASSIGNMENTS   29
ARTICLE 32
  CONTRACT PERIOD   29
EXHIBIT A
  12 HOUR SHIFT AGREEMENT   A-I
EXHIBIT B
  WAGE RATES   B-I
EXHIBIT C
  EMPLOYEE BENEFITS   C-I NO JURISDICTION SUPPORTING INFORMATION    

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INDEX

                  PARAGRAPH    
Signatory Unions
  1    
Basic Principles
  2    
Union Recognition
  3    
Bargaining Union Defined
  3 ARTICLE 29  
ABROGATION OF CONTRACT ARTICLES
  69 ARTICLE 28  
ARBITRATION PROCEDURE
       
Appealed Grievance Time Length
  68 b)    
Arbitration Expenses
  68 c)    
Arbitrator Authority
  68 d)    
Length of Time to Arbitrate
  68 a)    
Time Limit Failure
  68 e) ARTICLE 22  
BULLETIN BOARDS
  62 a) ARTICLE 23  
COMPANY RULES
  63 a) ARTICLE 32  
CONTRACT PERIOD
  80 a) thru d) ARTICLE 11  
CONTRACT WORK
       
Utilizing Independent Contractors
  42 a) ARTICLE 14  
DISCRIMINATION
       
Charges of Discrimination
  45 b) ARTICLE 17  
ELECTION DAY REGULATIONS
       
Election Judge
  52 b)    
Employees Time off to Vote
  52 a) ARTICLE 25  
FUNERAL LEAVE
       
Funeral Leave
  65 a) & b)    
Funeral Leave while on Vacation
  65 c)    
Pallbearer
  65 g)    
Proof of Relationship
  65 f) ARTICLE 27  
GRIEVANCE PROCEDURE AND DISCIPLINE RECORDS
       
Discharge Grievance Process
  67 c) thru e)    
Grievance Lapse Time
  67 a) 1)    
Grievance Time Limit Exceptions
  67 f)    
Length of Time to Answer Grievance
  67 a) 6)    
Letters of Reprimand
  67 g) & h)    
PUC Meeting Membership
  67 b)    
Sick Pay Benefit Grievance
  67 a) 5)    
Step 1 - Grievance Procedure
  67 a) 2)    
Step 2 - Grievance Procedure
  67 a) 3)    
Step 3 - Grievance Procedure
  67 a) 4) ARTICLE 3  
HOURS OF WORK
       
Changes to Materials Handling Schedule
  13 h)    
Dentist/Doctor Appt. 3 Hrs Unpaid
  13 f)    
Hours of Work — Maintenance
  12 a) thru c)    
Hours of Work — Groups 1, 2, & 4
  11 a) thru b)    
Normal Workweek
  13 d)    
Schedule Less than 40 Hours Inadvertently
  13 e)    
Shift Work Scheduling (when deemed necessary)
  13 a) & d)

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                  PARAGRAPH    
“Shift Work” – Definition of
  13 g) ARTICLE 16  
JURY SERVICE
       
Afternoon Court Appearance
  49 a) & 51 a)    
Morning Court Appearance
  48 a)    
Proof of Service
  50 a) ARTICLE 19  
LAYOFF NOTICE — SEPARATION ALLOWANCE
       
Eligibility for Separation Allowance
  57 a) & b)    
Labor Dispute Lay Off
  54 c)    
Lay Off Notice
  54 a) thru b)    
Lay Off Separation Allowance
  55 a)    
Method of Payment of Separation Allowance
  56 a) thru d) ARTICLE 20  
LEAVE OF ABSENCE
       
Leave of Absence for Personal Reasons
  58 a)    
Leave of Absence for Union Conventions
  58 b)    
Leave of Absence to Accept Employment with the Union
  58 c)    
Leave of Absence For Newborn Child
  58 d)    
Public Office Appointment
  58 e) ARTICLE 1  
MANAGEMENT RIGHTS
  5 ARTICLE 30  
OCCUPATIONAL & NON-OCCUPATIONAL ACCIDENT AND SICKNESS PLAN
       
Benefit Amount
  73 b)    
Benefit Payment
  73 a)    
Benefits Based on Normal Workweek
  72 a)    
Benefits during Vacation
  78 a) & b)    
Benefits during Work Stoppage
  77 a)    
Benefits while on Probation
  73 c)    
Duration of Benefits
  71 a) thru c)    
Exclusion from Benefit
  73 a) thru b)    
Late Report of Occupational Disability
  74 c)    
Plant Service Credit
  70 b)    
Proof of Disability
  74 a)    
Reporting Absences
  74 b)    
Sick Pay
  70 a)    
Withholding Benefit Payment
  76 a) ARTICLE 4  
OVERTIME AND PREMIUM TIME REGULATIONS
       
Bypassing (Scheduling Overtime)
  22 a) thru c)    
Call-outs
  15 a)    
Holiday — (No Work No Pay)
  16 d) 4)    
Holiday Pay
  16 a) thru d)    
Holidays
  16 a)    
Maintenance Overtime
  23 a) thru f)    
Overtime Equalization
  18 a)    
Overtime Meals
  19 a) thru c)    
Overtime Premium
  14 a) thru d)    
Shift Differential
  20 a)    
Transportation Due To Overtime
  21 a)

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                  PARAGRAPH ARTICLE 12  
PAY DAY
       
Pay Day
  43 a)    
Pay Errors Less or More than 8 Hours
  43 d)    
Paychecks Direct Deposit
  43 b) ARTICLE 13  
PHYSICAL EXAMINATIONS
       
Employees Physically Unfit to Perform in Assigned Classification
  44 c)    
New Hire Physicals
  44 a)    
Periodic Examinations of Employees
  44 b)    
X-rays
  44 e) ARTICLE 24  
PRODUCTIVITY STATEMENT
  64 a) thru d) ARTICLE 18  
REPLACEMENT OF CLOTHING
       
Clothes Damaged
  53 a) ARTICLE 21  
SANITATION AND SAFETY
       
Clip-On Glasses
  60 g)    
Colored Safety Glasses — Operating Engineers
  60 b)    
Commercial or Chauffeur’s License — Operating Engineers
  59 a)    
Eye Exam Payment
  60 c)    
Non-Prescription Safety Sunglasses
  60 d)    
Postponing Job for Safety Reasons
  59 b)    
Prescription Glasses for Welders
  60 f)    
Prescription Safety Glasses
  60 a)    
Safety Shoes
  61 a) ARTICLE 6  
SENIORITY
       
Bidding — Bidding Rules
  33 c)    
Bidding- No Qualified Bidders
  33 f)    
Bidding- Selection of Job Posting Bidders
  33 b)    
Grievances — Seniority
  37 a)    
Job Bidding
  33 a)    
Job Posting
  33 a) 1)    
Layoffs
  35 a) thru e)    
Rehiring
  36 a) thru b)    
Seniority — Four Types
  25 b)    
Seniority — Promotions
  32 a) & b)    
Seniority (Military Service)
  28 d)    
Seniority (Probationary Period)
  26 a) & 28 a)    
Seniority (Promoted to Supervision —Permanent or Temporary)
  28 b) & c)    
Seniority Consolidation of Departments
  31 a)    
Seniority Definition of Group. Dept., & Maintenance
  25 c)    
Seniority Draw
  26 c)    
Seniority for Straight Day Employment
  26 b)    
Seniority is Equal
  26 d)    
Seniority List
  27 a)    
Seniority Lost
  29 a)    
Seniority Unbroken
  30 a)    
Transfers — General Mechanic
  34 c)    
Transfers — Operating Unit Reduced Operation or Shut Down
  34 b)

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                  PARAGRAPH    
Transfers of Surplus Group 1 employees
  34 a) ARTICLE 9  
STAFFING OF NEW UNITS
  40 ARTICLE 10  
STEWARDS
       
Department Designation
  41 a)    
Steward (Benefits)
  41 e)    
Steward (Disciplinary Action)
  41 d) ARTICLE 26  
STRIKES AND LOCKOUTS
  66 a) thru e) ARTICLE 7  
SUPERVISORS DOING HOURLY WORK
  38 a) & b) ARTICLE 15  
UNION REPRESENTATIVES
  46 a) ARTICLE 2  
UNION SECURITY
       
Dues Check Off
  6 a)    
Dues Check Off Cancellation
  7 a) & 8 a) thru c)    
Dues Payment to Signatory Unions
  9 a) & b) ARTICLE 5  
VACATION
       
Bank Days — Vacation
  24 k)    
Choice Designation — Vacation
  24 j)    
Credit Accumulation
  24 b)    
Hold Over — Vacation
  24 o) thru q)    
Military Service — Vacation
  24 r)    
Seniority/Preference — Vacation
  24 i)    
Sick Leave — Vacation
  24 s)    
Vacation (Dismissal or Voluntary Separation)
  24 t)    
Vacation (Resigns Without Notice Or Discharged for Cause)
  24 u)    
Vacation Accrual Year Cutoff
  24 z)    
Vacation Back-to-Back
  24 y)    
Vacation Falls on Holiday
  24 v) thur w)    
Vacation Pay — Computed
  24 g)    
Vacation Period
  24 h)    
Vacation Splits
  24 l)    
Vacation Transfers Between Groups or Crafts
  24 x)    
Vacations 5, 10, 20 & 30
  24 c) thru f)    
Vacations less than 5 years & probationary period)
  24 a) ARTICLE 31  
WORK ASSIGNMENTS
  79 a) thru c) ARTICLE 8  
WORK CLASSIFICATIONS
  39 a)

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                  PAGE NO. EXHIBIT A  
12 HOUR SHIFT AGREEMENT
  A-i thru Axiii    
Day Jobs
  A-ii    
Extra Operators
  A-ii    
Wages
  A-ii    
Employee Benefit Plans, SIP, Pension, Life Insurance and Disability
  A-ii    
Overtime
  A-ii thru A-iii    
Mandatory Overtime Procedure
  A-iv    
Charging of Overtime
  A-iv    
Hours of Work
  A-iv    
Overtime and Holidays
  A-v thru A-vi    
Holiday and Holiday Pay
  A-v    
Shift Differential
  A-v thru A-vi    
Vacation
  A-vi    
Seniority
  A-vii    
Jury Service
  A-vii    
Funeral Leave
  A-vii    
Occupational & Non-Occupational Accident and Sickness Plan
  A-vii    
Wage Adjustment
  A-vii thru A-xi    
Interpretation of Attachment E
  A-xii EXHIBIT B  
WAGE RATES
  B-i thru B-ii EXHIBIT C  
EMPLOYEE BENEFITS
  C-i thru C-iii    
NO JURISDICTION SUPPORTING INFORMATION
   

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ARTICLES OF AGREEMENT
between
STERLING CHEMICALS, INC.
ITS SUCCESSORS AND ASSIGNS
and
THE TEXAS CITY, TEXAS METAL
TRADES COUNCIL, AFL-CIO
of TEXAS CITY, TEXAS

1   This agreement is made between Sterling Chemicals, Inc., its successors and
assigns, authorized to do business in Texas, hereinafter referred to as the
COMPANY, and the Texas City, Texas Metal Trades Council, AFL-CIO, of Galveston
County, Texas, hereinafter referred to as the UNION. It is agreed by the
following unions signatory to this Agreement that said Council is their
authorized representative for the purpose of negotiating and administering this
Agreement and for the purpose of modifying, amending, or waiving any of the
provisions of this Agreement:

      Electrical Workers Local No. 527
Operating Engineers No. 347
Painters and Paperhangers No. 1008
International Association of Machinists No. 6
Teamsters Local No. 968
Carpenters Local No. 973
International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths,
Forgers and Helpers No. 132
Heat & Frost Insulators and Asbestos Workers No. 22
Pipefitters Local No. 211
Operating Engineers No. 450

BASIC PRINCIPLES

2   The COMPANY and the UNION have a common and sympathetic interest in the
progress of industry. Therefore, a working system and harmonious relations are
necessary to improve the relationship between the COMPANY and the UNION, and the
Public. Progress in industry demands a mutuality of confidence between the
COMPANY and the UNION. All will benefit by a continuous peace and by adjusting
any differences by rational, common sense methods. The purpose of this Agreement
is to establish harmonious relations for the advancement of the mutual interest
of the parties in continuing and improving the manufacture and production of
products at said Texas City plant. The COMPANY and UNION agree that they will
not discriminate in any manner against any employee because of race, color,
religion, age, sex, national origin, disability or veteran status. It is the
understanding of the parties to this agreement that any reference in said
agreement to the masculine gender is understood to also include those employees
of the feminine gender. Now, therefore, in consideration of the mutual promises
and agreements herein contained, the parties hereto agree as follows:

RECOGNITION

3   The COMPANY hereby recognizes the Texas City, Texas Metal Trades Council as
the exclusive bargaining agency for all production and maintenance employees,
but excluding supervisory, technical, clerical, plant protection employees with
respect to rates of pay, wages, hours of work, and other conditions of
employment. Supervisory employees, in the Production and Maintenance
Departments, are those who are above the classification listed in Exhibit B, a
part of this contract.

SCOPE OF AGREEMENT

4   This Agreement constitutes the sole and entire Agreement between the
parties. It supersedes all prior Agreements, oral or written, and expresses all
obligations of or restrictions imposed on the respective parties during its
term. The waiver of any breach, term, or condition herein by Sterling shall not
constitute a precedent for future waiver of any breach, term, or condition.

 

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ARTICLE 1
MANAGEMENT RIGHTS

         
5
  a)   Except as expressly modified by a specific provision of this Agreement,
all the authority, rights, and powers which the COMPANY had prior to the signing
of this Agreement are retained by the COMPANY and remain exclusively and without
limitation the rights of management. Only express modifications contained in
specific provisions of this Agreement constitute limitations upon such
authority, rights, and powers.
 
       

  b)   The Union recognizes that the Employer has the right, on its own
initiative, to perform any function of management at any time, so long as it
does not violate any express provision of this Agreement.
 
       

  c)   The following acts are functions of management:

  1)   Those acts which are not within the area of collective bargaining as
required by the National Labor Relations Act;     2)   Those acts which are
usually exercised by other employers; and     3)   Those acts which management
should exercise in order to properly manage the business.

ARTICLE 2
UNION SECURITY

              6   Section 1
 
           

  a)   The COMPANY agrees to honor check-off cards signed by individual
employees, on forms agreed to by the COMPANY and the UNION, which authorize the
COMPANY to deduct from the employee’s first paycheck each month the regular
monthly UNION dues of the employee, or initiation fees as may be authorized by
the employee.    
 
           

  b)   The COMPANY agrees to notify the UNION of all newly employed personnel
covered by this Agreement. Such notice shall be in writing and shall state the
name of the employee, their classification, their date of hire, their address
and telephone number.           7   Section 2
 
           

  a)   Check-off authorizations now in effect shall become irrevocable in
accordance with the terms of Section 3 of this article unless written notice of
revocation from the employee is received by the COMPANY within the fifteen
(15) day period prior to the expiration date of this Agreement. A notice of this
provision will be posted by the COMPANY and the UNION.     8   Section 3
 
           

  a)   Check-off authorizations shall be irrevocable for the period of one
(1) year, or until the termination of the Agreement, whichever occurs sooner. It
is further agreed that this authorization shall be automatically renewed, and
shall be irrevocable for successive periods of one (1) year each unless written
notice by registered mail of revocation from the employee is received by the
COMPANY not more than twenty (20) days nor less than ten (10) days prior to the
expiration of each period of one (1) year.    
 
           

  b)   Employees withdrawing from a signatory union may cancel their dues
deduction authorization at any time by serving notice by letter to the COMPANY
canceling such authorization along with letters of approval from the UNION and
the signatory union to which the dues and initiation fees were to be forwarded.
   
 
           

  c)   Employees who, as a result of a change in job assignment, transfer from
one signatory union to another signatory union, may cancel any prior dues
deduction authorization by submitting to the COMPANY a    

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      new dues deduction authorization. Such new authorization must be
transmitted through the signatory union or its designated representative.      
    9   Section 4
 
           

  a)   Money deducted from paychecks as authorized herein for employees
bargained for by the UNION will be forwarded to each individual union signatory
to the Agreement. The UNION will furnish the COMPANY a list of signatory unions
showing the address and the individual to whom the check should be forwarded and
the regular monthly union dues of each Union. This check will be forwarded not
later than the 20th of the month in which the money is deducted, along with a
summary sheet in duplicate showing the name of each employee from whose paycheck
dues and initiation fees were deducted and the amount deducted.    
 
           

  b)   In the event a signatory union ceases to be affiliated with UNION for any
reason, and UNION officially notifies COMPANY of same, the authorization of
employees for deductions of dues and initiation fees for such Union whose
affiliation with UNION has ceased, shall be immediately and automatically
revoked and any monies deducted from checks of said employees and held by the
COMPANY will be refunded to the employee from whose check the deduction was
made.    
 
            10   Section 5
 
           

  a)   In the event applicable laws governing union security are liberalized to
the extent that they allow a Maintenance of Membership clause, the COMPANY
agrees to meet with the UNION at that time and agree on the terms of a
Maintenance of Membership clause.    

ARTICLE 3
HOURS OF WORK

              11   Section 1 - All Employees in Seniority Groups 1, 2 and 4
 
           

  a)   The period of time from 6:30 a.m. to 6:30 a.m. the following day shall
constitute a payroll day for all employees in the seniority groups above. The
period of time composed of seven (7) consecutive payroll days, extending from
6:30 a.m. Monday to 6:30 a.m. the following Monday, shall constitute a regular
work week at this plant for all employees in the seniority groups above.    
 
           

  b)   The hours of work shall be as follows:    

1)   Day Workers — Eight (8) consecutive hours of work per day, exclusive of a
thirty (30) minute lunch period, shall constitute a day’s work. Hours of work
shall be from 6:30 a.m. to 3:00 p.m. Employees will begin their unpaid thirty
(30) minute lunch period during a one and a half (1.5) hour window beginning
four (4) hours after the start of the shift. If the lunch break starts after the
window for work related reasons, the employee will be paid the appropriate
overtime rate for the lunch period.   2)   Eight Hour Shift Workers — Eight
(8) consecutive hours of work per day shall constitute a day’s work. Five
(5) eight (8) hour shifts in any one workweek shall constitute a week’s work.
Shifts shall normally be from 6:30 a.m. to 2:30 p.m., 2:30 p.m. to 10:30 p.m.,
and 10:30 p.m. to 6:30 a.m. Shift workers will be permitted sufficient time to
eat during their shift without loss of pay for such period.   3)   12-Hour Shift
Workers - Terms of the 12-Hour Shift Agreement are included in Exhibit A of this
Agreement.

              12   Section 2 - All Employees in the Maintenance Crafts Seniority
 
           

  a)   The period of time from 7:30 a.m. to 7:30 a.m. the following day shall
constitute a payroll day for all employees in the seniority groups above.    

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  b)   The period of time composed of seven (7) consecutive payroll days,
extending from 7:30 a.m. Monday to 7:30 a.m. the following Monday, shall
constitute a regular work week at this plant for all employees in the seniority
groups above.    
 
           

  c)   The hours of work shall be as follows:    

1)   Day Workers — All Employees in the Maintenance Crafts Seniority — Eight
(8) consecutive hours of work per day, exclusive of a thirty (30) minute lunch
period, shall constitute a day’s work. Hours of work shall be from 7:30 a.m. to
4:00 p.m. Employees will begin their unpaid thirty (30) minute lunch period
during a one and a half (1.5) hour window beginning four (4) hours after the
start of the shift. If the lunch break starts after the window for work related
reasons, the employee will be paid the appropriate overtime rate for the lunch
period.   2)   Shift Workers — Maintenance employees assigned to shifts will be
permitted sufficient time to eat during their shift work without loss of pay for
such period.

              13   Section 3
 
           

  a)   Employees may be scheduled as shift workers if and when required in the
operation of the plant, and when so working, shall be governed by the above
conditions relating to a shift worker.    
 
           

  b)   Straight day Maintenance employees temporarily assigned to shift work,
when being reassigned to straight days, will normally be reassigned at the
beginning of the work week.    
 
           

  c)   Special shift schedules and start/stop times to support non-routine
operations, shutdowns, turnarounds and emergency situations will be determined
by management after consultation with the UNION. Also after consultation with
the UNION, Management may implement modified overtime regulations for such
special schedules to allow for greater than 8 hours of straight time per day not
subject to the OT provisions of Article 4, Section 1.) a). Under such special
schedules, employees will be paid the applicable overtime rate for all hours
worked after 40 straight time hours in a week, as well as all eligible hours
worked in a week outside of the pre-determined special schedule, in accordance
with other contractual overtime provisions. For example: Employees put on a
special schedule of 4-10’s, Monday through Thursday, could receive overtime
rates only outside of the four pre-scheduled 10-hour blocks.    
 
           

  d)   The normal workweek shall consist of forty (40) hours of work and the
normal workday of eight (8) hours of work providing work is available.    
 
           

  e)   In the event an employee is inadvertently scheduled for less than the
normal workweek, the employee will be allowed to make up the difference after
reporting the discrepancy to supervision. The employee will be allowed to make
up such difference only to the point where their earnings equal the straight
time earnings for a normal workweek.    
 
           

  f)   An employee may be excused without pay for a period up to three (3) hours
at the beginning or end of the day shift, Monday through Friday (except holidays
falling Monday through Friday) for the purpose of a doctor or dentist
appointment. Such excuse will be granted if it is scheduled with enough advance
notice so that proper relief can be scheduled and the absence does not impair
plant operations.    
 
           

  g.)   The term “shift work” shall mean any schedule that has built into it a
regular, repeating pattern of variance in the scheduled days of rest, the core
hours of work, or both.    
 
           

  h.)   Hours and days of work for Materials Handling (Group 4) may be modified
at Management’s discretion based on business needs after consultation with the
UNION. This may include changes to the days worked in a week and/or the number
of hours scheduled per day/shift, however, no employee will be scheduled for
fewer than an average of 40 hours per week. Management will attempt to minimize
disruptions to employees’ lives due to such warranted changes in start and stop
times.    

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ARTICLE 4
OVERTIME AND PREMIUM TIME REGULATIONS

              14   Section 1
 
           

  a)   Except as modified by Article 3, section 3, c), an employee shall be paid
at the rate of one and one-half (1-1/2) times his regular rate for all hours
worked by him in excess of eight (8) in any one (1) day consisting of the
twenty-four (24) hour period beginning when an employee begins to work or report
for work in accordance with instructions, which ever is earlier.    
 
           

  b)   An employee shall be paid at the rate of one and one-half (1-1/2) times
his regular rate for all hours worked by him in excess of forty (40) in any
workweek.    
 
           

  c)   Time and one-half (1-1/2) shall be paid for the first 8-hour period
worked following a change of schedule unless the employee is given at least
thirty-six (36) hours notice in advance of the beginning of his newly assigned
hours. For the purpose of computing weekly overtime, hours for which premium pay
is payable under the provisions of this paragraph will not be counted in the
total hours worked by an employee in a given workweek.    
 
           

  d)   When an employee works a minimum of 8 hours on all their scheduled days
of rest within a payroll week, they will be paid for all hours worked on the
last day of rest at the rate of two (2) times their base rate of pay.    
 
            15   Section 2 - Call-outs
 
           

  a)   An employee called-out for work with less than 4 hours notice outside his
regular schedule shall be paid for the actual time worked at not less than one
and one half (1-1/2) times his straight time rate if the length of the
assignment is 2.5 hours or greater. If the assignment is less than 2.5 hours in
duration and the call-out work does not immediately precede or immediately
follow his regularly scheduled work period, he shall receive the equivalent of
four hours times his straight time rate.    
 
           

  b)   The COMPANY shall have the right to institute an on-call system for
calling out and contacting employees.    
 
            16   Section 3 - Holidays
 
           

  a)   Two and one-half times will be paid for work performed on the following
holidays: New Year’s Day, President’s Birthday, Good Friday, Easter Sunday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Friday after
Thanksgiving Day, Christmas Eve and Christmas Day.    
 
           

  b)   For day workers: If any of these holidays fall on a Sunday, the Monday
immediately following shall be recognized as the holiday. If holidays fall on
Saturday, they will be observed on the preceding Friday. The exception shall be
Christmas Eve, which shall be observed on the last working day before Christmas.
   
 
           

  c)   For shift workers: All holidays listed above will be recognized on the
calendar day on which it falls. For the purpose of determining pay for an
employee who works on a day observed as a holiday which falls on one of the
employee’s scheduled days of rest, “regular scheduled hours of work” for that
day shall mean the same hours the employee was assigned to work on the last
regularly scheduled day of work immediately prior to the holiday. Payment will
be made according to (d) 1 below.    
 
           

  d)   Employees will be paid for the holidays listed above not worked an amount
equivalent to eight (8) times the employee’s straight-time hourly rate, subject
to the following conditions:    

1)   Such pay shall be computed on the basis of payroll day and not calendar
day.   2)   To be eligible for such pay, an employee must report for work on
their last regular scheduled working day immediately preceding the holiday and
their first regular scheduled working day immediately following this holiday.

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3)   For purposes of determining eligibility for holiday pay only under this
section, employees absent either the day before, the day after, or both days,
because of vacation, death in the immediate family, occupational injury or
illness while under a doctor’s care, jury duty or excused absence will be
considered as having worked on such day or days and will be entitled to holiday
pay provided they have complied with the other requirements of Article 4,
Section 3. Immediate family will be interpreted to mean those members of the
family covered under Article 25 — Funeral Leave.   4)   An employee who is
instructed to work on a holiday but fails to report will receive no pay for the
holiday.   5)   Payment for holidays not worked shall not apply to employees on
approved leave of absence, off because of sickness or occupational injury
(unless under a doctor’s care), or layoff.

              17   Section 4
 
           

  a)   In the event any hours worked fall within two or more classifications
listed above, only one application can be made.    
 
            18   Section 5
 
           

  a)   Employees shall not be laid off during regular working hours to deprive
them of any time, which they have gained by working overtime. At one (1) week
intervals, the COMPANY will make every reasonable effort to post overtime
equalization lists in each zone or departments and to distribute such overtime
work as equally as practicable.    
 
            19   Section 6 - Overtime Meals
 
           

  a)   If an employee works more than two hours immediately following his
scheduled working period, he shall be provided a meal. The employee will be
afforded an opportunity on COMPANY time to eat meals so supplied at the time he
is entitled to same, or as soon thereafter as the condition of the work permits.
   
 
           

  b)   Any employee called out (with less than four (4) hours’ notice), will be
supplied with a suitable meal at the COMPANY’S expense after four (4) hours of
work. If the employee continues working on overtime, outside his regular or
scheduled shift, he will be furnished a meal every four (4) hours. If the
employee works into his scheduled shift, one additional mid-shift meal will be
furnished from the COMPANY’S frozen food supply if the employee was/is otherwise
unable to provide his own lunch due to the call-out.    
 
           

  c)   Employees scheduled on overtime, other than provided in (a) or (b) above,
will provide their own meals.    
 
            20   Section 7 - Shift Differential
 
           

  a)   Shift differential shall be added to the wage rate of the employees
required to work during the shift indicated in the following schedule for each
hour worked during such periods:    

1)   Eight Hour Shift Workers:

         
Days No
  differential
Evenings
  50¢ differential
Graveyards
  $1.00 differential

2)   Day Workers

         
Days No
  differential
Evenings
  50¢ differential
Graveyards
  $1.00 differential

3)   For shifts longer than 8 hours in duration:

         
Days No
  differential
Nights
  $1.00 differential

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              21   Section 8 - Transportation
 
           

  a)   The COMPANY will provide rides home for employees who are without
transportation and are held over on overtime past their regular scheduled shift.
The COMPANY further agrees that employees not held over but left without a ride
home due to their driver being held over will be provided a ride with the
understanding that only one ride to one destination will be provided. Should
evidence of abuse or fraud arise, the COMPANY reserves the right to discontinue
the practice of providing rides to those passengers not held over.    
 
            22   Section 9 - Bypassing
 
           

  a)   When an employee has worked sixteen (16) continuous hours and up to or
within the employee’s regular shift, the employee will be allowed to go home and
will be paid at the straight-time for the remaining hours of the employee’s
regular shift, or the employee may be bypassed for overtime if it will require
that he be sent home with pay for his regularly scheduled shift. This decision
will be made by supervision.    
 
           

  b)   The COMPANY agrees that in scheduling overtime, no employee shall be
bypassed in the assignment of overtime to work solely to avoid payment of
double-time, except as referenced above.    
 
           

  c)   The “rain-out” clause in the contractor’s contract or straight-time work
on Saturday, Sunday, or holidays as may be provided under the contractor’s
contract, will not be used to avoid Sterling employee’s overtime.    
 
            23   Section 10 – Maintenance Overtime
 
           

  a.)   Maintenance overtime will normally be scheduled and assigned from within
the zone group.    
 
           

  b.)   If unable to fill the overtime need, volunteer employees from other
zones may be offered the overtime. If unable to fill the overtime need,
employees may be conscripted from the zone first, and then from the rest of the
plant.    
 
           

  c.)   For job continuity, jobs started by contractor personnel may, at the
COMPANY’S discretion, be worked to completion by the contractor. Also for job
continuity purposes, Management may, at its discretion, decide to hold over the
Sterling craftsmen who started a job, in order to complete it on overtime.    
 
           

  d.)   The COMPANY shall have the right to institute an on-call system for
contacting employees for overtime.    
 
           

  e.)   Shutdown/Turnarounds — The COMPANY reserves the right to contract
shutdown/turnaround work. Employees from the affected zone group may volunteer
or be conscripted to work parts of the shutdown.    
 
           

  f.)   Management shall have the right to set start and end times for
shutdown/startup related work.    

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ARTICLE 5
VACATION

         
24
  a)   The vacation allowance for employees with less than five years of service
shall be eighty (80) hours, in which case vacation credits will be given at a
rate of six and two-thirds (6 2/3) hours per month of service for a maximum of
eighty (80) hours. Fractional credits shall be figured to the next 8-hour
increment. Vacation credits are not accumulative during the probationary period
specified in Article 6, Section 2, but after such period the new employee’s
vacation credits shall be calculated from the date of employment.
 
       

  b)   Vacation credits accumulated after January 1st of the current year shall
not be taken until January 1st of the following year. Vacation must be taken in
full shift increments.
 
       

  c)   Each employee who completes five (5) or more years of continuous service
will be granted one-hundred twenty (120) hours of vacation per year. Such
vacation may be taken at any time during the vacation year in which the employee
reaches the fifth (5th) year of continuous service. After receiving a first
vacation of one-hundred twenty (120) hours, the employee will accrue ten
(10) hours vacation per month of service or a maximum of one-hundred twenty
(120) hours per year.
 
       

  d)   Each employee who completes ten (10) or more years of continuous service
will be granted one-hundred sixty (160) hours of vacation per year. Such
vacation may be taken at any time during the vacation year in which the employee
reaches the tenth (10th) year of continuous service. After receiving a first
vacation of one hundred sixty (160) hours, the employee will accrue thirteen and
one-third (13-1/3) hours of vacation per month of service or a maximum of one
hundred sixty (160) hours per year.
 
       

  e)   Each employee who completes twenty (20) or more years of continuous
service will be granted two-hundred (200) hours of vacation per year. Such
vacation may be taken at any time during the vacation year in which the employee
reaches the twentieth (20th) year of continuous service. After receiving a first
vacation of two-hundred (200) hours, the employee will accrue sixteen and
two-thirds (16-2/3) hours of vacation per month of service or a maximum of
two-hundred (200) hours per year.
 
       

  f)   Each employee who completes thirty (30) or more years of continuous
service will be granted two-hundred forty (240) hours of vacation per year. Such
vacation may be taken at any time during the vacation year in which the employee
reaches the thirtieth (30th) year of continuous service. After receiving a first
vacation of two-hundred forty (240) hours, the employee will accrue twenty
(20) hours of vacation per month of service or a maximum of two-hundred forty
(240) hours per year.
 
       

  g)   The vacation pay for employees entitled to vacation is computed on the
basis of rate of pay per hour at the time of vacation at straight-time.
 
       

  h)   Vacation period shall be from January 1 through December 31 each year.
 
       

  i)   The employee with the greatest bargaining unit seniority within the group
or craft, wherever possible, shall be allowed preference as to time of vacation
within each department and within each maintenance zone. When an employee elects
to split their vacation, then they shall be allowed seniority preference only on
one (1) portion of the split vacation until all employees have exercised their
seniority preference.
 
       

  j)   Prior to January 1st, employees shall designate their choices of dates
for their vacations and a vacation schedule for the year will be made up in
accordance with other provisions of this article.
 
       

  k)   An employee may place up to eighty (80) hours (ten days) of their
vacation in a vacation bank prior to January 1 with such days to be taken at any
time during the vacation year on a first-come basis in an individual operating
unit, in a maintenance craft within a zone, or in any other department. Five
(5) bank days may be taken with one (1) hour’s notice. Twenty-two (22) hours’
notice for the other five (5) bank days will be required except in cases of
emergencies. All normal requests for bank days must be made to the employee’s
supervisor. Emergency requests will be subject to approval by the department
head or designee. Bank days will be granted only when, in the judgment of the
COMPANY, such days do not conflict or impair plant operations. Bank days will be
taken in any combination of whole days without

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      restriction by vacation splits. All bank days must be taken during the
vacation year and shall not be cumulative. When, in the opinion of the COMPANY,
it appears that vacation bank days are accumulating in a group, department or
craft and will create a problem near the end of the vacation year, employees
will be requested to schedule their remaining bank days in order not to conflict
with or impair plant operations.
 
       

  l)   Vacation may be split into as many periods as the employee has weeks of
vacation. In calculating vacation splits, the bank days will constitute one
split. Employees with ten (10) or more years of service will be eligible for one
(1) additional split. Vacation schedules established by January 1st will not be
altered after this date to give preference to the senior employee. Employees
shall be permitted to begin or end their vacations on a regularly scheduled day
off.
 
       

  m)   Vacations shall be given employees on such dates or as near as may be
practicable when, in the judgment of the COMPANY, such dates do not conflict
with or impair plant operations.
 
       

  n)   Vacation during any vacation period must be taken during the vacation
period and shall not be cumulative. Requests for exceptions to this requirement
will be considered by management on a case by case basis.
 
       

  o)   For the purpose of taking extended vacation, employees with five (5) or
more years of service will be permitted, one (1) time during the life of this
contract to elect to hold over forty (40) hours of vacation from one
(1) vacation period and take it during the next vacation period in conjunction
with the full vacation due that vacation period. Employees desiring to exercise
this option will so advise the COMPANY during the vacation-scheduling period in
the year in which they desire to hold over the forty (40) hours.
 
       

  p)   Employees with ten (10) to nineteen (19) years of service have the option
to hold over forty (40) hours of vacation from one (l) vacation period and take
it during the next vacation period. Employees desiring to exercise this option
must notify the COMPANY by November 1st prior to the end of the vacation year in
which it was originally expected to be taken. This request does not increase the
number of bank days.
 
       

  q)   An employee who is “Combo 80” (minimum age 55 with 80 points) or who has
at least 20 years of COMPANY service, may carry over from one vacation period to
the next up to eighty (80) hours of vacation in forty (40) hour increments. A
maximum of two hundred forty (240) hours may be carried over in this manner.
 
       

  r)   Any employee leaving the service of the COMPANY entering State or Federal
military service shall so notify the COMPANY, and shall be paid the vacation
credits earned up to the time of induction. Such employee shall not be taken off
the payroll until actually inducted in military service, State or Federal.
 
       

  s)   In calculating time for vacation credits, no vacation will accrue after
the sixth month of sick leave or otherwise while not actively at work.
 
       

  t)   In case an employee is dismissed or leaves the COMPANY’S service
voluntarily, they will receive vacation pay to the extent of the credits
accumulated at the time of their dismissal or voluntary separation.
 
       

  u)   In case an employee resigns without notice or is discharged for cause,
they will receive only pay for vacation earned during the previous year but not
taken. Such employees will not be eligible to receive vacation accrued in the
current vacation year up to the time of their removal from the payroll.
 
       

  v)   When a holiday is observed on an employee’s scheduled vacation day, they
will have the option of an extra day vacation or an extra eight (8) hours’ pay
at their regular straight-time rate.
 
       

  w)   When a day of vacation falls on a holiday and the employee elects to take
an extra day of vacation, they may elect to take it the last working day
immediately prior to their scheduled vacation.
 
       

  x)   When an employee transfers from one craft or group to another, the
employee will carry with them their vacation as scheduled for that year. The
transfer of this vacation schedule will not interfere with the rights of any
other employee to their vacation as previously scheduled.

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y)   Back-to-back vacations from one vacation year to the next will be allowed
under the following conditions:

1)   The period of vacation must be for six or more weeks.   2)   The employees
who desire to schedule vacation in a continuous period beginning in one vacation
year and ending in another vacation year must schedule such vacation prior to
January 1 of the first vacation year.   3)   If, on the basis of seniority, they
will be allowed to schedule their vacation immediately prior to the end of the
vacation year, then they shall be granted vacation preference for the continuous
portion of the vacation, which ends the next vacation year.

z)   For employees hired before January 1, 1996, vacation year allotment will be
based on years of service accrued by March 31 following the end of the vacation
year. For all other employees, vacation year allotment will be based on years of
service accrued by December 31 of the vacation year.

ARTICLE 6
SENIORITY

25   Section 1 — Definitions

a)   By the term “seniority” is meant the status of the employee’s length of
service as such.   b)   Four types of seniority shall be recognized:

1)   Group Seniority. This shall consist of the seniority accumulated by an
employee working in any of the groups listed below.   2)   Department Seniority.
For matters directly affecting any of the departments in Group 1, employees in
their respective operating departments shall be listed on the Seniority List by
order of Group 1 seniority within their respective department.   3)  
Maintenance Craft Seniority. This shall consist of the seniority accumulated by
an employee in the particular maintenance craft in which the employee is
working.   4)   Bargaining Unit Seniority. This shall consist of seniority
accumulated by an employee in any of the groups or crafts listed below.

c)   For purposes of paragraph (b) above, group, department, and maintenance
craft seniority shall cover the following:

1)   Group Seniority

i)   Group 1 - All hourly employees in the following operating departments and
any others which may be added and which are designated as operating departments
by the COMPANY: Styrene, Nitriles, Acetic/Methanol/Plasticizers, and Utilities.
  ii)   Group 2 - All hourly employees of the Laboratory.   iii)   Group 4 - All
hourly employees of the Materials Handling Department.

2)   Department Seniority

i)   For matters directly affecting departments in Group 1, employees in the
various operating departments shall be listed on department seniority lists by
Group 1 seniority within their respective departments. Any reference to
departmental seniority in other sections of the contract will refer to the Group
1 seniority of employees within the department.

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3)   Maintenance Craft Seniority

i)   All hourly employees in each of the maintenance crafts. The maintenance
crafts shall include, but shall not be limited to the following titles:

     
Pipefitters
  Carpenters
Asbestos Workers
  Instrument/Electrical
Boilermakers/ Ironworkers
  Machinists
Painters
  Operating Engineers
Laborers
   

26   Section 2 — Commencement

a)   All new employees shall be required to work a trial or probationary period
of one-hundred eighty (180) calendar days continuous service before the
seniority rules outlined herein shall apply to them, and after such period, the
new employee’s seniority shall be retroactive to the date they were employed.  
b)   Straight-day employment shall be determined on the basis of senior
qualified. New employees will be required to go on shift within not more than
ninety (90) days after employment.   c)   When employees are hired into a group
or craft on the same date, their order on the seniority lists shall be
determined by “lot”.   d)   In a situation where departmental seniority is
equal, the group seniority shall govern, and when group or craft seniority are
equal, seniority on the first day worked in the bargaining unit shall govern.

27   Section 3 — Seniority Lists

a)   The COMPANY agrees to compile and furnish the UNION a seniority list
quarterly, showing the seniority of each employee in bargaining unit, and the
COMPANY further agrees that it will add names and the seniority status of all
employees to said list after they have completed their probationary period and
are considered regular employees.

28   Section 4 — When Seniority Does Not Apply or Is Not Affected

a)   Seniority privileges shall not apply to probationary employees.   b)   The
Seniority of an employee shall not be affected when they are promoted to a
supervisory classification unless they remain in that capacity for a period in
excess of one hundred thirty-five (135) calendar days after which time they
shall lose their seniority as a member of the bargaining unit.   c)   The
seniority of an employee shall not be affected when they are promoted
temporarily to a supervisory classification unless they remain in that capacity
for a period in excess of one-hundred and eighty (180) working days in a
calendar year, after which time they shall lose their seniority as a member of
the bargaining unit.   d)   Employees, other than temporary employees, who are
called into active military service with any branch of the U. S. government,
shall not lose their seniority rights or their status with the COMPANY. Such
employees, however, shall file an application with the COMPANY for
reinstatement, within ninety (90) days after they have received an Honorable
Discharge from such service and if their physical and mental condition is
satisfactory, such employee shall be reinstated to their former position or one
to which their seniority entitles them, unless the COMPANY’S circumstances have
so changed as to make it impossible or unreasonable to do so.

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29   Section 5 — When Group, Department, Craft and Bargaining Unit Seniority is
Lost

a)   An employee under the following circumstances shall lose all seniority:

1)   When the COMPANY discharges them.   2)   When they quit the service of the
COMPANY of their own volition.   3)   When they are laid off for a period
exceeding eighteen (18) months without being recalled.   4)   When an employee
overstays their leave of absence without notifying the COMPANY and receiving an
extension of time.

30   Section 6 — When Group, Department, Craft, and Bargaining Unit Seniority is
Not Broken

a)   Seniority of the employee shall not be broken because of: (1) layoffs
(except as provided in Section 5 a) 3) of this article); (2) authorized leaves
of absence; (3) absences on account of occupational or non-occupational sick
leave not exceeding a period of twelve (12) months; (4) any cessation of work at
the COMPANY’S plant which is beyond the control of the employee not exceeding a
period of eighteen (18) months.

31   Section 7 — Consolidation of Departments

a)   When two or more departments are consolidated, the employees of these
departments may claim seniority in the consolidated department, it being
understood, however, that no employee may claim a classification in the
consolidated department higher than the one occupied in the department in which
the employee was previously employed.

32   Section 8 — Promotions

a)   When a new vacancy or new job occurs in a department or craft, such vacancy
or new job shall be filled from employees within that department or craft. When
skill and ability are approximately equal, then the senior qualified employee
shall fill the vacancy. If departmental seniority is equal, group seniority
shall govern.   b)   It is understood and agreed, however, that where skill and
ability are questioned, a senior employee may request the opportunity to fill
such vacancy or new job, in which event, the COMPANY agrees to consult with the
UNION concerning the matter. If it is determined that the request has merit, the
employee will be given a trial period of thirty (30) working days to prove to
the satisfaction of the COMPANY their skill and ability in such position.

33   Section 9 — Job Bidding Procedure

a)   When a permanent vacancy must be filled from outside the group or craft in
which the vacancy exists and no layoff exists for such group or craft, then the
job will be posted and filled in accordance with the following procedure:

1)   Job Posting — The job vacancy will be posted for seven (7) calendar days at
each of the main gates and on departmental bulletin boards within the plant.  
2)   Job Bidding — Each employee who desires to bid for the posted job may do so
by going to the Human Resources Department and signing a job bidding form within
the seven (7) day period.

i.)   Any employee who knows that they will be absent from the plant (for
reasons such as vacation, jury duty, etc.) may submit to the Human Resources
Department a pre-bid indicating those jobs they desire should a vacancy be
posted during their absence. The employee submitting a pre-bid will be
considered for a vacancy only if their pre-bid is received prior to the seven
(7) day period

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outlined in the job vacancy announcement. Each pre-bid shall be effective only
for the duration of the individual’s specific absence.

b)   Selection — Posted vacancies will be filled by the qualified bidder with
the greatest bargaining unit seniority. Successful bidders will be transferred
to their new job within 120 calendar days following the date of notification of
successful bid unless the COMPANY demonstrates, subject to the grievance and
arbitration provisions of the contract, that to move said successful bidder
would create a situation where the employee’s job cannot be manned in a safe
manner.

1)   The successful bidder will enter the new job classification at the
appropriate rate as indicated on the job vacancy announcement.   2)   The
provisions of Section 11 of this Article will apply to employees who are
transferred from one group or craft to another in accordance with the job
bidding procedure.

c)   Bidding Rules

1)   If the COMPANY determines that the senior employee bidding on a posted job
is not qualified, the employee may file a grievance contesting such
determination at Step 2 of the grievance procedure, which may, if not
satisfactorily resolved, be submitted to arbitration in accordance with the
arbitration procedure as outlined in Article 28. Nothing contained herein shall
interfere with the filling of the vacancy with another employee or with a new
hire, pending settlement of a grievance.   2)   Employees whose bids have been
denied on the basis of qualifications will not be considered again for transfer
to the same group or craft until they have shown proof that their qualifications
now fit the requirements of the job.   3)   A successful bidder will not be
eligible for another transfer until they have reached the top rate of their
classification and served an additional period of time equal to the time
required to reach the top rate.   4)   A successful bidder who refuses to accept
a tendered transfer will not be reconsidered for any other transfer for a period
of one (1) year after date of refusal.

d)   An employee who has been returned to their last previous group or craft for
inability to perform work of the new classification as provided in Section 11,
Article 6 of the Articles of Agreement will not be considered for any further
transfer for a period of one (1) year from the date of return to their last
previous group or craft.   e)   An employee shall be limited to one transfer to
a group or craft having a lower top rate or one transfer to group or craft
having an equal top rate. Subsequent lateral or downward transfer to another
group or craft shall be approved only when in the best interest of the employee
and by mutual agreement of COMPANY and UNION.   f)   No Qualified Bidders — If
none of the bidders are qualified for a posted job, or if there are no bidders,
the COMPANY shall have the right to fill the job as it sees fit.   g)  
Associate Operators — Associate operators will be selected based on criteria
determined at management discretion.

34   Section 10 — Transfers

a)   When surplus Group 1 employees exist in one operating department and
openings exist in another, transfers from the surplus department will be on a
volunteer-by-seniority basis. Those employees with the most Group 1 seniority in
the department being destaffed who wish to transfer out of the department to
another operating department will be allowed to volunteer. If not enough
employees volunteer to transfer, then the necessary number will be destaffed by
moving the junior employee based on Group 1 seniority within the department
being destaffed. In either case, the employee may be recalled to their original

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departments at the COMPANY’S discretion for up to one year from the date of
transfer. If employees are recalled to their original departments, those
transferred involuntarily will be recalled first, according to Group 1
seniority; those who transferred voluntarily will be recalled in inverse order
of Group 1 seniority.

b)   If an operating unit is shut down or temporarily under reduced operation
resulting in an excess of employees in any group, the UNION and the COMPANY will
meet and discuss a plan whereby these employees may be put to work so as to
prevent layoff. Employees in these groups may be assigned as helpers in
maintenance or in other groups.   c)   A General Mechanic classification is
established to increase the skill level of existing Carpenters, Asbestos
Workers, Laborers, Painters, and Stores Clerk. All current employees in these
classifications are eligible to receive training to qualify for transfer into
this classification.

35   Section 11 — Layoffs

a)   Layoffs in all groups and maintenance craft departments shall be in inverse
order of group, or craft seniority, depending on the need for employees in that
particular group or craft, it being understood that in any group or craft the
top classification will not be filled by an employee not having both skill and
ability and group or craft seniority.   b)   An employee transferred from one
group or craft shall retain seniority in their former group or craft but will
not be allowed to exercise their seniority, nor shall the COMPANY be allowed to
transfer the employee back to their old group or craft unless the employee is
being laid off for reduction in force or because their work performance has been
such that the employee would be laid off for inability to perform the work.   c)
  Employees being laid off for reduction in force may exercise the retained
seniority in their old group or craft to forestall layoff provided that they
meet the current qualification requirements of their previous job.   d)   An
employee being laid off for inability to perform the work prior to reaching top
pay in the classification in the group or craft to which they were transferred
will be considered to have accumulated seniority in their old group or craft up
to the time they were declared unable to perform such work and will be allowed
to exercise that seniority in their old group or craft to forestall layoff. An
employee transferring to a one rate job will be given a trial period of ninety
(90) days and, if unable to perform the work, will be considered to have accrued
seniority in their old group or craft during that period. They will be allowed
to exercise such seniority in order to forestall layoff.   e)   Discharge for
cause or termination for any reason other than those referred to above will not
be reason for the employee to exercise their seniority rights in the old group
or craft.

36   Section 12 — Rehiring

a)   Rehiring shall be in inverse order of layoffs. Employees being recalled
shall be notified by registered letter, return receipt requested, mailed to the
last address on record in the COMPANY’S files. If the COMPANY does not receive a
reply to said letter from the employee, within ten (10) days from the date of
its delivery as shown on the return receipt, stating that they will return to
work within ten (10) days from said delivery date; or, if they fail to so return
to work although they have sent such a reply, the next eligible employee will be
placed in the vacancy.   b)   In special cases, an employee, when replying
within ten (10) days to the COMPANY’S notice requesting them to return to work,
may be given an extension of time by the COMPANY beyond the ten (10) day limit
specified above. Failure to so reply or failure to so report to work will
abrogate all rehiring and seniority rights on the part of said employee. In case
of an emergency, the COMPANY may temporarily fill any vacancy without waiting
for any period of time to expire. After the emergency has expired, such
vacancies will be filled according to the regular procedure.   c)   Where the
period of recall is in the best judgment of the COMPANY to be less than ninety
(90) calendar days, the recalled employees may decline recall and not lose
subsequent recall rights.

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d)   If the period of recall is less than a 40 hour work week, the COMPANY is
not obliged to recall an employee for such assignment.

37   Section 13 — Grievances

a)   In all cases where the UNION or the employee claims that the principle of
seniority has been violated, such grievance must be taken up within ten
(10) days of the alleged violation and shall be handled according to the
procedure set out in Article 27 hereof. In the event the employee grieved is not
actively working on the day of such violation, the period of limitation shall
begin on the day the employee returns to work.

ARTICLE 7
SUPERVISORS DOING HOURLY WORK

         
38
  a)   Anyone employed by the COMPANY in the capacity of a foreman or a
supervisor will be permitted to perform work that is normally performed by
bargaining unit employees, except as limited by Article 7 (b), below.

b)   Foremen and supervisors will not be permitted to perform work normally
performed solely by bargaining unit employees, if bargaining unit employees are
laid off as a direct or indirect result or if the direct or indirect result is
that employees on the recall list are prevented from being recalled. It is
expressly agreed that work that is normally performed both by bargaining unit
employees and by foremen or supervisors is not “work that is normally performed
solely by bargaining unit employees” and consequently is not covered by the
preceding sentence. The management of the COMPANY will determine, in its sound
discretion, whether employees would be laid off and whether recalls would be
prevented as a result of the performance by foremen or supervisors of “work
normally performed solely by bargaining unit employees.”

ARTICLE 8
WORK CLASSIFICATIONS

         
39
  a)   Wage rates for all classifications of work within the bargaining unit
shall be mutually agreed to between the COMPANY and the UNION, set forth
separately, and attached to this Agreement and marked “Exhibit B”.

ARTICLE 9
STAFFING OF NEW UNITS

         
40
  a)   The COMPANY agrees to consult with the UNION in connection with the
staffing of new units or consolidation of departments in the operating section.

ARTICLE 10
STEWARDS

         
41
  a)   The UNION may designate for each Department in Operations and each craft
in Maintenance, a Shop Steward who shall call to the attention of the foreman or
supervisor any questions of working conditions that may arise in their
department or craft.

b)   Discussion between the Shop Steward and Foreman and/or the Supervisor shall
be at such time and place as not to interfere with work in the department or
craft.

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c)   If the Shop Steward and Foreman or Supervisor are unable to agree, the
matter will be referred to the department head involved in accordance with
procedure for handling grievances as set out in Article 27, it being agreed that
the Shop Steward shall suffer no loss in pay for acting in that capacity.   d)  
Any employee called in for discussion that might result in disciplinary action
or any entry to be made in their personnel file may be permitted to have a
Steward present.   e)   One person within the bargaining unit designated by the
Business Manager of the UNION may be named to act in the capacity as a Benefits
Steward for hourly employees. This Steward shall be provided with a locked file
cabinet in a suitable location within the plant in which to file records and
information. All medical, dental, disability, and other benefit forms and
associated correspondence presented or received by the COMPANY are confidential
and private information and the COMPANY is required to treat it as such. Any
confidential records and information sought by the UNION shall be obtained
directly from the concerned employee or, with written permission by the
employee, from the Human Resources Department.   f)   Nothing in this agreement
shall be construed as preventing any employee so represented from dealing
directly with the COMPANY’S Human Resources personnel.

ARTICLE 11
CONTRACT WORK

         
42
  a)   The COMPANY reserves the right to utilize independent contractors for any
purpose, including the performance of any amount of work normally performed by
employees in the bargaining unit, provided employees in Groups 1 and 4, and the
Instrument/Electrical and Machinist crafts are not laid off as a direct or
indirect result of such work being contracted out; nor shall any such work
contracted prevent the recall of laid off employees from these groups. It is
further agreed that (consistent with the terms of the parties’ previous
collective bargaining agreements and past practices) the performance of such
work under any circumstances by contractor personnel shall not result in such
personnel becoming part of the bargaining unit or in the application of the
terms of this Agreement to such personnel, whether they are deemed to be jointly
employed by Sterling or otherwise.
 
       

      Employees laid off on or before 5/1/05 as a result of the above provisions
will be entitled to 1.5 times the severance allowance provided in Article 19.

ARTICLE 12
PAY DAY

         
43
  a)   All regular employees covered by this Agreement shall be paid in full,
once every two weeks on regular paydays established by the COMPANY except that
when a holiday falls on a payday, the employees will be paid the day before the
holiday. Each employee on paydays shall be provided with an itemized statement
of gross earnings and all deductions for any purpose.

b)   Paychecks may be directly deposited with the financial institution of the
employee’s choice, if possible, and if the individual bargaining unit employee
signs a statement so indicating and holding the COMPANY harmless if their
financial institution has not credited their account in a timely manner.   c)  
The COMPANY further agrees that if any questions arise concerning time credited
or pay received by an employee, the time cards and other pertinent records will
be made available for examination to the employee and the Shop Steward. In the
event the difficulty cannot be resolved at that time, then the same shall be
considered a grievance and handled according to the regular grievance procedure.
  d)   A pay error of less than eight (8) hours pay will be corrected on the
next regular paycheck. An error of eight (8) or more hours pay will be corrected
via a special make-up check.

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ARTICLE 13
PHYSICAL EXAMINATIONS

         
44
  a)   An applicant for employment, before being hired, must meet certain
minimum standards of health and physical fitness. A licensed physician employed
by the COMPANY will give the physical examination.

b)   Periodic examinations of employees will be carried on with the principal
idea of helping employees improve their own health condition and to enable
COMPANY to guard the health of its employees.   c)   Employees who become
physically unfit to perform one or more of the essential functions of their
assigned classification, may be assigned other work, if available, and until, in
the opinion of the doctor retained by the COMPANY, the employee is able to
resume the work of their designated classification.   d)   The COMPANY agrees to
continue notification and to send a copy of such individual test results to
employees who fall outside the normal medical limits and to provide a copy to an
employee who comes to the Heath Services Department and requests such
information.   e)   When an employee is scheduled for a chest x-ray as part of
their physical, the COMPANY will provide for the x-ray to be read by a
“B-Reader”. For employees in the Insulator Craft, a second x-ray, read by a
“B-Reader”, will be provided at six (6) month intervals at the request of an
insulator.

ARTICLE 14
DISCRIMINATION

         
45
  a)   No members of a signatory union shall be discriminated against,
discharged or harassed on account of their activities or interest in their UNION
while carrying out in good faith the terms of this Agreement.

b)   Charges of such discrimination, discharge or harassment, if any, shall be
handled according to the regular grievance procedure.

ARTICLE 15
UNION REPRESENTATIVES

         
46
  a)   When in the opinion of a Steward or Plant Committeeman, or the COMPANY,
the counsel of a business representative of the Texas City, Texas Metal Trades
Council, or any of the organizations signatory to this Agreement, is advisable
or necessary to aid in the resolving of a grievance that has arisen, such
business representative shall be permitted to enter the premises of the COMPANY,
subject to the regulations governing visitors to this plant.

ARTICLE 16
JURY SERVICE

47   Employees kept away from work because of reporting for jury service or for
service as a witness under court subpoena will be paid their regular
straight-time hourly rate, exclusive of any overtime or other premium pay,
subject to the following provisions.   48   Section 1 — Morning Court Appearance

a)   Employees working days are not required to report back for work if
dismissed from court duty at or after 12:00 p.m. Employees dismissed before
12:00 p.m. are required to report for work and complete the workday.

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b)   Employees on the 10:30 p.m. to 6:30 a.m. (or 11:30 p.m. to 7:30 a.m.) shift
shall not be required to work the shift on the calendar day of their first day
in court, nor any other 10:30 p.m. to 6:30 a.m. (11:30 p.m. to 7:30 a.m.) shift
falling on a day they are scheduled to be in court.   c)   Employees scheduled
to work the 2:30 p.m. to 10:30 p.m. or 3:30 p.m. to 11:30 p.m. shift are not
required to report for their shift if they are released from court after
10:00 a.m.   d)   Employees scheduled to work the 10:30 p.m. to 6:30 a.m. (or
11:30 p.m. to 7:30 a.m.) shifts are not required to report for work on these
shifts if dismissed from court duty at or after 12:00 p.m. If released before
noon, they are expected to work their scheduled shifts.

49   Section 2 — Afternoon Court Appearance

a)   Employees working days are required to report for work at the beginning of
their shift and will be released a reasonable period of time prior to their
court appearance.   b)   Employees scheduled to work the 2:30 p.m. to 10:30 p.m.
(or 3:30 p.m. to 11:30 p.m.) shift are not required to report for work prior to
an appearance in court which begins after the start of their scheduled shift and
before 6:30 p.m. Employees scheduled to work the 2:30 to 10:30 p.m. (or 3:30
p.m. to 11:30 p.m.) shift who serve three (3) or more hours in court or who are
dismissed from court at or after 6:30 p.m. are not required to work the
remainder of their scheduled shift on that payroll day.   c)   Employees
scheduled to work the 10:30 p.m. to 6:30 a.m. (or 11:30 p.m. to 7:30 a.m.) shift
whose court appearance begins before 3:00 p.m. are not required to work their
graveyard shift on that calendar day. Employees scheduled to work the 10:30 p.m.
to 6:30 a.m. (or 11:30 p.m. to 7:30 a.m.) shift are not required to work the
shift falling on the payroll day of an appearance in court if released from
court at or after 3:00 p.m.

50   Section 3

a)   Employees are required to furnish proof from the court of such service,
showing the date and time served and amount paid for their services. With regard
to jury service, the COMPANY agrees to treat the documented release time the
same for standby as for court appearances.

51   Section 4

a)   An employee who is to report for court duty in the afternoon shall be given
a reasonable period of time to go home, change clothes, etc., eat and then drive
to the courthouse for duty; or that an employee released from court duty before
12:00 p.m. shall be given reasonable time to go home, change clothes, eat and
drive to the plant.

ARTICLE 17
ELECTION DAY REGULATIONS

         
52
  a)   It is further agreed that arrangements shall be made so that all
employees working days or day shifts who are requested to work overtime, shall
have sufficient time off to vote on election days covering City, State, and
National elections, and such time off shall not be deducted from the employee’s
wage.

b)   An employee appointed as an election judge or observer or those elected as
delegates to political conventions shall be granted (a) vacation bank days if
eligible; or (b) an excused absence. The request must be made in advance and
must not conflict with or impair plant operation.

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ARTICLE 18
REPLACEMENT OF CLOTHING

         
53
  a)   Any employee required to perform work which results in the damage to
clothes or shoes by chemical or fire action, to such an extent they are no
longer suitable for wear, shall be furnished with suitable clothing or be given
a cash replacement allowance provided the damage did not occur due to the
employee’s failure to wear proper PPE when required; reimbursement is to be at
replacement cost less depreciation for normal wear. Replacement cost shall mean
the cost to replace the clothing at the time it is ruined.

b)   All employees required to perform work which results in damage to clothes
and shoes by chemical or fire action will be furnished proper protective
clothing and equipment which is appropriate under the conditions prevailing. All
such clothing and equipment shall be returned, as directed by the COMPANY, at
the completion of an assignment or shift, whichever is applicable.

ARTICLE 19
LAYOFF NOTICE — SEPARATION ALLOWANCE

         
54
  a)   Whenever it is necessary to lay off an employee or employees because of
lack of work due to curtailment of production, process changes, changing
requirements of craft work, or any other reason beyond control of the COMPANY,
such employee or employees shall be given ten (10) working days’ notice of such
layoff. The COMPANY shall have the option of paying for their time in lieu of
notice.

b)   In the event of a hurricane evacuation, acts of God or other situations
beyond the reasonable and direct control of the COMPANY, the notice provisions
of this Article will not apply.   c)   If it is necessary to lay off employees
because of any labor dispute preventing normal operations of the plant, three
(3) calendar days’ notice will be given. The COMPANY shall have the option of
paying for this time in lieu of notice.   d)   Hourly paid employees, who are
laid off as a result of economic curtailment, will be eligible for a separation
allowance in keeping with the following provisions:

55   Section 1 — Mode of Compensation

a)   The Separation Allowance is computed on the basis of years of continuous
service with the COMPANY. Continuous service for the purpose of this agreement
is defined as time spent working for the COMPANY computed from the employee’s
last date of hire. The maximum allowance for any given period of layoff shall be
as follows:

ALLOWANCE SCHEDULE

      Years of Continuous Service

--------------------------------------------------------------------------------

  Pay Allowance

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Under 1 year
  2 weeks
1 through 4
  4 weeks
5 through 9
  8 weeks
10 or more
  12 weeks plus 1/2 week
 
  for each year in excess of 10

56   Section 2 — Method of Payment

a)   The Separation Allowance will be paid in bi-weekly installments at their
regular bi-weekly pay amount until the maximum allowance specified above is
reached, provided the employee continues to meet the eligibility requirements.

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b)   Should an employee be recalled to active employment before exhausting this
maximum allowance, payments will cease as of the effective date of recall. Any
remaining balance will be available for payment in the event the employee is
subsequently laid off before meeting the full reinstatement requirement
specified below. However, in the event the employee meets the requirements for
full allowance reinstatement, the payments will not exceed those specified in
Section (1) above.   c)   Any employee who is recalled to regular active
employment after exhausting the maximum allowance payments will be ineligible
for further separation payments until they have completed 78 continuous weeks of
active employment, at which time they will again become eligible for full
benefits under Section (1) above.   d)   All monies paid as Separation Allowance
will be subject to applicable taxes and other required withholdings.

57   Section 3 — Eligibility

a)   Separation Allowance is not payable to any employee who:

1)   Resigns or abandons employment for any reason.   2)   Becomes deceased.  
3)   Elects normal or early retirement.   4)   Is discharged.   5)   Accepts a
position in Sterling that is not within this bargaining unit.   6)   Is
receiving either occupational or non-occupational disability benefits until said
benefits are exhausted, and only then, provided the employee is still on layoff
status.   7)   Receives total and permanent (Long-Term Disability) disability
benefits.   8)   Is recalled from layoff.   9)   Is offered a position with an
acquiring company, of equivalent pay and benefits at the Texas City Plant.

b)   The above Separation Allowance shall not be paid in the event that the lack
of work is due to a labor dispute or to fire, flood, water, or power failure, or
other act of God.

ARTICLE 20
LEAVE OF ABSENCE

         
58
  a)   The COMPANY shall grant leave of absence, up to ninety (90) days length,
for personal reasons upon request and explanation by the employee, provided
that, in the opinion of the COMPANY, the reason for the request is worthy and
such leave shall not be used, except with the permission of the COMPANY, for the
purpose of accepting other employment and such leave shall not affect the
seniority status of said employee and/or employees.

b)   The COMPANY shall, upon at least ten (10) days notice given by the UNION,
grant leaves of absence not to exceed thirty (30) days, to employees to attend
UNION conventions or meetings, provided not more than a total of three
(3) employees from the plant or one (1) employee from a department shall be away
for that purpose at any one time.   c)   The COMPANY shall, upon at least two
(2) weeks notice given by the UNION, grant leaves of absence not to exceed one
(1) year in length to a maximum of two (2) employees during any one period for

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purposes of accepting employment with a union signatory to this Agreement.
Employees on such leaves of absence will maintain their seniority status while
on leave providing they maintain continuous service with said union. Such leaves
of absence will be automatically extended on a year-by-year basis for the
duration of the Agreement, upon receipt by the COMPANY, of a written request
from the UNION at least two (2) weeks prior to the expiration of each one
(1) year period. Employees desiring to return from such leaves will give the
COMPANY at least two (2) weeks notice in writing, and upon return will be
required to take a pre-employment physical as if they were new employees.

d)   Unpaid leave to care for a newborn child will be administered under the
guidelines of the Family and Medical Leave Act.   e)   Employees elected or
appointed to public office will be allowed an excused absence, without pay,
providing their absences do not create a cost to the COMPANY or impair normal
operations.

ARTICLE 21
SANITATION AND SAFETY

         
59
  a)   Operating Engineers (Local 450), and other employees who, in order to
perform their normal duties, are required by state law to possess either a
commercial or chauffeur’s license shall be reimbursed the cost of these
licenses.

b)   Inspection of any job for safety purpose may be secured upon the request of
any employee assigned to that job; such inspection to be made by a member of the
Plant Safety Department or other supervision with the employee involved. If the
result of this inspection indicates an unsafe condition, the job will be
postponed until proper steps have been taken to remedy the condition unless, in
the opinion of the supervisor, postponing the job creates a greater hazard.   c)
  When an employee accompanies an OSHA representative, while on COMPANY time
during an in-plant investigation, said employee shall not suffer any loss of
pay.

60   Prescription Safety Glasses -

a)   The COMPANY agrees to pay up to eighty-five dollars ($85.00) applicable to
the lenses for one pair of prescription safety glasses purchased through the
Safety Department. Such glasses may be tinted or clear. Where the employee’s
prescription is from a licensed physician and states that the employee’s eye
condition makes it mandatory that they wear dark glasses during daylight hours,
the COMPANY will agree to pay up to an additional eighty-five dollars ($85.00)
for the purchase of an additional pair of shaded glasses. It is also understood
that the COMPANY will pay up to eighty-five dollars ($85.00) applicable to the
lenses for the purchase of new safety glasses when an employee’s prescription is
changed.   b)   The COMPANY agrees to provide one pair of colored prescription
safety glasses for Operating Engineers required to operate hoisting equipment.
The parties recognize that this is a unique requirement for that craft and that
such provision is not intended to be the beginning of a colored safety glass
program for other groups.   c)   The COMPANY will pay 100% for the initial eye
exam from an approved provider. The COMPANY will pay 75% for subsequent eye
exams in two (2) year intervals from an approved provider.   d)   Additionally,
up to two (2) pair of non-prescription safety sunglasses will be provided each
year from an approved list.   e)   The COMPANY payment toward frames for
prescription safety glasses is $35.00.   f)   The COMPANY agrees to provide one
(1) pair of prescription glasses for welders. If additional glasses are needed,
requests will be evaluated and processed by the Plant Safety Department on a
case by case basis.

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g)   Up to two pairs of clip-on glasses per year shall be furnished by the
COMPANY to the Operating Engineers, Local 450 members only. Clip-on glasses may
be purchased at cost by other employees at the Safety Supply section.
Additionally, the COMPANY agrees to provide one pair of colored prescription
safety glasses for Operating Engineers required to operate hoisting equipment.

61   Safety Shoes -

a)   The COMPANY will provide to each bargaining unit employee up to two
(2) pairs of approved chemical resistant safety shoes per contract year at the
COMPANY’s expense up to a maximum of $85.00 per pair. Employees will be allowed
to opt, instead, for one (1) pair of more expensive safety shoes per contract
year at COMPANY expense up to a maximum of $150.00 per pair. In either case, the
employee will pay the additional cost above the maximum COMPANY dollar
contribution where applicable.

ARTICLE 22
BULLETIN BOARDS

         
62
  a)   It is further agreed that the COMPANY shall provide an electronic
bulletin board for the posting of UNION notices. This board shall be used for
the display of the following notices:

      UNION meetings, UNION appointments, UNION elections, and UNION social
affairs. All notices to be posted on said board must first have the approval of
the Plant Manager or his designee. It is agreed that no UNION matter of any kind
shall be posted in and about the plant except on said board. In addition,
postings must be supplied in the form of a scanable document. Approved postings
will be removed after 10 days.

ARTICLE 23
COMPANY RULES

         
63
  a)   It is further agreed by both parties to this Agreement that fair
treatment, good service, and due diligence in observance of the rules as
promulgated by the COMPANY are essential to the maintenance of satisfactory
working conditions and wages described in this Agreement and for efficient
production provided that such rules as may be promulgated by the COMPANY shall
not in any way conflict with the terms of this Agreement.

ARTICLE 24
PRODUCTIVITY STATEMENT

         
64
  a)   The COMPANY and the Texas City Metal Trades Council agree that a
profitable and highly competitive Texas City plant enhances the job security of
all plant employees. Both parties recognize the necessity of making productivity
improvements to ensure the future profitability and competitiveness of the
plant.

b)   While acknowledging their respective rights and obligations, the COMPANY
and the UNION further recognize that in today’s rapidly changing business
environment a cooperative versus a confrontational approach to labor relations
matters is vital to the plant’s success. Specifically, the parties have endorsed
the following principles to reinforce their emphasis on this productive
collaboration:

1)   A working environment that fosters increased effectiveness, efficiency and
productivity of plant operations is a highly desirable goal all employees should
contribute to achieving.   2)   Timely, effective two-way communications are
basic to productive plant operations.

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3)   As appropriate, problem solving groups, as well as participative concepts
such as quality circles, may be facilitated. Productivity improvement plans,
programs and results will be periodically reviewed with the Plant Union
Committee.

c)   The COMPANY and the UNION recognize that it is desirable and mutually
beneficial to set up an annual meeting to review Work Practices vs. Best of
Class in Industry. The purpose of these meetings would be to identify possible
areas of improvement that could enhance the COMPANY’S competitiveness within the
industry.   d)   During such meetings, possible areas of improvement identified
which would require modifying, amending, or waiving any of the provisions of
this Labor Agreement shall be implemented only by mutual consent of both the
COMPANY and the UNION.

ARTICLE 25
FUNERAL LEAVE

         
65
  a)   Employees with ninety (90) days of continuous service will be given a
three (3) day leave of absence to attend the funeral of their spouse, child,
parent, brother, sister, parent-in-law, brother-in-law, sister-in-law,
son-in-law, daughter-in-law, grandparent, grandchild, stepchild, stepmother,
stepfather, or spouse’s grandparent. These shall be three (3) consecutive
calendar days, one (1) of which must be the day of the funeral. Employees will
be paid for any such days lost from work at their regular straight-time hourly
rate, exclusive of any overtime or other premium pay, provided such are their
regularly-scheduled work days. No employee shall receive funeral leave pay for
any day that is not a regularly-scheduled workday nor for any day on which they
are absent from work or on leave for any other purpose.

b)   Upon the death of a relative of an employee or employee’s spouse where said
relative has been a long term resident of the employee’s household immediately
prior to death and/or confinement to a health facility, funeral leave provisions
shall apply the same as that which applies to the death of a person defined
above within the immediate family.   c)   The COMPANY agrees that when a death
in an employee’s immediate family, as defined above, occurs while the employee
is on vacation, the employee, with sufficient notice to the COMPANY may stop
their vacation and start their funeral leave in accordance with this article.  
d)   An employee absent from their regular work schedule due to the imminent
death of a listed relative may receive funeral leave provided such lost time
occurs within the three-day period selected by the employee as funeral leave
under this article.   e)   The COMPANY agrees to double the allotted Funeral
Leave when two or more listed family members die concurrently.   f)   Upon
return to work, employees shall complete and sign a COMPANY “Funeral Leave Pay”
form and submit satisfactory proof of relationship to the deceased and of actual
attendance at the funeral.   g)   An employee will be excused without the loss
of straight time earnings to serve as an active pallbearer on the day of the
funeral of an employee or retired employee of the Texas City Plant. The request
for the employee to serve must be from a member of the deceased employee’s
immediate family and no more than six (6) employees may be excused for such
pallbearer service at any one funeral. Where the employee or employees to be
excused would result in the impairment of plant operations, the COMPANY reserves
the right to limit the number of employees absent.

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ARTICLE 26
STRIKES AND LOCKOUTS

         
66
  a)   All members of the UNION agree to conform to the rules and regulations of
the COMPANY insofar as they do not violate the conditions of these Articles of
Agreement. No member of the UNION employed by the COMPANY shall be discriminated
against for upholding UNION principles not inconsistent with the terms of this
Agreement. The COMPANY and the UNION desire that production shall continue
without interruptions. The COMPANY and the UNION further agree that good
employer/employee relations cannot exist unless there is a serious effort on the
part of both the COMPANY and the UNION to settle in a peaceable manner all
disputes that may arise. Therefore, as a means of promoting continued production
and employment and improved employer/employee relationships, the COMPANY and the
UNION agree that the grievance procedure and arbitration procedure provided in
this Contract shall be used to peaceably settle without strike disputes that are
covered by such grievance and arbitration procedure.

b)   It is agreed that there will be no lockout by the COMPANY or strike or work
stoppage by the UNION.   c)   In the event of such strike or work stoppage,
there shall be no liability on the part of the UNION, its officers or agents, if
such strike or work stoppage was not authorized, encouraged or condoned by the
UNION.   d)   The UNION agrees to cooperate with the COMPANY and use means at
its disposal to settle such strike or work stoppage and request such employees
to return to work.   e)   This provision shall no longer be binding on the
COMPANY or the UNION if either party has served proper notice requesting changes
or modifications of this Agreement in accordance with the terms of Article 32
and either party has given written notice that is discontinuing negotiations.

ARTICLE 27
GRIEVANCE PROCEDURE AND DISCIPLINE RECORDS

         
67
  a)   The parties to this Agreement agree that any dispute, complaints, or
grievance, except those pertaining to discharge, arising out of the
interpretation or application of the terms of this Agreement, shall be settled
promptly in accordance with the following procedure:

1)   It is understood and agreed that no complaint, dispute, or grievance shall
be submitted to either the COMPANY or UNION after a lapse of ten (10) days from
the time the incident causing the complaint, dispute, or grievance shall have
occurred or become known to the employee.   2)   Step 1 — Any employee or group
of employees either individually or with, or through, their Steward, may discuss
with the immediate supervisor any complaint or other matter which they feel
requires clarification. The supervisor shall have five (5) days in which to
render a verbal decision to said employee(s) and the Steward involved, if any.
Should the decision fail to bring about a satisfactory settlement in the matter,
it may become a grievance and may be handled in accordance with Step 2.

i)   It is understood that when a group of employees desire a clarification on a
matter in which they are commonly involved, one employee in the group, with or
through the steward, if desired, shall be designated by the group to discuss the
matter with the supervisor. Matters which do not affect the employees as a group
in a common manner, or which may require individual adjustment, shall be
presented on an individual basis.

3)   Step 2 — Within five (5) days of receipt of the verbal decision at Step 1,
the employee or group of employees, either individually or through their
steward, may file the grievance, on forms provided by the COMPANY and the UNION,
through the immediate supervisor to their department head.

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    Within five (5) days of receipt of the grievance, the department’s
supervision, and a representative of the Human Resources Department shall meet
with the employee, their steward, the appropriate Plant/Union Committeeman and
the Business Manager of the UNION or designee, for the purpose of discussing the
grievance. Supervision shall have five (5) days in which to render a decision.
If the decision brings about a satisfactory settlement of the matter, it shall
be reduced to writing and shall be delivered to the employee, the steward and
the UNION.

i)   If the decision fails to bring about a satisfactory settlement, it may be
appealed in writing by the employee or group of employees, either individually,
or through their Steward, to the Plant Manager or designee, within ten (10) days
of the decision and will be handled in accordance with Step 3.

4)   Step 3 — A grievance appealed to Step 3 will be entered on the agenda of
the next meeting of the Plant/Union and the Plant Management Committees if the
appeal is received at least ten (10) days prior to its scheduled meeting. If
received within the ten (10) day period prior to a meeting, it shall be placed
on the agenda for the following meeting.   5)   An employee having a grievance
in regard to contractual sick pay benefits may file a grievance directly with
the Human Resources Department, who shall have five (5) days’ time in which to
investigate and answer the grievance. Should the answer fail to bring about a
satisfactory settlement to the grievance, then the employee may, within five
(5) days, appeal the grievance directly to Step 3 of the grievance procedure.  
6)   After discussion of the grievance by the Plant/Union and Plant Management
Committees, it shall be answered, in writing, to the UNION within ten (10) days.
If the grievance is settled at Step 3, the answer shall reflect the settlement.
If the grievance has not been settled, then the COMPANY’S answer shall state why
the grievance is denied.

b)   The COMPANY and the UNION recognize that it is desirable and mutually
beneficial to have regular monthly meetings for the purpose of discussing any
grievances placed on the agenda for the respective meeting. For this purpose,
the representatives of the UNION shall consist of a committee designated by the
UNION and shall be called the Plant/Union Committee (PUC), of which there shall
be seven (7) employee members. Employees in the probationary period of
employment shall not be eligible for membership on the PUC.   c)   If an
employee is discharged, the COMPANY, within three (3) days of the discharge,
shall, on request of the employee provide the employee with a written statement
of the reason or reasons for the action taken. If the UNION desires to protest
the discharge, the UNION, instead of following the procedure set forth in Steps
1 and 2 of the Article, may, within ten (10) days after the discharge in
question, file directly with the COMPANY, a written request for a hearing. Such
hearing shall be held within two (2) days after receipt by the COMPANY of such
written request. At such hearing, evidence may be presented on behalf of the one
discharged and by the COMPANY.   d)   If the evidence presented by the UNION to
the COMPANY warrants the reinstatement of the discharged employee or employees,
such reinstatement shall be to their former position without loss of seniority
or vacation credits. All other terms of the reinstatement may be agreed upon
between the COMPANY and the UNION at this time. If the COMPANY and the UNION
cannot agree that the discharge was justified, the dispute may be referred to
arbitration in accordance with the procedure set forth below.   e)   If a
grievance or discharge protest cannot be settled to the mutual satisfaction of
the COMPANY and UNION in Steps 1 through 3 or as otherwise provided above, the
UNION shall have forty-five (45) days during which to notify the COMPANY of
their desire to arbitrate the dispute.   f)   Except where stated otherwise, all
time limits noted in this Article are exclusive of Saturdays, Sundays and
holidays as listed in Article 4, Sec. 3 (a). Extensions of time limits as set
forth in this Article, may be requested by either the COMPANY or the UNION to
take care of unusual cases.

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  g)  Whenever a supervisory employee places charges or letters of reprimand on
an employee’s record, a copy of such charges or letters of reprimand must be
furnished to such employee. Any charges or letters of reprimand made against an
employee may be referred by the employee to the grievance procedure for handling
if the employee feels the charges or letters of reprimand are unfounded or not
justified.     h)  If an employee has gone a period of twenty-four (24) months
without receiving a letter of warning or reprimand, no letters issued to the
employee previously (except those which involved disciplinary suspension) will
be used for the purpose of further disciplinary action. Disciplinary suspension
will be limited to five (5) years for the purpose of further disciplinary
action.

ARTICLE 28
ARBITRATION PROCEDURE

68 a)  If a grievance has not been settled to the mutual satisfaction of the
COMPANY and UNION after completing Step 3 of the grievance procedure provided
above, the UNION shall have forty-five (45) days during which to notify the
COMPANY of their desire to arbitrate the dispute. A panel of five (5) neutral
arbitrators shall be requested in writing from the Federal Mediation and
Conciliation Service (FMCS), a copy of such letter will be given to the other
party. Upon receipt of the panel of arbitrators, the parties shall alternately
strike same, with the first strike determined by flip of a coin.     b) 
Grievances appealed to arbitration but not scheduled for hearing within
12 months of the appeal are considered to be dropped.     c)  The COMPANY and
the UNION shall bear the expenses of their respective advocates. All other
expenses of the arbitration shall be borne by and divided equally between the
UNION and the COMPANY.     d)  The arbitrator selected shall have no power or
authority to amend, alter or modify this Agreement, including any appendices
hereto, but shall be limited to deciding whether or not a violation of its
express terms has been committed. The decision of the arbitrator shall be final,
conclusive and binding upon all employees, the UNION and the COMPANY. The
arbitrator shall have no power to establish wage scales, rates for new jobs, or
to change any wage. He shall have no power to substitute his discretion for that
of the COMPANY in cases where the COMPANY has retained discretion or the right
to act under this Agreement. The arbitrator shall, in his decision, specify
whether or not the decision is retroactive or the effective date thereof.    
e)  Time limits: If the UNION or Grievant fails to observe the time limits set
forth in the Grievance or Arbitration Procedures, the grievance shall be
considered closed and no further proceeding thereon shall lie. If the COMPANY
fails to meet the time limits set forth, the grievance may be appealed to the
next step of the grievance or arbitration procedures.

ARTICLE 29
ABROGATION OF CONTRACT ARTICLES

69   Should any part hereof, or any provisions herein contained, be rendered or
declared invalid by reason of any existing or subsequently enacted legislation
or by a decree of a court of competent jurisdiction, such invalidation of such
part or portion of this Agreement shall not invalidate the remaining portion
hereof and they shall remain in full force and effect.

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ARTICLE 30
OCCUPATIONAL & NON-OCCUPATIONAL
ACCIDENT AND SICKNESS PLAN

70   Section 1

a)   This Benefit Plan is provided to aid employees in meeting their expenses
while suffering from an illness or accident in accordance with the following
schedule:

          Maximum Number Plant Service Credit

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  of Weeks Benefit

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Six months to 1 year
  12 weeks
Over 1 year
  26 weeks

b)   Plant Service Credit shall mean employment with the COMPANY, which is
credited to the employee from the records of the COMPANY and shall start with
the employee’s hiring date with the COMPANY. No credit shall be given for
absence due to leave of absence, layoff or strikes.

71   Section 2

a)   Maximum Number of Weeks Benefits is determined by the employee’s Plant
Service Credit, and all disability periods occurring within the Plant Service
Credit year will be totaled for the purpose of computing the Maximum Benefits
allowed for that year.   b)   Unused benefits during a Plant Service Credit year
may not be carried over to the next Plant Service Credit year.   c)   An
employee whose continuous absence due to an illness or injury extends from one
(1) service year to another shall be entitled to a maximum of twenty-six
(26) weeks benefits for that disability. An employee whose continuous absence
exceeds such Maximum Benefits must return to work for a period of sixty
(60) days for a related disability or one (1) day for an unrelated disability in
order to receive further benefits to which they may be entitled. Total benefits
will not exceed twenty-six (26) weeks in a Plant Service Credit year.

72   Section 3

a)   The Plan provides benefits based on a normal workweek of forty (40) hours
and a normal day of eight (8) hours. In case the number of hours in the normal
workweek or workday is changed, the benefits listed below will be changed in
direct proportion to the change in the scheduled working hours.   b)   The
benefits provided for herein shall be less any amount or amounts of disability
benefits which may be provided for through the State or Federal legislation,
Workers Compensation, or benefits provided in the Hourly Disability Benefit
Plan.

73   Section 4

a)   This Benefit Plan will provide benefit payments based on the employee’s
base hourly rate, exclusive of all premium pay. Benefit payments will be made
for an employee’s disability for each scheduled workday up to the maximum number
of weeks for which the employee is eligible according to the schedule in
Section 1.   b)   The COMPANY will provide benefits in an amount equal to 90% of
an employee’s base straight-time earnings for workdays lost due to
non-occupational disability and up to 100% of an employee’s base straight-time
earnings for workdays lost due to occupational disability.   c)   An employee
who has completed the probationary period but has less than six (6) month’s
service and

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    otherwise is qualified for benefits from this Plan on a holiday will be
guaranteed up to eight (8) hours pay.

74   Section 5

a)   An employee must present evidence satisfactory to the COMPANY, showing that
an absence is due to illness or accident within the meaning of this Plan on
forms provided by the COMPANY.   b)   The employee, the doctor, or a member of
the family must report an employee’s absence to the Health Services Department
by the third day of absence. Failure to comply will be considered an absence
without leave.   c)   Additionally, an employee’s occupational injury or illness
must be reported to supervision as soon as it becomes known to the employee or
it will be considered a late report and subject to disciplinary action.   d)  
Employees must adopt such remedial measures as may be commensurate with their
disability and permit such reasonable examinations and inquiries by the
COMPANY’S Health Services Department representative as, in its judgment, may be
necessary to ascertain the employee’s condition.

75   Section 6

a)   Payments will not be made for:

1)   Any period of disability during which the employee is not under treatment
by a licensed physician or a licensed chiropractor.   2)   Any disability caused
directly or indirectly by war or riot.   3)   Any sickness or injury due to the
employee’s

i)   Willful intention to injure oneself or another;   ii)   Intoxication or the
use of drugs except when in an EAP approved treatment program for substance
abuse.

4)   Any disability occurring while the employee is working for wages or profit.
  5)   Any disability due to misconduct.   6)   Any disability when an employee
is absent because of layoffs, strikes, or leave of absence or on vacation. Any
employee who is injured or becomes sick during vacation and is unable to return
to work at the end of the vacation shall qualify for benefits in accordance with
the Plan.

b)   All benefits under this plan shall cease immediately when employment with
the COMPANY is terminated for any reason.

76   Section 7

a)   The COMPANY reserves the right to withhold benefit payments to any employee
who is guilty of submitting a false claim or of abuse of the privileges covered
and may take disciplinary action including discharge.

77   Section 8

a)   Employees receiving sick benefits under this Article at the time a work
stoppage occurs will continue to be covered under this Article until certified
able to return to work. Employees whose illness or injury occurs after a work
stoppage begins will not receive benefits, as set forth in this Article, until
the settlement of the work stoppage.

-28-

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78   Section 9

  a)  The COMPANY agrees that when an employee becomes ill or is injured while
on vacation and is certified as disabled by a licensed physician, they will be
able to cancel subsequent full weeks of vacation beyond the week in which they
become certified as disabled upon proper notification to the COMPANY.     b) 
The COMPANY agrees that if an employee is hospitalized while on vacation, the
employee’s vacation may be canceled and the employee placed on sick leave on the
day of hospitalization. For purposes of this paragraph, the day is defined as
the payroll day appropriate to the employee’s regular work schedule.

ARTICLE 31
WORK ASSIGNMENTS

79 a)  There is no jurisdiction. Work will be assigned on the basis of skill and
ability taking into account that the needed skills will be represented.     b) 
Bargaining Unit employees will not be required to train non-Sterling personnel.

ARTICLE 32
CONTRACT PERIOD

80 a)   This agreement shall become effective on the date of signing and shall
remain in effect until 4:00 p.m. on May 1, 2007, and the same shall
automatically renew itself from year to year thereafter unless either party
shall have given the other written notice of desired changes or termination at
least sixty (60) days before the anniversary date.     b)  This Agreement is in
full settlement of all contractual issues in dispute between the COMPANY and the
UNION. The parties acknowledge that during the negotiations which resulted in
this Agreement, each had the unlimited right and opportunity to make demands and
proposals with respect to any subject or matter not removed by law from the area
of collective bargaining, and that the understanding and agreements arrived at
by the parties after the exercise of that right and opportunity are set forth in
this Agreement.     c)  The COMPANY and UNION also agree that any subsequent
agreement reached within the duration of this Agreement will be in compliance
with applicable Federal laws, regulations, guidelines and standards.     d)  The
UNION and Sterling agree that all pending and unsettled grievances will be
subject to the Grievance and Arbitration Process (including all timeliness and
other defenses permitted by the either the expired or new Agreement) and will
not be affected in any way by Article 32(b) of the Agreement. The parties
further agree that all pending unfair labor practice charges will not be
affected in any way by Article 32(b) of the Agreement. The parties further agree
that the Return to Work agreement dated September 11, 2002 will not be rendered
unenforceable by the terms of this Article.

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81
     Contract Period: May 27, 2004 to May 1, 2007
 
   

     STERLING CHEMICALS, INC.
 
   

 

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     Plant Manager
 
   

 

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     Human Resources Manager
 
   

     TEXAS CITY, TEXAS METAL TRADES COUNCIL AFL-CIO
 
   

 

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     President
 
   

 

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     Business Manager
 
   

     Electrical Workers Local No. 527
 
   
By
   

 

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     Operating Engineers No. 347
 
   
By
   

 

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     Painters and Paperhangers No. 1008
 
   
By
   

 

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     Bridge, Structural, Ornamental & Reinforcing Iron Workers No. 135
 
   
By
   

 

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     International Association of Machinists No. 6
 
   
By
   

 

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     Contract Period: May 27, 2004 to May 1, 2007
 
   

     Sheet Metal Workers No. 54
 
   
By
   

 

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     Teamsters Local No. 968
 
   
By
   

 

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     Carpenters Local No. 973
 
   
By
   

 

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     International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths,
Forgers and Helpers No. 132
 
   
By
   

 

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     Heat & Frost Insulators and Asbestos Workers No. 22
 
   
By
   

 

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     Pipefitters Local No. 211
 
   
By
   

 

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     Operating Engineers No. 450
 
   
By
   

 

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EXHIBIT A

TWELVE-HOUR SHIFT AGREEMENT

A-i

 

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EXHIBIT A
TWELVE-HOUR SHIFT AGREEMENT

This Agreement is applicable to Groups 1, 2, and 4 employees assigned to the 12H
Shift Schedule (designated 12H). In addition, only those Articles, Appendices
and Letters of Understanding specifically cited herein are modified by this
Agreement. Those provisions in the basic agreement not addressed here remain
effective for all employees affected by this Agreement as well as all other
represented employees.

The COMPANY will not relinquish its rights to determine hours and schedules of
work except as specifically limited in the Articles of Agreement. It is
expressly provided, however, that the COMPANY for legitimate business cause, may
cause the discontinuance of the use of the 12H Shift with at least ninety
(90) days notice of the effective date of such discontinuance.

Day Jobs

Straight day employment shall be determined on the basis of senior qualified.

Extra Operators

Employees in excess of the department’s minimum staffing needs may be defined as
“extra”. Extra employees will not receive pay at time-and-one-half (1-1/2)
premium for shift changes where notice was received more than twenty-four
(24) hours in advance of the start of the new shift.

Wages

The hourly wage rate of an employee assigned to the 12H Rotating Shift Schedule
must be adjusted so as to provide the annual earnings under the 12H Shift
arrangement which shall equal that which the employee would have earned under
the 8-Hour Rotating Schedule if he/she worked an equal number of hours.

This adjustment is necessary due to the requirement of paying overtime hours
over eight (8) in a scheduled work day, and on holidays.

Under the 12H Schedule, an employee will work eight (8) hours at the straight
time rate and four (4) hours at the time and one-half premium rate. To make the
earnings for 12 hours of work equal to that which the employee would have earned
at the straight time rate, the eight-hour (regular negotiated) rate must be
reduced by multiplying said rate by a factor of 0.8685, and then rounding to the
nearest penny.

The contractual wage rate of the various classifications affected by the 12H
Shift arrangement shall, as applies to those regularly assigned to the 12H
Schedule, be reduced by a factor of 0.8685. Calculation of the 0.8685 factor and
the application of the adjusted rate are attached at the end of this Exhibit.
Premium pay practices for holidays and shift differential, and pay continuation
practice for vacation, jury duty, etc. are attached in order by Article and
Section.

Employee Benefit Plans

The COMPANY will make SIP matching contributions for 12H shift employees in
accordance with Exhibit D.

Life Insurance, and Disability Benefits will be calculated on 2080 annual hours
at the unadjusted rate with no benefit payment difference for an 8-hour or 12H
Shift employee with similar service for the COMPANY.

Under the Pension Plan, the scheduled 104 hours of overtime in the 12 Hour Shift
Schedule are applied in the calculation for bargaining unit average overtime.

Overtime

Operation on the 12H Shift (versus the 8 hour shift) prevents employees from
covering a vacant shift by holding over one-half of the shift and by the next
shift coming in early (total of 18 hours), or doubling over both shifts (total
of 24 hours). Therefore, the majority of overtime will have to be covered by
employees on the their days off.

The Overtime Agreement will be used throughout all the affected groups,
including day workers in those areas where 12H Shift employees work

A-ii

 

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EXHIBIT A
TWELVE-HOUR SHIFT AGREEMENT

Overtime coverage will be provided on a voluntary basis as described below until
an overtime group fails to meet its commitment to staff its respective unit
around-the-clock. If a voluntary system fails to provide the necessary coverage,
an alternate system will be initiated as required. A mandatory on-call system
will be implemented if the voluntary system fails to produce the number of
people required for overtime coverage.

•   The 12H Shift will make some changes necessary in the overtime procedures.  
•   Normally, it will be necessary to cover vacant shift with persons on the off
shifts.   •   Overtime procedures are included in the document for all affected
groups.   •   The UNION agrees to a firm commitment to staff the plant.

As a general practice, overtime will be pre-scheduled however practical by
scheduling the off shift for all known overtime before each shift’s days off. If
there are no volunteers, the low person will be forced to work overtime. The
COMPANY will attempt up to twelve (12) hours before overtime is to begin to get
the lower off shift person.

Employees who are forced out on overtime and work up to or into their regular
shift, shall be excused from work on their regular shift without pay, once the
employee has performed twelve (12) hours of continuous work if the employee so
requests.

It is recognized that with a 12 Hour Schedule, it is no longer possible for an
employee to “hold over” one-half (1/2) the shift and another employee to come in
early one-half (1/2) the shift (total of 18 hours each), or “double over” (total
of 24 hours). An employee cannot be forced to work more than sixteen
(16) consecutive hours.

Operators who work 8-hour day shift schedules in the overtime group, will comply
with this procedure on weekends and holidays.

When it is necessary to provide overtime coverage by calling in an employee, a
change in the overtime procedure is necessary to ensure adequate staffing of the
plant. A call-in list would provide names of employees eligible to work the 12
hours (i.e., capable of working the full shift without interfering with their
next scheduled shift). The employee with the lowest number of hours would be
contacted first, and on through the list.

An employee who accepts an overtime assignment, can later turn it down; however,
he/she will still be required to work unless another qualified employee (not the
standby or forced person) volunteers to work. Volunteers will not be sought
later than four (4) hours prior to the start of the shift.

When it is necessary to provide overtime coverage by calling in an employee, the
following procedure shall be followed:

1)   Call the low person off shift who is eligible to perform the job. The first
person contacted by telephone may refuse the assignment, but if he/she refuses,
he/she will be informed that he/she is in the “forced” position. If subsequent
calls to other persons fail to produce volunteers, then the “forced” persons
will be required to report to work.   2)   If the list of low persons off shift
fails to produce the staffing necessary, the following procedure shall be
followed:

a)   Force the on shift low person(s) on holdover for up to four (4) hours.   b)
  Force out low person on-coming shift for up to four (4) hours.   c)   When
necessary to do this, the middle four (4) hours will be covered as the COMPANY
sees fit.   d)   This constitutes a breakdown in the voluntary system and may
lead to the Mandatory Procedure.

3)   In those situations where it is anticipated that the overtime required on a
job shall not exceed eight (8) hours duration, the overtime will be offered to
those employees present in the plant or to the on-coming shift rather than
calling out the off shift.

A-iii

 

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EXHIBIT A
TWELVE-HOUR SHIFT AGREEMENT

Mandatory Overtime Procedure

Should the voluntary overtime system fail to provide coverage for overtime in an
overtime area, the COMPANY will review the circumstances and decide if the
voluntary system will continue to fail. If so determined, then the following
Mandatory Overtime Procedure and standby system will be initiated.

1)   The primary shift (shift on short days off) and the secondary shift (shift
on 8-day long change) will provide the needed personnel for standby. A volunteer
list will be posted for employees desiring to stand by for overtime on shift as
they desire.   2)   The number of standby personnel will be determined by
management, dependent on training, job flexibility and the number of jobs per
overtime area, but will be kept to the minimum necessary. Standby duties shall
be rotated on an equitable basis among all employees of the overtime group and
will be for the entire off period. It is preferred that different standby
personnel be scheduled for coverage of the day and night shift, of an off
period. Standby lists will be posted prior to the beginning of the employee’s
days off.   3)   The personnel on standby will not be scheduled for known
overtime.   4)   It will be the responsibility of the person(s) on standby to be
available by phone between 3:30 a.m. and 6:30 a.m. and/or 3:30 p.m. and 6:30
p.m. If the standby personnel are not at home, it is their responsibility to let
the appropriate on-duty person know where they can be reached. Standby personnel
may, at the employee’s option, check out a pager prior to the start of their
standby period in order to facilitate communication. However, when pagers are
unavailable, the standby employee will comply with the mandatory overtime
procedure. The employee is responsible for verifying that the pager is working.
  5)   The person(s) on standby should be prepared to report to work by the
beginning of the shift.

Charging of Overtime

An employee, who is contacted and refuses overtime, will be charged the total
hours paid for such overtime.

ARTICLE 3
HOURS OF WORK

Section 1

Work day will be defined as a consecutive twenty-four (24) hour period beginning
at 6:30 a.m.

12H Shift Workers

Twelve (12) consecutive hours of work per day shall constitute a days work. Day
shift will be from 6:30 a.m. to 6:30 p.m. and night shift will be from 6:30 p.m.
to 6:30 a.m. The payroll week for employees on the 12H Shift starts at 6:30 p.m.
Thursday, and runs until 6:30 p.m. the following Thursday. The payroll day
starts at 6:30 p.m. and runs until 6:30 p.m. of the following day. Shift workers
are permitted sufficient time to eat during their shift without loss of pay for
such period.

The 12H Shift Schedule will be as follows:

     
Four
  12-Hour Days Two Days Off
Three
  12 Hour Nights Two Days Off
Three
  12-Hour Days Two Days Off
Four
  12-Hour Nights
Eight
  Days Off

A-iv

 

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EXHIBIT A
TWELVE-HOUR SHIFT AGREEMENT

ARTICLE 4
OVERTIME AND HOLIDAYS

Section 1

a)   An employee shall be paid at the rate of one and one-half (1-1/2) times his
adjusted rate for hours worked over eight (8) and up to twelve (12) and at a
rate of one and one-half (1-1/2) times his unadjusted rate for hours worked in
excess of twelve (12) within a given twenty-four (24) hour payroll day.   b)  
For 12H Shift Workers, time worked in excess of their weekly scheduled hours (36
or 48), shall be paid at the rate of one and one-half (1-1/2) times the
unadjusted base rate of pay.

Section 3

Holiday and Holiday Pay

All holidays listed in the Articles of Agreement will be recognized. Holiday Pay
provisions begin at 6:30 a.m. on the day of the holiday. Employees assigned to
the 12H Shift Schedule shall receive the following pay for holidays:

1)   For holiday not worked: 8 hours times a premium factor of 1.151 times the
adjusted hourly rate.   2)   For all regularly scheduled hours worked on a
holiday: 2.879 times the employee’s adjusted hourly rate.

a)   For holiday hours worked outside the regular schedule, when it occurs on
the same shift as the last regularly scheduled shift worked: 1.5 times the
unadjusted rate times hours worked during the first 8 hours of the shift, plus
2.5 times the unadjusted rate times hours worked during the last four hours of
the shift, plus Item No. 1 above.   b)   For holiday hours worked outside the
regular schedule, when it occurs on the opposite shift as the last regularly
scheduled shift worked: 2.5 times the unadjusted rate plus Item No. 1 above.

All other provisions in the Articles of Agreement concerning holidays and
holiday pay shall continue to apply.

Section 5

Shift Differential

For employees assigned to the 12H Shift, the contractual rate of shift
differential will be amended to provide:

•   6:30 a.m. to 6:30 p.m. — no differential

•   6:30 p.m. to 6:30 a.m. — $1.00 differential (adjusted where applicable —
87.7 cents)

Employees assigned to the 12H Shift Schedule shall receive the following shift
differential pay for holidays and when working outside the regular 12H Schedule:

•   For regularly scheduled hours worked on the night shift of a holiday: 2.879
times the adjusted shift differential rate of 87.7 cents.

•   For hours worked on the night shift outside the schedule on a holiday: 2.5
times the contractual rate of $1.00.

•   For all hours worked on the night shift outside the regular schedule,
excluding holidays: 1.5 times $1.00.

•   For holidays not worked: No shift differential.

A-v

 

--------------------------------------------------------------------------------

 

EXHIBIT A
TWELVE-HOUR SHIFT AGREEMENT

•   For the night shift of the last scheduled day of rest worked (if all days of
rest worked): 2.0 times $1.00.

ARTICLE 5
VACATION

The vacation policy will allow 8-hours excused absence to be taken during a
48-hour work week in conjunction with 40 hours vacation to fill out the period
between days off.

Remnant hours (4 or 8 hours remaining at the end of the vacation year) may be
used, at the employee’s discretion as follows:

a)   Take off with pay in conjunction with time off without pay, totaling 12
hours. This does not constitute an additional bank day.   b)   Take pay in lieu
of vacation (at the adjusted hourly rate).   c)   A twelve (12) hour shift
employee may opt to work his/her shift and take remnant hours (four (4) or eight
(8) hours) at the beginning or end of their respective shift. This must be
scheduled in advance to allow for proper coverage of the shift. This does not
constitute an additional bank day.   d)   When it becomes known in advance that
an employee has remnant vacation hours he/she may request to schedule these
prior to the end of the vacation year, but only if all other vacation has been
used.

Section b)

The vacation pay, for employees entitled to vacation, is computed on the basis
of eight (8) hours times the adjusted hourly rate plus four (4) hours at time
and one-half the adjusted hourly rate for each twelve-hour shift taken as
vacation.

Section e)

An employee may place up to six (6) shifts (72 hours) of their vacation in a
vacation bank prior to January 1 with such days to be taken at any time during
the vacation year when requested by the employee. Three (3) bank days (36 hours)
may be taken with one (1) hours notice. Thirty (30) hours notice for the other
three (3) bank days (36) hours will be required except in cases of emergencies.

An employee will be allowed to convert one (1) 12 H bank day to three (3) four
hour bank days to be taken at the beginning or end of a shift, within a vacation
year. All three (3) four hour bank days must be used or lost. They cannot be
treated as remnants. These bank days must be scheduled with thirty (30) hours
notice and supervisor approval. No overtime meals will be granted for employees
covering four hour bank days.

The employee exercising the four hour bank day will be responsible for finding
coverage for the opening within the overtime guidelines.

This will be implemented for a one (1) year trial period and after that year
will be continued with agreement between the UNION and the COMPANY.

An employee is entitled to one split for each forty (40) hours of vacation
earned.

Section m)

When a holiday is observed on an employee’s scheduled vacation day, they will
have the option of an extra day vacation or eight (8) hours pay at 1.151 times
the adjusted hourly rate.

A-vi

 

--------------------------------------------------------------------------------

 

EXHIBIT A
TWELVE-HOUR SHIFT AGREEMENT

ARTICLE 6
SENIORITY

Section 9

Job Bidding Procedure

Job Posting: The job vacancy will be posted for eleven (11) calendar days at
each of the main gates and on departmental bulletin boards within the plant.

ARTICLE 16
JURY SERVICE

Employees on the day shift (6:30 a.m. to 6:30 p.m.) are not required to report
back to work if dismissed from court duty at or after 12:30 p.m. Employees
dismissed before 12:30 p.m. are required to report for work and complete the
work day. COMPANY has the option to utilize the overtime replacement or to send
them home. Employees on the night shift (6:30 p.m. to 6:30 a.m.) are not
required to report for work if jury service commences less than eight (8) hours
from the end of the last shift, or if jury service is terminated less than eight
(8) hours before the beginning of the next shift.

Jury duty pay for hours excused as provided above shall be: first eight
(8) hours of a shift excused shall be at the adjusted rate and all hours excused
after eight (8) hours shall be at one and one-half (1-1/2) times the adjusted
rate.

ARTICLE 25
FUNERAL LEAVE

Employees will be given up to three (3) consecutive 12-hour days off, one (1) of
which must be the day of the funeral. Employees will be paid for funeral leave
days at eight (8) hours times the adjusted hourly rate plus four (4) hours at
time and one-half (1-1/2) the adjusted hourly rate.

ARTICLE 30
OCCUPATIONAL & NON-OCCUPATIONAL
ACCIDENT AND SICKNESS PLAN

Section 4

The plan will provide benefit payments for 12H Shift employees, based on the
unadjusted hourly rate, exclusive of all premium pay, times 0.9524.

The COMPANY will provide benefits to a 12H Shift employee in an amount to equal
90% of the employee’s adjusted base earnings for work time lost due to
non-occupational disability. The adjusted base will be calculated by multiplying
0.9524 times the unadjusted hourly rate times the hours lost. The benefits for
occupational disability will be equal to 100% of the employee’s adjusted base
earnings for work time lost.

WAGE ADJUSTMENT

Wage Adjustment

The intent of wage adjustment is to adjust hourly wage rate and shift
differential so the 12H schedule can be paid within contractual premium
agreements and:

1)   Cause the employee no loss of earnings.   2)   Pay the employee at least a
1.5 premium for the additional 104 hours per year in the 12H schedule versus the
existing 8-hour schedule, and   3   Keep the total cost of the 12H schedule at
approximately the same cost of the 8-hour schedule.

A-vii

 

--------------------------------------------------------------------------------

 

EXHIBIT A
TWELVE-HOUR SHIFT AGREEMENT

Hours Worked and Paid Under 8-Hour and 12-Hour Shift Schedule

Presently, shift employees are scheduled to work an average of 2080 hours per
year. With a 12H shift, employees will be scheduled to work an average of 2,184
hours per year. Therefore, pay practices for the 12H shift must be calculated as
if the employee were working an additional 104 hours at least a 1.5 premium.

A)   Average annual earnings on the present 8-hour schedule, based on 2080 hours
worked.

                              Hours   Premium   Hours Type

--------------------------------------------------------------------------------

  Worked

--------------------------------------------------------------------------------

  Factor

--------------------------------------------------------------------------------

  Paid

--------------------------------------------------------------------------------

Total S/T Worked (excl. holidays)
    2,017.1       1.0       2,017.1  
Scheduled Holiday (Avg. = 7.86 days)
    62.9       2.5       157.1  
Holiday Off Hours (Avg. = 3.14 days)
    (25.1 )     1.0       25.1  
 
   

--------------------------------------------------------------------------------

               

--------------------------------------------------------------------------------

   
 
    2,080.0               2,199.3  

    Earnings = 2,199.3 ($16.73) = $36,794.29

B)   Average annual earnings under an 8-hour, 2,184-hour schedule:

                              Hours   Premium   Hours Type

--------------------------------------------------------------------------------

  Worked

--------------------------------------------------------------------------------

  Factor

--------------------------------------------------------------------------------

  Paid

--------------------------------------------------------------------------------

Total S/T Worked (excl. holidays)
    2,017.1       1.0       2,017.1  
Additional hours at 1.5 premium
    100.9       1.5       151.4  
Scheduled Holiday (Avg. = 8.25 days) (includes 3.1 additional hours)
    66.0       2.5       165.0  
Holiday Off Hours (Avg. = 2.75 days)
    (22.0 )     1.0       22.0  
 
   

--------------------------------------------------------------------------------

               

--------------------------------------------------------------------------------

   
 
    2,184.0               2,355.5  

    Earnings = 2,355.5 ($16.73) = $39,407.52

C)   Average annual earnings under the 12H, 2,184-hour schedule:

                              Hours   Premium   Hours Type

--------------------------------------------------------------------------------

  Worked

--------------------------------------------------------------------------------

  Factor

--------------------------------------------------------------------------------

  Paid

--------------------------------------------------------------------------------

Scheduled S/T (excl. holidays)
    1,412       1.0       1,412.0  
Scheduled O/T (excl. holidays)
    706       1.5       1,059.0  
Holiday Hours (Avg. 5.5 days)
    66       2.879       190.0  
Holiday Off Hours (Avg. 5.5 days)
    (44 )     1.151       50.6  
 
   

--------------------------------------------------------------------------------

               

--------------------------------------------------------------------------------

   
 
    2,184               2,711.6  

    Annual earnings are the same as in Case B = $39,407.52

                 
Wage Rate
  =   $39,407.52   =   $14.53      

--------------------------------------------------------------------------------

                2,711.6        

    Ratio of 12H rate to 8-hour rate =

                      $16.73   =   1.151   $14.53   =   0.8685

--------------------------------------------------------------------------------

           

--------------------------------------------------------------------------------

          $14.53           $16.73        

    Earnings 2,711.6 ($14.53) = $39,399.55

A-viii

 

--------------------------------------------------------------------------------

 

EXHIBIT A
TWELVE-HOUR SHIFT AGREEMENT

Shift Differential

Currently, shift employees receive shift differential for working the evening
and midnight shifts. When premium rates apply to hours worked, the same premium
is applied to shift differential.

Under the 12H shift, shift differential will be paid for the night shift only,
therefore, the rate must be adjusted to keep annual earnings the same. Shift
differential will continue to be increased by premium rates, and will continue
to be paid only for hours worked.

  A)   Average Annual Shift Differential under the present 8-hour schedule,
based on 2,080 hours worked:

                                              Hours   Premium   Hours        
Type

--------------------------------------------------------------------------------

  Worked

--------------------------------------------------------------------------------

  Factor

--------------------------------------------------------------------------------

  Paid

--------------------------------------------------------------------------------

  Rate

--------------------------------------------------------------------------------

  Earnings

--------------------------------------------------------------------------------

Eve Shift (excl. holidays)
    672.4       1.0       672.4     $ 0.50     $ 336.20  
Mid Shift (excl. holidays)
    672.4       1.0       672.4     $ 1.00     $ 672.40  
Holiday Eve Shift
    21.0       2.5       52.5     $ 0.50     $ 26.25  
Holiday Mid Shift
    21.0       2.5       52.5     $ l.00     $ 52.50  
 
                                   

--------------------------------------------------------------------------------

   
 
                                  $ 1,087.35  

  B)   Average Annual Earnings on the present 8-hour schedule, based on 2,184
hours worked:

                                              Hours   Premium   Hours        
Type

--------------------------------------------------------------------------------

  Worked

--------------------------------------------------------------------------------

  Factor

--------------------------------------------------------------------------------

  Paid

--------------------------------------------------------------------------------

  Rate

--------------------------------------------------------------------------------

  Earnings

--------------------------------------------------------------------------------

Eve Shift S/T (excl. holidays)
    672.4       1.0       672.4     $ 0.50     $ 336.20  
Eve Shift O/T (excl. holidays)
    33.6       1.5       50.4     $ 0.50     $ 25.20  
Mid Shift S/T (excl. holidays)
    672.4       1.0       672.4     $ 1.00     $ 672.40  
Mid Shift O/T (excl. holidays)
    33.6       1.5       50.4     $ 1.00     $ 50.40  
Holiday Eve Shift
    22.0       2.5       55.0     $ 0.50     $ 27.50  
Holiday Mid Shift
    22.0       2.5       55.0     $ l.00     $ 55.00  
 
                                   

--------------------------------------------------------------------------------

   
 
                                  $ 1,166.70  

  C)   Average Annual Shift Differential on the 12H shift schedule, based on
2,184 hours worked:         The 12H shift differential rate (unadjusted) is
calculated as follows:

                                                      8-Hour Schedule

--------------------------------------------------------------------------------

                                  12H Scheduled

--------------------------------------------------------------------------------

Days
  $0.00/hr. * 8     =     $ 0.00     Days     —     No differential
Eves.
  $0.50/hr. * 8     =     $ 4.00     Nights     —     $12.12 hr. = $1.00/hr
Mid
  $1.00/hr. * 8     =     $ 8.00                          
 
                   

--------------------------------------------------------------------------------

                           
 
                  $ 12.00/day                          

                                              Hours   Premium   Hours        
Type

--------------------------------------------------------------------------------

  Worked

--------------------------------------------------------------------------------

  Factor

--------------------------------------------------------------------------------

  Paid

--------------------------------------------------------------------------------

  Rate

--------------------------------------------------------------------------------

  Earnings

--------------------------------------------------------------------------------

S/T Night Shift (excl. holidays)
    706       1.0       706.0     $ 1.00     $ 706.00  
O/T Night Shift (excl. holidays)
    353       1.5       529.5     $ 1.00     $ 529.50  
Holiday Night Shift
    33       2.879       95.0     $ 1.00     $ 95.00  
 
                   

--------------------------------------------------------------------------------

               

--------------------------------------------------------------------------------

   
 
                    1,330.5             $ 1,330.50  

A-ix

 

--------------------------------------------------------------------------------

 

EXHIBIT A
TWELVE-HOUR SHIFT AGREEMENT

          Therefore, the negotiated shift differential must be adjusted by:

             
 
  $1,166.70   =   0.877
 
 

--------------------------------------------------------------------------------

         
 
  $1,330.50        

          to keep annual earnings the same.

          Annual Earnings = $1,330.5 (0.877) $1,166.85

Summary — Combined Annual Earnings

                    A )  
Under present 8-Hour (2,080 hours) schedule:
               
Straight Time, O/T & Holiday Wages
  $ 36,794.29          
Shift Differential
    1,087.35          
 
   

--------------------------------------------------------------------------------

           
 
  $ 37,881.64     B )  
Under an 8-hour (2,184 hours) schedule:
               
S/T, O/T & Holiday Wages
  $ 39,407.52          
Shift Differential
    1,166.70          
 
   

--------------------------------------------------------------------------------

           
 
  $ 40,574.22     C )  
Under the 12H (2,184 hours) schedule:
               
S/T, O/T & Holiday Wages
  $ 39,399.55          
Shift Differential
    1,166.85          
 
   

--------------------------------------------------------------------------------

           
 
  $ 40,566.40  

Pay Rates

Premiums under the 12-hour schedule will be as follows:

                              A)  
Straight time hours as part
  1.0   x   12 hour base                
of the regular schedule
  1.0   x   $14.53   =   $ 14.53   B)  
Overtime hours as part
  1.5   x   12 hour base                
of the regular schedule
  1.5   x   $14.53   =   $ 21.80   C)  
Hours worked beyond 12.
  1.5   x   $16.73   =   $ 25.10      
or
                           
Hours worked outside regular schedule.
                           
or
                           
Hours worked for schedule change outside contract notice.
                        D)  
Hours worked on last schedule day of
  2.0   x   $16.73   =   $ 33.46      
rest (if all days of rest worked that week).
                        E)  
Hours worked on scheduled
  2.879   x   12 hour base                
holiday up to 12 hours.
  2.879   x   $14.53   =   $ 41.83   F)  
Hours worked on holiday outside
  2.5   x   $16.73   =   $ 41.83      
regular schedule
                        G)  
Vacation Pay, Jury Duty,
  8 Hrs.   x   12-Hour base                
Funeral Pay, etc.
  + 4 Hrs.   x   1.5 x 12-Hour base             H)  
Holiday not worked (8 hours)
  1.151   x   $14.53   =   $ 16.72  

A-x

 

--------------------------------------------------------------------------------

 

EXHIBIT A
TWELVE-HOUR SHIFT AGREEMENT

EXAMPLE OF SICKNESS PLAN CALCULATIONS

                 
Basis: 2-Week Sickness
               
Ratio of 8-Hour to 12-Hour Schedules
               
80-Hours/2 Weeks
    =       0.9524  
84-Hours/2 Weeks
               
40-Hour Weeks — Current Schedule
               
40 x 2 x $16.73 x 0.90
    =     $ 1,204.56  
36/48-Hour Weeks - 12H Schedule
               
(36 + 48) x $16.73 x 0.9524 x 0.90
    =     $ 1,204.58  
 
           

--------------------------------------------------------------------------------

   
Difference
    =     $ 0.02  
 
           

--------------------------------------------------------------------------------

   

A-xi

 

--------------------------------------------------------------------------------

 

EXHIBIT A
TWELVE-HOUR SHIFT AGREEMENT

January 31, 1991

Interpretation of Attachment E

12 Hour Shift, Operations Overtime Agreement

Page 20 applies to scheduled overtime, and

Page 21 applies to call-out overtime

SCHEDULED OVERTIME, Attachment E Page 20

It is our intent to inform people, by their last work day, of any scheduled
overtime needs known to exist during their off days. Adequate notice should be
provided when scheduled overtime wants to be turned down so that coverage can be
arranged no later than 12 hours prior to the start of the overtime period. If no
replacement can be arranged, the employee remains scheduled for the overtime
assignment.

CALL-OUT OVERTIME, Attachment E Page 21

It is our intent to arrange for overtime coverage as far in advance as possible,
once a need has been identified. Less than a 4-hour notice should be necessary
only when short notice illness, emergency, or 1-hour day bank day requests are
received. Therefore, a crew on off days will be contacted as soon as possible
once a vacancy exists. Each department can determine an appropriate method to
contact people for overtime coverage.

If a person accepts a call-out overtime assignment, he can later turn it down,
if coverage can be arranged no later than 4 hours prior to the start of the
overtime period.

     
      /s/ P. J. Pollock
  /s/ Wayne R. Parker

--------------------------------------------------------------------------------

 
 

--------------------------------------------------------------------------------

 
FOR THE UNION
  FOR THE COMPANY
 
   
      6/2/93
        6/2/93

--------------------------------------------------------------------------------

 
 

--------------------------------------------------------------------------------

 
DATE
  DATE

A-xiii

 

--------------------------------------------------------------------------------

 

EXHIBIT B
WAGE RATES

Top Rates

                                                              1                
                    Ratification           2           3             Date

--------------------------------------------------------------------------------

          05/01/05

--------------------------------------------------------------------------------

          05/01/06

--------------------------------------------------------------------------------

Instrument & Electrical
    3.0 %   $ 26.22       3.0 %   $ 27.01       3.0 %   $ 27.82  
Machinist
    2.5 %   $ 26.01       3.0 %   $ 26.79       3.0 %   $ 27.60  
Boilermaker
  Freeze   $ 24.52       0.0 %   $ 24.52       0.0 %   $ 24.52  
Pipefitter
  Freeze   $ 24.52       0.0 %   $ 24.52       0.0 %   $ 24.52  
Operating Engineer
  Freeze   $ 24.52       0.0 %   $ 24.52       0.0 %   $ 24.52  
General Mechanic
  Freeze   $ 24.52       0.0 %   $ 24.52       0.0 %   $ 24.52  
Lab Analyst
  Freeze   $ 24.52       0.0 %   $ 24.52       0.0 %   $ 24.52  
Outside Operator
  Freeze   $ 24.52       3.0 %   $ 25.26       3.0 %   $ 26.01  
Pumper Gauger
  Freeze   $ 24.52       0.0 %   $ 24.52       0.0 %   $ 24.52  

Note:

The Company will allow a voluntary severance payout in accordance with Article
19 for employees in the following crafts: Boilermaker, Pipefitter, Operating
Engineer, Carpenter, Painter, Insulator and Laborer. Employees wishing to opt
for the voluntary severance must submit to the Company, in writing, a letter of
resignation no later than 12/31/04.

A lump sum of $1000 (gross pay) will be paid within 30 days of ratification of
this agreement to all employees who are frozen in year 1.

New Hire Progressions*

     * Note:  The COMPANY will determine the appropriate starting point within
the related progression for each new hire based on the individual’s experience
level and education.

                              Ratification             Date

--------------------------------------------------------------------------------

  05/01/05

--------------------------------------------------------------------------------

  05/01/06

--------------------------------------------------------------------------------

Outside Operator:
                       
Start
    17.16       17.68       18.21  
End of 12 Months
    19.62       20.20       20.81  
End of 24 Months
    22.07       22.73       23.41  
End of 36 Months
(Journeyman Rate)
    24.52       25.26       26.01  

                              Ratification             Date

--------------------------------------------------------------------------------

  05/01/05

--------------------------------------------------------------------------------

  05/01/06

--------------------------------------------------------------------------------

Pumper Gauger:
                       
Start
    17.16       17.16       17.16  
End of 12 Months
    19.62       19.62       19.62  
End of 24 Months
    22.07       22.07       22.07  
End of 36 Months
(Journeyman Rate)
    24.52       24.52       24.52  

B-i

 

--------------------------------------------------------------------------------

 

EXHIBIT B
WAGE RATES

                              Ratification             Date

--------------------------------------------------------------------------------

  05/01/05

--------------------------------------------------------------------------------

  05/01/06

--------------------------------------------------------------------------------

Lab Analyst:
                       
Start
    17.16       17.16       17.16  
End of 12 Months
    19.62       19.62       19.62  
End of 24 Months
    22.07       22.07       22.07  
End of 36 Months
(Journeyman Rate)
    24.52       24.52       24.52  

                              Ratification             Date

--------------------------------------------------------------------------------

  05/01/05

--------------------------------------------------------------------------------

  05/01/06

--------------------------------------------------------------------------------

Machinist:
                       
Start
    18.21       18.76       19.32  
End of 12 Months
    20.16       20.77       21.39  
End of 24 Months
    22.11       22.78       23.46  
End of 36 Months
    24.06       24.79       25.53  
End of 48 Months
(Journeyman Rate)
    26.01       26.79       27.60  

                              Ratification             Date

--------------------------------------------------------------------------------

  05/01/05

--------------------------------------------------------------------------------

  05/01/06

--------------------------------------------------------------------------------

Instrument & Electrical:
                       
Start
    18.36       18.91       19.47  
End of 12 Months
    19.93       20.53       21.14  
End of 24 Months
    21.50       22.15       22.81  
End of 36 Months
    23.08       23.77       24.48  
End of 48 Months
    24.65       25.39       26.15  
End of 60 Months
(Journeyman Rate)
    26.22       27.01       27.82  

B-ii

 

--------------------------------------------------------------------------------

 

EXHIBIT C
EMPLOYEE BENEFITS

Except as modified below, the COMPANY agrees to continue to provide employee
benefits under the plans listed below as in effect on April 1, 2002. These
benefits will last for the duration of this agreement and will be subject to
change as negotiated in future contracts.

      Sterling Chemicals, Inc. Medical Benefits Plan for Hourly-Paid Employees
      Sterling Chemicals, Inc. Prescription Drug Benefits Plan for Hourly-Paid
Employees
      Sterling Chemicals, Inc. Dental Assistance Plan for Hourly-Paid Employees
      Sterling Chemicals, Inc. Hourly Employees’ Flexible Spending Account Plan
      Sterling Chemicals, Inc. Disability Benefits Plan for Hourly-Paid
Employees
      Sterling Chemicals, Inc. Group Life Insurance Plan for Hourly-Paid
Employees
      Sterling Chemicals, Inc. Hourly-Paid Employees’ Pension Plan
      Sterling Chemicals, Inc. Savings and Investment Plan

Nothing in this Agreement shall restrict the COMPANY from changing the language
in the official plan documents or changing the providers of plan benefits as
long as the benefits provided are not changed (unless required by law.)

Savings and Investment Plan (SIP): The COMPANY will provide matching
contributions equal to 50% of the first 7% of contributions made on base pay.
Effective October 1, 2002, installment payments will no longer be available. As
soon as administratively feasible after contract ratification, three withdrawals
per year will be allowed for all participants. Fees for SIP loans will be paid
by the individual participant. Employees who are not eligible to participate in
the Hourly Paid Employees’ Pension Plan because they were hired (or rehired) on
or after the effective date of this Agreement will be eligible for a matching
contribution equal to 100% of the first 6% of contributions made on base pay.
This match is in lieu of the “regular” match (50% of 7%) and is not in addition
to it.

Hourly Paid Employees’ Pension Plan: The maximum pension factor is $60.
Employees hired on or after the effective date of this Agreement will not be
eligible to participate in the Hourly Paid Employees’ Pension Plan (or any other
defined benefit pension plan sponsored by the COMPANY). Employees rehired on or
after the effective date of this Agreement who were participants in the Hourly
Paid Employees’ Pension Plan during a prior period of employment with the
COMPANY will not be reinstated in the plan.

Life Insurance and Accidental Death & Dismemberment Insurance (AD&D) Benefits:
The COMPANY will not provide retiree life insurance benefits. Effective the
first of the month following return to work, the COMPANY agrees to provide
$75,000 of AD&D insurance to all active employees.

Dental Premiums: Employee dental premiums will be increased 5% on every January
1st beginning in 2007 through the expiration of this contract. After-tax payment
of premiums is not allowed.

Medical Premiums: Effective January 1, 2005, active employee medical premiums
will equal 20% of projected expenses and be based on the medical claims,
prescription drug claims and stop-loss insurance premiums attributable to
participants in the active medical plan. After-tax payment of premiums is not
allowed.

PPO Medical Plan: (1) Change coordination of benefits from standard to
carve-out. This means that in situations where the Sterling Medical Plan is
secondary, total benefits from both plans will be limited to the amount the
Sterling Medical Plan would have paid had it been primary. (2) The COMPANY will
increase the hearing aid maximum from $500 to $750. (3) Effective January 1,
2003, the COMPANY agrees to increase the lifetime medical maximum from
$1,000,000 to $1,500,000 per participant. Notwithstanding the foregoing, any
medical plan participant who has already received $1,000,000 in medical benefits
prior to January 1, 2003, will not be eligible for these additional benefits.
Additionally, any participant for whom the COMPANY is unable to obtain stop loss
insurance coverage from the low cost stop loss insurance provider without
additional cost will not be eligible for these additional benefits.

HMO Medical Plan: The COMPANY shall make available an HMO for employees.
Employee premiums shall equal 15% of the billed cost to the COMPANY by the HMO.
If the COMPANY should decide to provide HMO benefits on a self-insured basis at
a later date, the COMPANY agrees to use a similar methodology to calculate HMO
employee premiums as is used for the PPO plan.

C-i

 

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EXHIBIT C
EMPLOYEE BENEFITS

Prescription Drugs: The prescription drug co-pay for current employees and
employees who retire during the term of this agreement will be 10% on generic
drugs and 20% on brand name drugs.

Disability Insurance: Disability income benefits for psychiatric and substance
abuse claims will not be payable beyond 30 months from the initial date of
disability.

Retiree Medical Benefits (including prescription drug coverage): Current
employees who retire after this agreement is ratified (“Future Retirees”) and
who at retirement are at least age 55 and who have at least 10 years of Vesting
Service (as defined in the Hourly Paid Employees’ Pension Plan), will be
eligible to participate in the Sterling Chemicals, Inc. Medical Benefits Plan
for Retirees and the Sterling Chemicals, Inc. Prescription Drug Benefits Plan
for Retirees (collectively the “Retiree Medical Plan”.) Medical premiums for
Future Retirees will equal 50% of projected expenses and be based upon the
medical claims, prescription drug claims and stop-loss insurance premiums
attributable to participants in the Retiree Medical Plan. This exception to the
reservation of rights provisions of the Sterling Chemicals, Inc. Medical
Benefits Plan for Retirees and the Sterling Chemicals, Inc. Prescription Drug
Benefits Plan for Retirees will last only for the duration of this agreement and
will be subject to change as negotiated between the UNION and the COMPANY in
future agreements or otherwise as permitted by this agreement or by law.

Effective January 1, 2005, the COMPANY’S contributions towards the cost of
retiree medical will be as follows:

         
Retiree and spouse both under age 65
       
Retiree only
    261.76  
Retiree plus spouse
    575.86  
Retiree plus child(ren)
    471.16  
Retiree plus family
    785.26  
Retiree and spouse both equal to or over age 65
       
Retiree only
    87.25  
Retiree plus spouse
    191.95  
Retiree plus child(ren)
    296.66  
Retiree plus family
    401.36  
Retiree or spouse under age 65, other one equal to or over age 65
       
Retiree plus spouse
    349.01  
Retiree plus family
    558.41  

The COMPANY shall have the right to modify the prescription drug benefits to
take full advantage of the prescription drug provisions of Medicare. The COMPANY
shall be solely responsible for deciding whether, when and how any changes to
prescription drug coverage will take effect.

Employees hired (or rehired) on or after the effective date of this agreement
will not be eligible to participate in the Retiree Medical Plan.

Voluntary Employee Benefit Association (VEBA): The COMPANY has the right to use,
in accordance with the terms of the VEBA, all of the funds in the VEBA to pay
medical and prescription drug claims as such claims are presented to the COMPANY
for payment without maintaining any minimum balance in the VEBA. If all of the
funds in the VEBA are used to pay such claims, the COMPANY shall not be under
any obligation to contribute additional funds to, or otherwise continue the
existence of, the VEBA.

Disclaimer as to Current Retirees: Except for the foregoing provision regarding
the use of VEBA funds, nothing contained in this Exhibit D (or the new
collective bargaining agreement of which it is a part) shall apply to persons
who retired before the new agreement was ratified. Any prior contractual
commitments, in prior collective bargaining agreements or otherwise, creating
exceptions to the Sterling Chemicals, Inc. Medical Benefits Plan for Retirees or
the Sterling Chemicals, Inc. Prescription Drug Benefits Plan for Retirees,
including but not limited to,

C-ii

 

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EXHIBIT C
EMPLOYEE BENEFITS

medical premium contribution percentages for any individual who retired prior to
the ratification of this agreement, have expired and are not renewed by this
agreement. The COMPANY retains the right to modify, amend, or terminate the
Sterling Chemicals, Inc. Medical Benefits Plan for Retirees and the Sterling
Chemicals, Inc. Prescription Drug Benefits Plan for Retirees as provided in the
summary plan description and other plan documents.

C-iii

 

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NO JURISDICTION
SUPPORTING INFORMATION

1.   Operators perform CLAIR, TPM, and minor maintenance.       Examples:

  •   help Machinist pull and install pump     •   pull small pump and
decontaminate     •   pull small control valve up to level of skill and ability
    •   install and pull blinds for product changeover and to prepare equipment
(small number of blinds)

2.   Maintenance planners plan total hours to perform job.   3.   Maintenance
foreman assigns jobs based on skill and ability. You could have crews of all one
craft or mixture of crafts. Crew would secure permits, get necessary materials,
communicate with foreman and operations.   4.   General Mechanic classification
set up to increase skill level of Painters, Laborers, Asbestos Workers,
Carpenters, and Stores personnel who choose to transfer to the Laborers. They
would learn low, medium, and some high skills of primary skill groups. Support
personnel would be trained, tested, and certified to become a General Mechanic.
General Mechanic would help primary skill craftsmen or perform the jobs outright
up to their level of skill and ability.   5.   Depending on jobs scheduled,
General Mechanics may perform support work by themselves or with help from
primary group.

 

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May 24, 2004

Hand Delivered on May 24, 2004

Mr. Jesse Sanchez
Texas City Metal Trades Council
P.O. Box 1149
Texas City, Texas 77592-1149

     Re: Revised Letter of Agreement for Company’s Revised May 21, 2004 Final
and Concluding Offer

Dear Mr. Sanchez:

This revised letter of agreement is submitted as part of the Company’s attached
Revised May 21, 2004 Final and Concluding Offer. The terms of this letter and
the attached offer will be withdrawn at 4 p.m. on Friday, May 28, 2004 if not
accepted and ratified by the Union by that time. If it is accepted and ratified
before this deadline, all terms of our offer, including this letter, will become
effective on the date of ratification.

The following additional terms are submitted as part of the attached Company’s
Revised May 21 Final and Concluding Offer:

1. Offers To Four Laid-Off Employees: Sterling will offer the four most senior
laid off employees (based on bargaining unit seniority) from among all of the
following combined maintenance crafts: Pipefitters, Asbestos Workers,
Boilermakers/Ironworkers, Painters, Laborers, Carpenters and Heavy Equipment
Operating Engineers, the opportunity to transfer into Group 4 Material Handling
positions. It is understood that only the four most senior employees who are
laid off from all such classifications in the aggregate will receive offers;
there will not be four offers to the senior laid-off employees from each
classification. The four offers may be accepted by written notice to Human
Resources within five (5) working days of the delivery to the union of notice of
layoff but not thereafter. It is understood that if any of the four most senior
employees fail timely to accept the offer to transfer, Sterling shall have no
obligation to extend such offers to any other bargaining unit employees.

2. Post-strike Agreement: The Post-strike Agreement between Sterling Chemicals,
Inc. and Texas City Metal Trades Council signed by both parties on May 10, 2004,
will remain if effect for the duration of this contract period.

3. Dismissal Of Lawsuit: The Union will promptly dismiss with prejudice its
lawsuit against Sterling [Civil Action No. G-04-302, in the United States
District Court], in which the union seeks an order compelling Sterling to
arbitrate the “Contractor vs. Bargaining Unit” and “Alleged Contractor Recall
Rights” grievances and damages resulting from Sterling’s refusal to arbitrate
them. The Union also releases Sterling from any alleged liability based on the
allegations contained in those two grievances.

 

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4. Resolution and Clarification of Company Proposal #16-A and Union Committee
Support For Ratification: It is acknowledged that Company’s proposal #16-A was
the only previously un-resolvable issue between the parties. The Union and
Company have discussed in good faith all possible alternate solutions to the
unresolved #16-A and neither party knows of any other concession that it is
willing to make on #16-A or any other issue that might enable the parties to
reach agreement, other than what is represented and agreed to within this Letter
of Agreement and attached Revised Final and Concluding Offer. It is further
agreed that agreement to the terms of this offer has been reached after good
faith bargaining, in which the union representatives and each member of the
union’s bargaining committee has agreed to recommend ratification to the
membership.

5. Bargaining unit employees laid off pursuant to Article 11 on or before May 1,
2005 who are between the ages of 54 and 55 on May 1, 2004 and who would have
reached COMBO 80 by May 1, 2005 if their employment had not been terminated will
be entitled to the following: 1) no early retirement reduction applied to their
pension benefit, 2) eligibility to enroll in the retiree medical plan beginning
the first of the month after attainment of age 55, 3) eligibility to pay active
employee medical plan premiums for COBRA medical coverage until age 55.

If you accept our Revised Final and Concluding Offer which includes our May 21
proposal and this letter agreement, and it is timely ratified by the members,
please sign below and return a copy to me upon ratification.

Sincerely,

Rick Turner
Human Resources Manager
Sterling Chemicals, Inc.

Accepted:

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Jesse Sanchez
Texas City Metal Trades Council

Cc: P. Palacio, FMCS