INDEMNIFICATION AGREEMENT
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AGREEMENT, effective as of April 28, 1993 between
CARPENTER TECHNOLOGY CORPORATION, a Delaware corporation (the
"Company"), and ~ (the "Indemnitee").
WHEREAS, it is essential to the Company to retain and
attract as directors and officers the most capable persons
available;
WHEREAS, Indemnitee is a director or officer of the
Company;
WHEREAS, both the Company and Indemnitee recognize the
increased risk of litigation and other claims being asserted
against directors and officers of public companies in today's
environment;
WHEREAS, the Restated Certificate of Incorporation (the
"Charter") and By-laws of the Company require the Company to
indemnify its directors and officers to the fullest extent
permitted by law and the Indemnitee has been serving and continues
to serve as a director or officer of the Company in part in
reliance on such Charter and By-laws;
WHEREAS, in recognition of Indemnitee's need for
substantial protection against personal liability in order to
enhance Indemnitee's continued service to the Company in an
effective manner, and Indemnitee's reliance on the aforesaid
Charter and By-laws, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by such
Charter and By-laws will be available to Indemnitee (regardless of,
among other things, any amendment to or revocation of such Charter
and By-laws or any change in the composition of the Company's Board
of Directors or acquisition transaction relating to the Company),
the Company wishes to provide in this Agreement for the
indemnification of and the advancing of expenses to Indemnitee to
the fullest extent (whether partial or complete) permitted by law
and as set forth in this Agreement, and, to the extent insurance is
maintained, for the continued coverage of Indemnitee under the
Company's directors' and officers' liability insurance policies;
NOW, THEREFORE, in consideration of the premises and of
Indemnitee continuing to serve the Company directly or, at its
request, another enterprise, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Certain Definitions:
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(a) Change in Control: shall be deemed to have
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occurred if (i) any "person" (as such term is used
in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended), other than a
trustee or other fiduciary holding securities under
an employee benefit plan of the Company or a
corporation owned directly or indirectly by the
stockholders of the Company in substantially the
same proportions as their ownership of stock of the
Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company
representing 20% or more of the total voting power
represented by the Company's then outstanding
Voting Securities, or (ii) during any period of two
consecutive years, individuals who at the beginning
of such period constitute the Board of Directors of
the Company and any new director whose election by
the Board of Directors or nomination for election
by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at
the beginning of the period or whose election or
nomination for election was previously so approved,
cease for any reason to constitute a majority
thereof, or (iii) the stockholders of the Company
approve a merger or consolidation of the Company
with any other corporation, other than a merger or
consolidation which would result in the Voting
Securities of the Company outstanding immediately
prior thereto continuing to represent (either by
remaining outstanding or by being converted into
Voting Securities of the surviving entity) at least
80% of the total voting power represented by the
Voting Securities of the Company or such surviving
entity outstanding immediately after such merger or
consolidation, or the stockholders of the Company
approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition
by the Company of (in one transaction or a series
of transactions) all or substantially all the
Company's assets.
(b) Claim: any threatened, pending or completed
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action, suit or proceeding, or any inquiry or
investigation, whether instituted by the Company or
any other party, that Indemnitee in good faith
believes might lead to the institution of any such
action, suit or proceeding, whether civil,
criminal, administrative, investigative or other.
(c) Expenses: include attorneys' fees and all other
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costs, expenses and obligations paid or incurred in
connection with investigating, defending, being a
witness in or participating in (including on
appeal), or preparing to defend, be a witness in or
participate in any Claim relating to any
Indemnifiable Event.
(d) Indemnifiable Event: any event or occurrence
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related to the fact that Indemnitee is or was a
director, officer, employee, agent or fiduciary of
the Company, or is or was serving at the request of
the Company as a director, officer, employee,
trustee, agent or fiduciary of another corporation,
partnership, joint venture, employee benefit plan,
trust or other enterprise, or by reason of anything
done or not done by Indemnitee in any such
capacity.
(e) Independent Legal Counsel: an attorney or firm of
attorneys, selected in accordance with the
provisions of Section 3, who shall not have
otherwise performed services for the Company or
Indemnitee within the last five years (other than
with respect to matters concerning the rights of
Indemnitee under this Agreement, or of other
indemnitees under similar indemnity agreements).
(f) Potential Change in Control: shall be deemed to
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have occurred if (i) the Company enters into an
agreement, the consummation of which would result
in the occurrence of a Change in Control; (ii) any
person (including the Company) publicly announces
an intention to take or to consider taking actions
which if consummated would constitute a Change in
Control; (iii) any person, other than a trustee or
other fiduciary holding securities under an
employee benefit plan of the Company or a
corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the
same proportions as their ownership of stock of the
Company, who is or becomes the beneficial owner,
directly or indirectly, of securities of the
Company representing 9.5% or more of the combined
voting power of the Company's then outstanding
Voting Securities, increases his beneficial
ownership of such securities by five percentage
points (5%) or more over the percentage so owned by
such person; or (iv) the Board adopts a resolution
to the effect that, for purposes of this Agreement,
a Potential Change in Control has occurred.
(g) Reviewing Party: any appropriate person or body
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consisting of a member or members of the Company's
Board of Directors or any other person or body
appointed by the Board who is not a party to the
particular Claim for which Indemnitee is seeking
indemnification, or Independent Legal Counsel.
(h) Voting Securities: any securities of the Company
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which vote generally in the election of directors.
2. Basic Indemnification Arrangement:
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(a) In the event Indemnitee was, is or becomes a party
to or witness or other participant in, or is
threatened to be made a party to or witness or
other participant in, a Claim by reason of (or
arising in part out of) an Indemnifiable Event, the
Company shall indemnify Indemnitee to the fullest
extent permitted by law as soon as practicable, but
in any event no later than thirty days after
written demand is presented to the Company, against
any and all Expenses, judgments, fines, penalties
and amounts paid in settlement (including all
interest, assessments and other charges paid or
payable in connection with or in respect of such
Expenses, judgments, fines, penalties or amounts
paid in settlement) of such Claim. If so requested
by Indemnitee, the Company shall advance (within
two business days of such request) any and all
Expenses to Indemnitee (an "Expense Advance").
Notwithstanding anything in this Agreement to the
contrary, except as provided in Section 5 hereof,
prior to a Change in Control, Indemnitee shall not
be entitled to indemnification or Expense Advances
pursuant to this Agreement in connection with any
Claim initiated by Indemnitee unless the Board of
Directors has authorized or consented to the
initiation of such Claim.
(b) Notwithstanding the foregoing, (i) the obligations
of the Company under Section 2(a) shall be subject
to the condition that the Reviewing Party shall not
have determined (in a written opinion, in any case
in which the Independent Legal Counsel referred to
in Section 3 hereof is involved) that Indemnitee
would not be permitted to be indemnified under
applicable law, and (ii) the obligation of the
Company to make an Expense Advance pursuant to
Section 2(a) shall be subject to the condition
that, if, when and to the extent that the Reviewing
Party determines that Indemnitee would not be
permitted to be so indemnified under applicable
law, the Company shall be entitled to be reimbursed
by Indemnitee (who hereby agrees to reimburse the
Company) for all such amounts theretofore paid;
provided, however, that if Indemnitee has commenced
or thereafter commences legal proceedings in a
court of competent jurisdiction to secure a
determination that Indemnitee should be indemnified
under applicable law, any determination made by the
Reviewing Party that Indemnitee would not be
permitted to be indemnified under applicable law
shall not be binding and Indemnitee shall not be
required to reimburse the Company for any Expense
Advance until a final judicial determination is
made with respect thereto (as to which all rights
of appeal therefrom have been exhausted or lapsed).
If there has not been a Change in Control, the
Reviewing Party shall be selected by the Board of
Directors and, if there has been such a Change in
Control (other than a Change in Control which has
been approved by a majority of the Company's Board
of Directors who were directors immediately prior
to such Change in Control), the Reviewing Party
shall be the Independent Legal Counsel referred to
in Section 3 hereof. If there has been no
determination by the Reviewing Party or if the
Reviewing Party determines that Indemnitee
substantively would not be permitted to be
indemnified in whole or in part under applicable
law, Indemnitee shall have the right to commence
litigation in any court in the States of
Pennsylvania or Delaware having subject matter
jurisdiction thereof and in which venue is proper
seeking an initial determination by the court or
challenging any such determination by the Reviewing
Party or any aspect thereof, including the legal or
factual bases therefor, and the Company hereby
consents to service of process and to appear in any
such proceeding. Any determination by the
Reviewing Party otherwise shall be conclusive and
binding on the Company and Indemnitee.
3. Change in Control. The Company agrees that, if
there is a Change in Control of the Company (other than a Change in
Control which has been approved by a majority of the Company's
Board of Directors who were directors immediately prior to such
Change in Control), then with respect to all matters thereafter
arising concerning the rights of Indemnitee to indemnity payments
and Expense Advances under this Agreement or any other agreement or
Charter or By-law provision now or hereafter in effect relating to
Claims for Indemnifiable Events, the Company shall seek legal
advice only from Independent Legal Counsel selected by Indemnitee
and approved by the Company (which approval shall not be
unreasonably withheld). Such counsel, among other things, shall
render its written opinion to the Company and Indemnitee as to
whether and to what extent the Indemnitee would be permitted to be
indemnified under applicable law. The Company agrees to pay the
reasonable fees of the Independent Legal Counsel referred to above
and to fully indemnify such counsel against any and all expenses
(including attorneys' fees), claims, liabilities and damages
arising out of or relating to this Agreement or its engagement
pursuant hereto.
4. Establishment of Trust. In the event of a Potential
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Change in Control, the Company shall, upon written request by
Indemnitee, create a trust for the benefit of Indemnitee and from
time to time upon written request of Indemnitee shall fund such
trust in an amount sufficient to satisfy any and all Expenses
reasonably anticipated at the time of each such request to be
incurred in connection with investigating, preparing for, and
defending any Claim relating to an Indemnifiable Event, and any and
all judgments, fines, penalties and settlement amounts of any and
all Claims relating to an Indemnifiable Event from time to time
actually paid or claimed, reasonably anticipated or proposed to be
paid, provided that in no event shall more than $150,000 be
required to be deposited in any trust created hereunder in excess
of amounts deposited in respect of reasonably anticipated Expenses.
The amount or amounts to be deposited in the trust pursuant to the
foregoing funding obligation shall be determined by the Reviewing
Party, in any case in which the Independent Legal Counsel referred
to above is involved. The terms of the trust shall provide that
upon a Change in Control (i) the trust shall not be revoked or the
principal thereof invaded, without the written consent of the
Indemnitee, (ii) the trustee shall advance, within two business
days of a request by the Indemnitee, any and all Expenses to the
Indemnitee (and the Indemnitee hereby agrees to reimburse the trust
under the circumstances under which the Indemnitee would be
required to reimburse the Company under Section 2(b) of this
Agreement), (iii) the trust shall continue to be funded by the
Company in accordance with the funding obligation set forth above,
(iv) the trustee shall promptly pay to Indemnitee all amounts for
which Indemnitee shall be entitled to indemnification pursuant to
this Agreement or otherwise, and (v) all unexpended funds in such
trust shall revert to the Company upon a final determination by the
Reviewing Party or a court of competent jurisdiction, as the case
may be, that Indemnitee has been fully indemnified under the terms
of this Agreement. The trustee shall be a national banking
association or trust company chosen by Indemnitee. Nothing in this
Section 4 shall relieve the Company of any of its obligations under
this Agreement.
5. Indemnification for Additional Expenses. The
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Company shall indemnify Indemnitee against any and all expenses
(including attorneys' fees) and, if requested by Indemnitee, shall
(within two business days of such request) advance such expenses to
Indemnitee, which are incurred by Indemnitee in connection with any
action brought by Indemnitee for (i) indemnification or advance
payment of Expenses by the Company under this Agreement or any
other agreement or Charter or By-law provision now or hereafter in
effect relating to Claims for Indemnifiable Events and/or (ii)
recovery under any directors' and officers' liability insurance
policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such
indemnification, advance expense payment or insurance recovery, as
the case may be.
6. Partial Indemnity, Etc. If Indemnitee is entitled
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under any provision of this Agreement to indemnification by the
Company for some or a portion of the Expenses, judgments, fines,
penalties and amounts paid in settlement of a Claim but not,
however, for all of the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled. Moreover, notwithstanding any other
provision of this Agreement, to the extent that Indemnitee has been
successful on the merits or otherwise in defense of any or all
Claims relating in whole or in part to an Indemnifiable Event or in
defense of any issue or matter therein, including dismissal without
prejudice, Indemnitee shall be indemnified against all Expenses
incurred in connection therewith.
7. Burden of Proof. In connection with any
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determination by the Reviewing Party or otherwise as to whether
Indemnitee is entitled to be indemnified hereunder, the burden of
proof shall be on the Company to establish that Indemnitee is not
so entitled.
8. No Presumptions. For purposes of this Agreement,
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the termination of any claim, action, suit or proceeding, by
judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that Indemnitee did not
meet any particular standard of conduct or have any particular
belief or that a court has determined that indemnification is not
permitted by applicable law. In addition, neither the failure of
the Reviewing Party to have made a determination as to whether
Indemnitee has met any particular standard of conduct or had any
particular belief, nor an actual determination by the Reviewing
Party that Indemnitee has not met such standard of conduct or did
not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that
Indemnitee should be indemnified under applicable law shall be a
defense to Indemnitee's claim or create a presumption that
Indemnitee has not met any particular standard of conduct or did
not have any particular belief.
9. Nonexclusivity, Etc. The rights of the Indemnitee
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hereunder shall be in addition to any other rights Indemnitee may
have under the Company's Charter or By-laws or the Delaware General
Corporation Law or otherwise. To the extent that a change in the
Delaware General Corporation Law (whether by statute or judicial
decision) permits greater indemnification by agreement than would
be afforded currently under the Company's Charter or By-laws and
this Agreement, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits so
afforded by such change.
10. Liability Insurance. To the extent the Company
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maintains an insurance policy or policies providing directors' and
officers' liability insurance, Indemnitee shall be covered by such
policy or policies, in accordance with its or their terms, to the
maximum extent of the coverage available for any Company director
or officer.
11. Period of Limitations. No legal action shall be
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brought and no cause of action shall be asserted by or in the right
of the Company against Indemnitee, Indemnitee's spouse, heirs,
executors or personal or legal representatives after the expiration
of two years from the date of accrual of such cause of action, and
any claim or cause of action of the Company shall be extinguished
and deemed released unless asserted by the timely filing of a legal
action within such two-year period; provided, however, that if any
shorter period of limitations is otherwise applicable to any such
cause of action such shorter period shall govern.
12. Amendments, Etc. No supplement, modification or
amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provisions hereof (whether or not similar) nor
shall such waiver constitute a continuing waiver.
13. Subrogation. In the event of payment under this
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Agreement, the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of Indemnitee, who shall
execute all papers required and shall do everything that may be
necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit
to enforce such rights.
14. No Duplication of Payments. The Company shall not
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be liable under this Agreement to make any payment in connection
with any Claim made against Indemnitee to the extent Indemnitee has
otherwise actually received payment (under any insurance policy,
Charter or By-law provision or otherwise) of the amounts otherwise
indemnifiable hereunder.
15. Binding Effect, Etc. This Agreement shall be
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binding upon and inure to the benefit of and be enforceable by the
parties hereto and their respective successors, assigns, including
any direct or indirect successor by purchase, merger, consolidation
or otherwise to all or substantially all of the business and/or
assets of the Company, spouses, heirs, executors and personal and
legal representatives. This Agreement shall continue in effect
regardless of whether Indemnitee continues to serve as an officer
or director of the Company or of any other enterprise at the
Company's request.
16. Severability. The provisions of this Agreement
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shall be severable in the event that any of the provisions hereof
(including any provision within a single section, paragraph or
sentence) is held by a court of competent jurisdiction to be
invalid, void or otherwise unenforceable in any respect, and the
validity and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any
way impaired and shall remain enforceable to the fullest extent
permitted by law.
17. Governing Law. This Agreement shall be governed by
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and construed and enforced in accordance with the laws of the State
of Delaware applicable to contracts made and to be performed in
such state without giving effect to the principles of conflicts of
laws.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement this _____ day of __________, 1993.
CARPENTER TECHNOLOGY CORPORATION
By s/Robert W. Cardy
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Name: Robert W. Cardy
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Title: Chairman, President and
Chief Executive Officer
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_______________________________
~
Indemnitee