Deferred Compensation Plan For
Officers And Key Employees Of
Carpenter Technology Corporation
As amended and restated, effective January 1, 2005
This is the Deferred Compensation Plan for Officers and Key Employees of Carpenter Technology Corporation, effective January 1, 1995, established by Carpenter Technology Corporation and its subsidiaries expressly included herein to provide its senior executives with an additional method of planning for their retirement. The Plan is intended to be an "unfunded" plan maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended.
The Plan has been amended, effective January 1, 2005, to meet the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, to achieve deferral of taxation until deferred amounts are distributed in accordance with the terms of the Plan.
ARTICLE I. - DEFINITIONS
The following words and phrases as used herein have the following meanings unless the context plainly requires a different meaning:
1.1Account means the total amount credited to the bookkeeping accounts in which a Participant's Contributions are maintained, including earnings thereon. The Accounts will consist of subaccounts for each type of Contribution made under Article IV, as the Plan Administrator deems necessary.
1.2Beneficiary means the person that the Participant designates to receive any unpaid portion of the Participant's Account should the Participant's death occur before the Participant receives the entire balance to the credit of such Participant's Account. If the Participant does not designate a beneficiary, his Beneficiary shall be his spouse if he is married at the time of his death, or his estate if he is unmarried at the time of his death.
1.3Board of Directors means the board of directors of Carpenter Technology Corporation or the Human Resources Committee thereof (including any successor committee performing similar duties), whenever said Board delegates responsibilities under this Plan to such Committee.
1.4Code means the Internal Revenue Code of 1986, as amended.
1.5Company means Carpenter Technology Corporation or any successor by merger, purchase or otherwise.
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1.6Compensation means all amounts that are treated as wages for Federal income tax withholding under Section 3401(a) of the Code for the Plan Year plus amounts that would be paid to the Employee during the year but for the Employee's election under a cash or deferred arrangement described in Section 401(k) of the Code or a cafeteria plan described in Section 125 of the Code. Notwithstanding the preceding sentence, Compensation shall not include:
1.6.1 bonuses or other amounts payable under the Annual Extra Compensation Plan, the Executive Annual Compensation Plan, and the Quarterly Profit Sharing Program;
1.6.2 contributions by the Employer to this or any other plan or plans for the benefit of its employees, except as otherwise expressly provided in this Section 1.6; or
1.6.3 amounts identified by the Employer as expense allowances or reimbursements regardless of whether such amounts are treated as wages under the Code.
1.7Contribution means an amount deferred under the Plan pursuant to a Participant's election or an Employer Addition under Article IV, and credited to a Participant's Account. No money or other assets will actually be contributed to such Accounts.
1.8Effective Date means January 1, 1995.
1.9Employee means an individual who is employed by an Employer.
1.10Employer means the Company and any subsidiary that (1) the Board of Directors designates as an Employer and (2) the Board of such subsidiary approves participation in the Plan. A list of the subsidiaries currently designated as an Employer is attached hereto as Appendix A.
1.11Employer Addition means contributions made on behalf of a Participant by an Employer.
1.12Executive Annual Compensation Plan means the Carpenter Technology Corporation Executive Annual Compensation Plan, as may be amended from time to time.
1.13Investment Funds means the investment alternatives made available by the Plan Administrator from time to time under the Plan.
1.14Participant means a Senior Executive who elects to participate or is otherwise granted participation in the Plan pursuant to Section 2.2.
1.15Pension Board means the Pension Board appointed pursuant to the General Retirement Plan for Employees of Carpenter Technology Corporation, as constituted from time to time.
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1.16Plan means the Deferred Compensation Plan for Officers and Key Employees of Carpenter Technology Corporation, as may be amended from time to time.
1.17Plan Administrator means the Pension Board.
1.18Plan Year means the 12-month period beginning January 1 and ending December 31.
1.19Senior Executive means an Employee who is classified as "exempt" under the Fair Labor Standards Act of 1938, as amended, and whose salary grade is at least 19, or its equivalent as determined by the management of Carpenter Technology Corporation, or any other Employee who the Board of Directors expressly designates as a Senior Executive.
1.20Termination means a Participant's termination of employment with the Company.
1.21Unforeseeable Emergency means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant's spouse, or a dependent [as defined in Code section 152(a)] of the Participant, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.
1.22Valuation Date means any day on which the New York Stock Exchange or any successor to its business is open for trading.
ARTICLE II. - PARTICIPATION
2.1Eligibility to Participate. All Senior Executives are eligible to participate in the Plan.
2.2Participation. Any Senior Executive who elects to participate in the Plan shall become a Participant in the Plan immediately upon enrolling as a Participant by the method required by the Plan Administrator. Any Senior Executive receiving Employer Additions shall become a Participant on the date of the initial Employer Addition, if the Participant has not enrolled under the preceding sentence. An individual shall remain a Participant under the Plan until all amounts credited to the Participant's Account have been distributed to the Participant or the Participant's Beneficiary.
ARTICLE III. - VESTING
Participants are always fully vested in all amounts credited to their Accounts.
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ARTICLE IV. - CONTRIBUTIONS
4.1Eligibility to Receive Contributions. A Participant may receive Contributions in each Plan Year that the Participant is a Senior Executive.
4.2Elective Participant Contributions.
4.2.1Salary Deferral Contributions. A Participant may elect to defer up to 35% of the Participant's Compensation and to have the Employer make a Contribution of that amount to the Participant's Account under the Plan.
4.2.2Annual Executive Compensation Deferral Contributions. A Participant may elect to defer up to 100% of the amounts the Participant is eligible to receive under the Executive Annual Compensation Plan and to have the Employer make a Contribution of that amount to the Participant's Account under the Plan.
4.3.3Other Deferral Contributions. A Participant may elect to defer up to 100% of the amount the Participant is eligible to receive under any compensation plan that the Board designates a compensation plan for purposes of this Section 4.2.3, and to have the Employer make a Contribution of that amount to the Participant's Account under the Plan.
4.3Employer Additions. The Participant's Employer will contribute to a separate subaccount on behalf of a Senior Executive whose Company Basic Contributions [as defined in the Savings Plan of Carpenter Technology Corporation ("Savings Plan")] are limited by Code section 401(a)(17). The amount of the Employer Addition will equal the amount that would have been contributed to the Savings Plan as Company Basic Contributions except for such limitation.
4.4Elections.
4.4.1Frequency and Timing of Elections. Elections may be made once each Plan Year and they may not be modified during the Plan Year. For Salary Deferral Contributions, Other Deferral Contributions and Employer Additions, described in Sections 4.2.1, 4.2.3, and 4.3 respectively, the Participant must make an election by December 15 of a Plan Year for it to take effect for the next Plan Year. For Annual Executive Compensation Deferral Contributions described in Section 4.2.2, the Participant must make an election by December 15 of the fiscal year for which the award is based. For example, to defer an award paid after the end of the July 1, 2005 to June 30, 2006 fiscal year (determined based on services performed during that fiscal year), the Participant must make an election by December 15, 2005.
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4.4.2Duration of Elections. Elections to receive Contributions under this Article IV expire at the end of the Plan Year or fiscal year for which the election was made.
4.4.3Restriction on Elections. Elections to receive Contributions may be in the form of a whole percentage or in $1 increments.
4.5Investment Returns. The Plan Administrator shall establish multiple Investment Funds which shall be maintained for the purpose of determining the investment return to be credited to each Participant's Account. The Plan Administrator may change the number, identity or composition of the Investment Funds from time to time. Each Participant shall indicate the Investment Funds based on which Contributions under Sections 4.2 and 4.3 are to be adjusted. Each Participant's Account shall be increased or decreased by the net amount of investment earnings or losses that it would have achieved had it actually been invested in the deemed investments. The Company is not required to purchase or hold any of the deemed investments. Investment Fund elections must be made in a minimum of 1% increments and in such a manner as the Plan Administrator shall specify. A Participant may change his or her Investment Fund election as soon as administratively practicable following the date the Plan A dministrator receives notice of such change in the form prescribed by the Plan Administrator.
No less frequently than as of each Valuation Date, each Participant Account shall be increased or decreased to reflect investment results. Each Participant Account shall be adjusted by the investment return of the Investment Funds in which the Participant elected to be deemed to participate. The investment return adjustment is intended to reflect the actual performance of the Investment Fund net of any applicable investment management fees or administrative expenses determined by the Plan Administrator. Notwithstanding the above, the amount of any payment of Plan benefits pursuant to Article V shall be determined as of the Valuation Date preceding the date of payment.
ARTICLE V - DISTRIBUTIONS
5.1Payment of Distributions. All distributions shall, at the Employer's discretion, be made directly out of the Employer's general assets or from the Carpenter Technology Corporation Non-Qualified Employee Benefits Trust.
5.2Form of Distributions. A Participant may receive distributions in one of the following manners, which the Participant shall elect on the initial enrollment forms. A Participant may elect to receive distributions from each subaccount in different manners and at different times.
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5.2.1 A lump sum distribution of the Participant's entire Account;
5.2.2 Ten annual installments, with the distribution each year equal to the product resulting from multiplying the then current Account balance by a fraction. The numerator of the fraction is always one, and the denominator of the fraction is ten for the first distribution and is reduced by one for each subsequent distribution; or
5.2.3 Fifteen annual installments, with the distribution each year equal to the product resulting from multiplying the then current Account balance by a fraction. The numerator of the fraction is always one, and the denominator of the fraction is fifteen for the first distribution and is reduced by one for each subsequent distribution.
5.3Timing of Distributions. Each Participant shall elect the timing of the distribution with respect to his or her Account in the manner authorized by the Plan Administrator. The Participant's election(s) shall indicate that payment shall be made (in the case of a lump sum election) or shall commence (in the case of an installment election):
5.3.1 as soon as administratively practicable following the Participant's Termination; provided, however, if the Participant is a key employee [as defined in Code section 416(i) without regard to paragraph (5) thereof] and the stock of the Company is publicly traded on an established securities market, distributions shall not commence before the date which is 6 months following the date of Termination (or, if earlier, the death of the Participant); or
5.3.2 in a specific month and year.
5.4Default Form and Timing Election. If the Participant has not affirmatively made a form or timing of distribution election pursuant to Sections 5.2 and/or 5.3 above, the Participant will be deemed to have made elections as indicated in Sections 5.2.1 and 5.3.1.
5.5Change in Form or Time of Distribution. A Participant may change his or her form and timing election applicable to the distribution of an Account under Sections 5.2 and 5.3 (or a deemed election under Section 5.4), provided that such request for change is made (i) at least twelve (12) consecutive months prior to the date on which such distribution would otherwise have been made or commenced and (ii) the first payment with respect to such new election is deferred for a period of not less than 5 years beyond the date such distribution would otherwise have been made.
5.6Distributions Due to Unforeseeable Emergency. Distributions hereunder may commence if the Plan Administrator determines, based on uniform, established standards, that the Participant has incurred an Unforeseeable Emergency. The amount distributed under this Section 5.6 shall not exceed the amount necessary to satisfy such emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into
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account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant's assets (to the extent the liquidation of such assets would not itself cause severe financial hardship). The Plan Administrator shall determine the Investment Fund or Funds under Section 4.5 from which the amount necessary to satisfy the severe financial hardship shall be distributed.
5.7Termination of Employment. Upon Termination, a Participant, or the Beneficiary if the Termination is caused by the Participant's death, shall have distribution of the Participant's Account governed by the election in place under Sections 5.2, 5.3, 5.4 and 5.5.
ARTICLE VI - PLAN ADMINISTRATION
6.1General. The Plan shall be administered by the Pension Board, which is the Plan Administrator.
6.2Responsibilities and Reports. The Plan Administrator may, pursuant to a written resolution, allocate, among one or more of its members, specific responsibilities under the Plan, and the Plan Administrator may name other persons to carry out such responsibilities. The Plan Administrator shall be entitled to rely conclusively upon all tables, valuations, certificates, opinions and reports that are furnished by any actuary, accountant, controller, counsel, investment banker or other person who is employed or engaged for such purposes.
6.3Governing Law. This Plan shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, to the extent not preempted by federal law.
ARTICLE VII - CLAIMS PROCEDURE
7.1Plan Interpretation. The Human Resources Committee of the Board of Directors shall have the authority and responsibility to interpret and construe the Plan and to decide all questions arising thereunder, including, without limitation, questions of eligibility for participation, eligibility for Contributions, the amount of Account balances, and the timing of the distribution thereof, and shall have the authority to deviate from the literal terms of the Plan to the extent it shall determine to be necessary or appropriate to operate the Plan in compliance with the provisions of applicable law. Notwithstanding the above, a member of the Human Resources Committee shall not take any part in decisions regarding his participation in the Plan.
7.2Denial of Claim for Benefits. Any denial by the Human Resources Committee of any claim for benefits under the Plan by a Participant or Beneficiary shall be stated in writing by the Human Resources Committee and delivered or mailed to the Participant or Beneficiary. The Human Resources Committee shall furnish the claimant with notice of the decision not later than 90 days after receipt of the claim, unless special circumstances require an extension of time for processing the claim. If such an extension of time for processing is required, written notice of the extension shall be furnished to the claimant prior to the termination of the initial 90 day period. In no event shall such extension exceed a period of 90 days from the end of such initial
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period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Human Resources Committee expects to render the final decision. The notice of the Human Resources Committee's decision shall be written in a manner calculated to be understood by the claimant and shall include (i) the specific reasons for the denial, including, where appropriate, references to the Plan, (ii) any additional information necessary to perfect the claim with an explanation of why the information is necessary, and (iii) an explanation of the procedure for perfecting the claim.
7.3Appeal of Denial. The claimant shall have 60 days after receipt of written notification of denial of his or her claim in which to file a written appeal with the Human Resources Committee. As a part of any such appeal, the claimant may submit issues and comments in writing and shall, on request, be afforded an opportunity to review any documents pertinent to the perfection of his or her claim. The Human Resources Committee shall render a written decision on the claimant's appeal ordinarily within 60 days of receipt of notice thereof but, in no case, later than 120 days.
ARTICLE VIII -FUNDING
8.1Funding. The Employer shall not segregate or hold separately from its general assets any amounts credited to the Accounts, and shall be under no obligation whatsoever to fund in advance any amounts under the Plan, including Contributions and earnings thereon.
8.2Insolvency. In the event that the Employer becomes insolvent, all Participants and Beneficiaries shall be treated as general, unsecured creditors of the Employer with respect to any amounts credited to the Accounts under the Plan.
ARTICLE IX - AMENDMENT AND TERMINATION
9.1Reservation of Rights. The Employer reserves the right to amend or terminate the Plan at any time by action of the Board of Directors. Notwithstanding the foregoing, no such amendment or termination shall reduce the balance of any Participant's Account as of the date of such amendment or termination.
9.2Funding upon Termination. Upon a complete termination of the Plan, the Employer shall contribute to the Carpenter Technology Corporation Non-Qualified Employee Benefits Trust an amount equal to the aggregate of all amounts credited to Participants' Accounts as of the date of such termination. If the Carpenter Technology Corporation Non-Qualified Employee Benefits Trust does not exist at the time the Plan is terminated, the Employer shall create an irrevocable grantor trust to which it will contribute such amounts. This newly created trust shall be designed to ensure that Participants will not be subject to taxation on amounts contributed to and held under the trust on their behalf before the amounts are distributed.
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9.3Survival of Accounts and Elections. Notwithstanding any termination of the Plan, the trustee of the trust to which amounts are contributed under Section 9.2 shall maintain the Accounts for Participants in the same manner as under this Plan and all elections for distributions under Article V of the Plan shall survive the termination and remain in effect.
ARTICLE X - MISCELLANEOUS
10.1Limited Purpose of Plan. The establishment or existence of the Plan shall not confer upon any individual the right to be continued as an Employee. The Employer expressly reserves the right to discharge any Employee whenever in its judgment its best interests so require.
10.2Non-alienation. No amounts payable under the Plan shall be subject in any manner to anticipation, assignment, or voluntary or involuntary alienation.
10.3Facility of Payment. If the Plan Administrator, in its sole discretion, deems a Participant or Beneficiary who is eligible to receive any payment hereunder to be incompetent to receive the same by reason of age, illness or any infirmity or incapacity of any kind, the Plan Administrator may direct the Employer to apply such payment directly for the benefit of such person, or to make payment to any person selected by the Plan Administrator to disburse the same for the benefit of the Participant or Beneficiary. Payments made pursuant to this Section 10.3 shall operate as a discharge, to the extent thereof, of all liabilities of all Employers and the Plan Administrator to the person for whose benefit the payments are made.
To record the adoption of the Plan, the Carpenter Technology Corporation has caused its authorized officers to affix its corporate name and seal this ____day of _________, 2005.
[CORPORATE SEAL] Attest:___________________________
Secretary | Carpenter Technology Corporation By: _________________________________
John E. Thames
Vice President - Human Resources |
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Deferred Compensation Plan
For Officers And Key Employees Of
Carpenter Technology Corporation
APPENDIX A
PARTICIPATING SUBSIDIARIES
[NONE]
As of January 1, 2005
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