CARPENTER TECHNOLOGY CORPORATION
DEFERRED COMPENSATION PLAN FOR NON-MANAGEMENT DIRECTORS
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This is the Carpenter Technology Corporation Deferred Compensation
Plan for Non-Management Directors, effective January 1, 1995, established
by Carpenter Technology Corporation and its subsidiaries expressly included
herein to provide its non-employee directors 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 to the
non-employee directors of Carpenter Technology Corporation.
ARTICLE I - DEFINITIONS
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The following words and phrases as used herein have the following
meanings unless the context plainly requires a different meaning:
1.1 Account means the total amount credited to the bookkeeping
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accounts in which a Participant's Contributions are maintained, including
earnings thereon.
1.2 Beneficiary means the person that the Participant designates to
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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.
1.3 Board of Directors means the board of directors of
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Carpenter Technology Corporation.
1.4 Code means the Internal Revenue Code of 1986, as amended.
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1.5 Compensation means all amounts that a Director receives in
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payment for serving on the Board of Directors. Notwithstanding the
preceding sentence, Compensation shall not include amounts identified
by the Corporation as expense allowances or reimbursements.
1.6 Contribution means an amount deferred under the Plan pursuant
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to a Participant's election under Article IV and credited to a Participant's
Account. No money or other assets will actually be contributed to such
Accounts.
1.7 Corporation means the Carpenter Technology Corporation.
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1.8 Director means an individual who serves on the Board of
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Directors or on the board of directors of any subsidiary that the
Board of Directors of Carpenter Technology Corporation designates
to participate in the Plan. A list of the subsidiaries currently
designated to participate in the Plan is attached hereto as
Appendix A.
1.9 Effective Date means January 1, 1995.
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1.10 Five-Year Medium Term Note Borrowing Rate means the
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Corporation's Five-Year Medium Term Note Borrowing Rate, as
provided by one of the Corporation's investment bankers for any
such medium term note that would have been issued on November 15
(or the next business day thereafter if November 15 is not a
business day) of each Plan Year.
1.11 Participant means a Director who elects to participate in the
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Plan pursuant to Section 2.2.
1.12 Pension Board means the Pension Board appointed pursuant to
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the General Retirement Plan for Employees of Carpenter Technology
Corporation, as constituted from time to time.
1.13 Plan means the Carpenter Technology Corporation Deferred
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Compensation Plan for Non-Management Directors, as may be amended from
time to time.
1.14 Plan Administrator means the Pension Board.
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1.15 Plan Year means the 12-month period beginning January 1 and
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ending December 31.
ARTICLE II - PARTICIPATION
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2.1 Eligibility to Participate. All Directors who are neither current
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nor past employees of the Corporation or any of its subsidiaries are eligible
to participate in the Plan.
2.2 Participation. Any Director who elects to participate in the
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Plan shall become a Participant in the Plan immediately upon enrolling as
a Participant by the method required by the Plan Administrator. 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
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Participants are always fully vested in all amounts credited to their
Accounts.
ARTICLE IV - CONTRIBUTIONS
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4.1 Eligibility to Receive Contributions. Subject to Section 5.4.2,
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a Participant may receive Contributions in each Plan Year that the
Participant is a Director and is not an employee of the Corporation.
4.2 Contributions. A Participant may elect to defer up to 100% of
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the Participant's Compensation and to have the Corporation make a
Contribution of that amount to the Participant's Account under the Plan.
4.3 Elections.
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4.3.1 Frequency and Timing of Elections. Elections may be
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made once each Plan Year and they may not be modified during the Plan Year.
The Participant must make an election by December 15 of a Plan Year for it
to take effect for the next Plan Year. However, for the initial Plan Year
beginning January 1, 1995, elections must be made by January 31, 1995, and
they will be effective as of February 1, 1995.
4.3.2 Duration of Elections. Elections to receive
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Contributions under this Article IV expire at the end of each Plan Year for
which the election was made.
4.3.3 Restriction on Elections. Elections to receive
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Contributions may be in the form of a whole percentage or in $1 increments.
4.4 Earnings. All amounts credited to a Participant's Account shall
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be credited with earnings at a rate equal to the Five-Year Medium Term Note
Borrowing Rate, established as of November 15 (or the next business day
thereafter if November 15 is not a business day) of the prior Plan Year.
For the first Plan Year, the rate is 8.25%. The Pension Board shall
communicate to all Directors the Five-Year Medium Term Note Borrowing Rate
for the next Plan Year no later than November 30 of the current Plan Year.
Earnings on Contributions shall begin to accrue on the date that such
Contributions would have been paid to the Participant but for an election
to defer under this Article IV. Earnings shall be compounded semi-annually
on each January 1 and July 1. In addition, any distribution not made on
either January 1 or July 1 shall have earnings compounded as of the date of
distribution.
ARTICLE V - DISTRIBUTIONS
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5.1 Payment of Distributions. All distributions shall, at the
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Company's discretion, be made directly out of the Corporation's general
assets or from the Carpenter Technology Corporation Non-Qualified Benefits
Trust for Directors.
5.2 Form of Distributions. A Participant may receive distributions
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in one of the following manners, which the Participant shall elect on the
initial enrollment form.
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;
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; or
5.2.4 On a schedule that is the same as that used for payments
made to the Participant under the Carpenter Technology Corporation Director
Retirement Plan.
5.3 Timing of Distributions. Participants shall elect on their
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initial enrollment forms when distributions of their Accounts will begin,
which shall either be a specific date or event. At any point prior to a
year in which a distribution of any or all of a Participant's Account is
scheduled for distribution pursuant to this Article V, the Participant
shall have the option to further defer all or part of the scheduled
distribution to a later year. A scheduled distribution or portion
thereof may, however, be further deferred only once.
5.4 Accelerated Distributions. Subject to the following forfeiture
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and suspension provisions, a Participant may elect to receive a
distribution of all or a portion of his Account prior to the date or
dates originally elected under Section 5.3 as long as such distribution
is at least $5,000.
5.4.1 Forfeiture of Earnings. A Participant shall forfeit
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any earnings attributable to the amount distributed pursuant to
Section 5.4 that accrued during the six-month period ending on the date
of the distribution. The amount of forfeited earnings shall be calculated
using the highest interest rate that was in effect during the six-month
period. If, however, the actual earnings credited to a Participant's
Account are less than the amount determined in the immediately preceding
sentence, no amount beyond the actual earnings shall be forfeited. Any
amounts forfeited under this Section shall not be distributed or allocated
to any other Account in the Plan and shall be forfeited to the Corporation.
5.4.2 Suspension of Participation. If a Participant
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elects to accelerate a distribution under Section 5.4, he will not be
entitled to receive any Contributions under the Plan for the Plan Year
immediately following the Plan Year in which the Participant elected to
accelerate a distribution. Any election made to receive Contributions
for a Plan Year in which participation is suspended shall be disregarded.
5.5 Termination of Service. Upon termination of service as a
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Director, a Participant, or the Beneficiary if the termination of
service is caused by the Participant's death, shall have the following
options with respect to the distribution of the Participant's Account:
5.5.1 Reaffirm Current Election. The Participant or
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Beneficiary may elect to reaffirm the Participant's election under
Section 5.3 that was in effect at the time of the Participant's
termination; or
5.5.2 Request a New Election. The Participant or
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Beneficiary may elect a new distribution option available under
Section 5.2, subject to the Corporation's consent.
ARTICLE VI - PLAN ADMINISTRATION
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6.1 General. The Plan shall be administered by the Pension Board,
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which is the Plan Administrator.
6.2 Responsibilities and Reports. The Plan Administrator may
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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.
6.3 Governing Law. This Plan shall be governed by and construed in
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accordance with the laws of the Commonwealth of Pennsylvania, to the
extent not preempted by federal law.
ARTICLE VII - CLAIMS PROCEDURE
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7.1 Plan Interpretation. The Human Resources Committee of the
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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.
7.2 Denial of Claim for Benefits. Any denial by the Human Resources
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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 circum-
stances 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 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 thedenial, 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.
7.3 Appeal of Denial. The claimant shall have 60 days after receipt
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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
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8.1 Funding. The Corporation shall not segregate or hold separately
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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.
8.2 Insolvency. In the event that the Corporation becomes insolvent,
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all Participants and Beneficiaries shall be treated as general, unsecured
creditors of the Corporation with respect to any amounts credited to the
Accounts under the Plan.
ARTICLE IX - AMENDMENT AND TERMINATION
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9.1 Reservation of Rights. The Corporation reserves the right to
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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.
9.2 Funding upon Termination. Upon a complete termination of the
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Plan, the Corporation shall contribute to the Carpenter Technology
Corporation Non-Qualified Benefits Trust for Directors 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 Benefits Trust for Directors does not exist
at the time the Plan is terminated, the Corporation 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.
9.3 Survival of Accounts and Elections. Notwithstanding
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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
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10.1 Limited Purpose of Plan. The establishment or
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existence of the Plan shall not confer upon any individual the
right to be continued as a Director.
10.2 Non-alienation. No amounts payable under the Plan
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shall be subject in any manner to anticipation, assignment, or
voluntary or involuntary alienation.
10.3 Facility of Payment. If the Plan Administrator, in its
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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
Corporation 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 the Corporation 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 20th day of December, 1995.
[CORPORATE SEAL] CARPENTER TECHNOLOGY CORPORATION
Attest: By: s/Robert W. Lodge
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Secretary Robert W. Lodge
Title: Vice President - Human &
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Administrative Services
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CARPENTER TECHNOLOGY CORPORATION
DEFERRED COMPENSATION PLAN FOR NON-MANAGEMENT DIRECTORS
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APPENDIX A
PARTICIPATING SUBSIDIARIES
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None
As of January 1, 1995