TRUST AGREEMENT
---------------
Carpenter Technology Corporation
Non-Qualified Benefits Trust for Directors
TRUST AGREEMENT effective as of the 1st day of May,
1997, by and between Carpenter Technology Corporation, a
corporation organized under the laws of the State of Delaware
(hereinafter referred to as the "Company"), and THE CHASE
MANHATTAN BANK, a banking corporation organized under the laws of
the State of New York (hereinafter referred to as the "Trustee").
BACKGROUND
----------
The Company maintains the benefit plans listed on
Exhibit A hereto (the "Plans") for the benefit of various of its
Directors. The Company intends to create a trust, to which it
will contribute cash, or other property acceptable to the
Trustee, to help the Company meet its obligations under the
Plans, and to assure that, subject to the sufficiency of the
Trust Fund, payments provided for by the Plans are not improperly
withheld in the event of a Change in Control of the Company.
The establishment of this Trust shall not affect the
Company's continuing obligation to make payments under the Plans,
except that the liability shall be reduced to the extent payments
are made by the Trustee hereunder.
The assets of the Trust Fund shall be, and shall
remain, subject to the claims of the Company's general creditors
in the event of the Company's insolvency. Otherwise, the Trust
shall be irrevocable until all liabilities under all Plans have
been satisfied, at which time the Trust shall terminate, and all
remaining assets of the Trust Fund shall be returned to the
Company.
The Trust is intended to be a "grantor trust" with the
result that the corpus and income of the Trust are treated as
assets and income of the Company pursuant to sections 671 through
679 of the "Code".
The Company intends that the Plans not be deemed funded
(within the meaning of Title I of ERISA) despite the existence of
this Trust.
NOW, THEREFORE, in consideration of the mutual
covenants herein contained, the Company and the Trustee covenant
and agree as follows:
ARTICLE I
DEFINITIONS; ESTABLISHMENT OF TRUST
-----------------------------------
Section 1.01 Definitions. Whenever used in this
-----------
Trust Agreement, unless otherwise provided or the context
otherwise requires:
(a) "Account" shall mean an account maintained in
-------
respect of a Participant pursuant to Section 4.02.
(b) "Benefits" shall mean, with respect to each
--------
Participant, the benefits payable to or in respect of that
Participant pursuant to the applicable Plan listed on
Exhibit A.
(c) "Change in Control" is defined in Article III.
-----------------
(d) "Code" shall mean the Internal Revenue Code of
----
1986, as amended from time to time.
(e) "Committee" shall mean the Human Resources
---------
Committee of the Company's Board of Directors, or its
successor.
(f) "Company" shall mean Carpenter Technology
-------
Corporation or any successor company by merger, acquisition
or otherwise.
(g) "ERISA" means the Employee Retirement Income
-----
Security Act of 1974, as amended from time to time.
(h) "Investment Manager" shall mean any person or
------------------
entity that qualifies as an Investment Manager under section
3(38) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and is appointed by the Pension
Board or a duly authorized officer of the Company to manage
Trust assets that are not invested in life insurance
policies.
(i) "Participant" shall mean each person entitled to
-----------
benefits under any Plan, including the beneficiaries
pursuant to any Plan.
(j) "Pension Board" shall mean the Pension Board as
-------------
defined in the General Retirement Plan for Employees of
Carpenter Technology Corporation.
(k) "Plan" shall mean any plan listed on Exhibit A
----
hereto, as in effect from time to time. "Plans" shall mean
all such plans.
(l) "Trust" shall mean the trust established under
-----
this Trust Agreement.
(m) "Trust Agreement" shall mean this trust agreement,
---------------
as from time to time amended.
(n) "Trust Fund" shall mean the trust fund held from
----------
time to time by the Trustee hereunder consisting of all
contributions received by the Trustee together with the
investments and reinvestment made therewith and all net
profits and earnings thereon less all payments and charges
therefrom.
(o) "Trustee" shall mean The Chase Manhattan Bank, or
-------
its successor, or an officer, director or employee of such a
Trustee exercising any fiduciary powers under this Trust
Agreement; provided, however, that in no event may any
subsidiary or affiliate of the Company or any Participant be
such a successor Trustee.
Section 1.02 Establishment and Title of the Trust.
------------------------------------
The Company hereby establishes with the Trustee a trust to be
known as the "Carpenter Technology Corporation Non-Qualified
Benefits Trust for Directors," consisting of such sums of money
and other property acceptable to the Trustee as from time to time
may be paid or delivered to the Trustee pursuant to this Trust
Agreement. The Trust Fund shall be held by the Trustee in trust
and shall be dealt with in accordance with the provisions of this
Trust Agreement.
Section 1.03 Acceptance by the Trustee. The Trustee
-------------------------
accepts the Trust established hereunder on the terms and
conditions set forth herein and agrees to perform the duties
imposed on it by this Trust Agreement.
ARTICLE II
INVESTMENT AND ADMINISTRATION OF THE TRUST FUND
-----------------------------------------------
Section 2.01 Investment of the Trust Fund. Except as
----------------------------
directed by any Investment Manager, the Pension Board or a duly
authorized officer of the Company, the Trustee shall have the
exclusive responsibility and authority to hold, invest, reinvest
and administer the assets of the Trust, hereinafter referred to
as the "Fund", in accordance with the terms of this Trust
Agreement. The Trustee shall be under no liability for any loss
of any kind that may result when it follows proper written
directions of the Pension Board or a duly authorized officer of
the Company which are in accordance with the terms of the Trust
Agreement and not contrary to law.
(a) If an Investment Manager is so appointed by the
Pension Board or a duly authorized officer of the Company to
manage any portion of the Trust Fund, the Trustee's only
responsibility with respect to such portion shall be:
(1) except as otherwise directed by the Pension
Board or a duly authorized officer of the
Company, to retain custody of the assets of
such portion of the Trust Fund; and
(2) to follow the written directions of the
Investment Manager with respect to such
portion of the Trust Fund.
(b) The Trustee shall incur no liability with respect
to the investment of any portion of the Trust Fund if an
Investment Manager has been appointed to manage that portion
of the Trust Fund, by the Pension Board or a duly authorized
officer of the Company for either:
(1) following the written directions of the
Investment Manager; or
(2) failing to act in the absence of written
directions from the Investment Manager.
Notwithstanding anything to the contrary herein
contained, the Pension Board or a duly authorized officer of
the Company may direct the transfer of such part or all of
the Fund as it shall deem advisable to The Chase Manhattan
Bank as trustee of any trust ("Collective Trust") maintained
by it as a common trust fund as defined under section 584 of
the Code, now or hereinafter maintained by it as a medium
for the collective investment of assets of trusts and which
it may elect to make available to non-qualified benefit
trusts, and the Pension Board or a duly authorized officer
of the Company may direct the withdrawal of any part or all
of the Fund so transferred. To the extent of the interest
of the Trust in any Collective Trust, the terms of the
agreement or declaration of trust establishing such
Collective Trust shall be a part of this Trust as if set
forth in full herein, and any assets transferred to any
Collective Trust shall be held, invested and administered in
accordance with such agreement or declaration of trust,
which shall be controlling notwithstanding any contrary
provision of this Agreement.
Section 2.02 Plan Insurance. The Company may apply
--------------
for and maintain such contracts of insurance with one or more
insurance companies and on such rating or risk terms as the
Company may determine to be appropriate for the provision of
benefits under the Plans. The Trust shall be the policyholder
and owner of such contracts. The Trustee, only as directed by
the Pension Board or a duly authorized officer of the Company,
shall pay premiums or other charges with respect to such
contracts from assets of the Trust Fund.
Section 2.03 Investments of Insurance. The Pension
------------------------
Board or a duly authorized officer of the Company may direct the
Trustee to apply for and maintain contracts of insurance with one
or more companies for investment purposes pursuant to Section
2.05(m), using the proceeds of such insurance to fund the Trust.
The Trustee shall be the policyholder and owner of such
contracts. The Trustee, only as directed by the Pension Board or
a duly authorized officer of the Company, shall exercise any and
all investment options, decisions or rights that the Trustee has
as policyholder and owner of such insurance policies held for
investment purposes.
(a) If the Trustee is directed by the Pension Board or
a duly authorized officer of the Company to purchase an
insurance policy for investment purposes, the Trustee's only
responsibility with respect to such policy shall be:
(1) except as otherwise directed by the Pension
Board or a duly authorized officer of the
Company, to retain custody of such policy;
and
(2) to follow the written directions of the
Pension Board or a duly authorized officer of
the Company with respect to such policy.
(b) The Trustee shall incur no liability with respect
to the purchase of an insurance policy purchased for
investment purposes if directed by the Pension Board or a
duly authorized officer of the Company for either:
(1) following the written directions of the
Pension Board or a duly authorized officer of
the Company with respect to such policy; or
(2) failing to act in the absence of written
directions from the Pension Board or a duly
authorized officer of the Company with
respect to such policy.
Section 2.04 Funding Policy. From time to time the
--------------
Pension Board or a duly authorized officer of the Company may
communicate to the Trustee in writing the current funding policy
and method that have been established to carry out the objectives
of the Trust. The Trustee's discretion in investing and
reinvesting the principal and income of the Fund shall be subject
to the funding policy, and the Trustee shall have the duty to act
strictly in accordance with and may rely upon, such funding
policy, and any changes therein, as so communicated to the
Trustee from time to time in writing.
Section 2.05 Investment Powers of Trustee. Subject
----------------------------
to the direction of an Investment Manager, the Pension Board or a
duly authorized officer of the Company, or with respect to assets
subject to the Trustee's investment, management and control, the
Trustee shall have, with respect to any securities or other
property at any time held by it and constituting part of the
Fund, power:
(a) to purchase, receive or subscribe for any
securities or other property and to retain in trust such
securities or other property;
(b) to sell, exchange, redeem or otherwise dispose of
any securities or other property at public or private sale
for cash, on credit, or for other securities or property,
and to grant options for the purchase or exchange thereof
without liability on the purchasers to see to the
application of the purchase money;
(c) to participate in any plan of reorganization,
consolidation, merger, combination, liquidation or other
similar plan relating to any securities or other property
held in the Fund, and to consent to or oppose any such plan
or any action thereunder, or any contract, lease, mortgage,
purchase, sale or other action by any person or corporation;
(d) to deposit any securities or other property with
any protective, reorganization or similar committee; and to
pay and agree to pay part of the expenses and compensation
of any such committee and any assessment levied with respect
to any securities or other property so deposited;
(e) to exercise conversion and subscription rights
pertaining to any securities or other property held in the
Fund;
(f) to extend the time of payment of any obligation
held in the Fund;
(g) to enter into stand-by agreements for future
investment, either with or without a stand-by fee;
(h) to hold any moneys received by the Trustee in a
common trust fund as defined under Section 584 of the Code,
now or hereinafter maintained by it as a medium for the
collective investment of assets of trusts, or any other
comparable fund the Trustee deems advisable;
(i) to exercise all voting rights with respect to any
investment and to grant proxies, discretionary or otherwise;
(j) to collect and receive any and all money,
securities or other property due to the Fund and to give
full discharge therefor;
(k) with the consent of the Company, to settle,
compromise or submit to arbitration any claims, debts or
damages due or owing to or from the Trust; with the consent
of Carpenter, to commence or defend suits or legal
proceedings to protect any interest of the Trust; and, with
the consent of Carpenter, to represent the Trust in all
suits or legal proceedings in any court or before any other
body or tribunal (subsequent to a Change in Control the
consent of Carpenter is not required to pursue the powers
granted in this Section);
(l) for the purposes of the Trust and if so instructed
by the Investment Manager, the Pension Board or a duly
authorized officer of the Company, to borrow money from
others, to issue its promissory note or notes therefore, and
to secure the repayment thereof by pledging any securities
or other property in its possession; provided, however, that
no such loan or advance shall be made by the Trustee
hereunder other than as temporary advances to the Fund, on a
cash or overdraft basis, on which no interest is payable and
provided further that no insurance contract shall be pledged
except to secure a loan to pay premiums thereon;
(m) to purchase insurance contracts, and pay premiums
with respect thereto;
(n) to organize under the laws of any state a
corporation or trust for the purpose of acquiring and
holding title to any securities or other property which it
is authorized to acquire under this Trust Agreement and to
exercise with respect thereto any or all of the powers set
forth in this Trust Agreement.
Section 2.06 Discretionary Powers of Trustee. The
-------------------------------
Trustee shall have the following powers and authority with
respect to the fund:
(a) to employ suitable agents and counsel and to pay
their reasonable and proper expenses and compensation;
(b) to register any securities held by it hereunder in
its own name or in the name of a nominee with or without the
addition of words indicating that such securities are held
in a fiduciary capacity and to hold any securities in bearer
form and to deposit any securities or other property in a
depository or a clearing corporation;
(c) to make, execute and deliver, as Trustee, any and
all deed, leases, mortgages, conveyances, waivers, releases
or other instruments in writing necessary or desirable for
the accomplishment of any of the powers listed in Section
2.05; and
(d) generally, to do all acts, whether or not
expressly authorized, which the Trustee may deem necessary
or desirable for the protection of the Fund.
Section 2.07 Securities or Other Property. The words
----------------------------
"securities or other property" as used in this Trust Agreement
shall be deemed to refer to any property, real or personal, or
part interest therein, wherever situate, including, but not
limited, to governmental, corporate or personal obligations,
trust and participation certificates, leaseholds, fee titles,
mortgages and other interests in realty, preferred and common
stocks, certificates of deposit, put and call options and other
option contracts of any type, foreign or domestic, whether or not
traded on any exchange, tangible personal property, contracts for
future or immediate receipt or delivery of property, evidences of
indebtedness or ownership in foreign corporation or other
enterprises, indebtedness of foreign governments, limited
partnerships, insurance contracts, and any other evidences of
indebtedness or ownership including securities or other property
of the Company, without being limited to the classes of property
in which trustees are authorized to invest trust funds by any law
or any rule of court of any State.
Section 2.08 Trustee's Authority. Persons dealing
-------------------
with the Trustee shall be under no obligation to see the proper
application of any money paid or property delivered to the
Trustee or to inquire into the Trustee's authority as to any
transaction.
Section 2.09 Protection Clause. Neither the Company
-----------------
nor the Trustee shall be responsible for any insurance company's
failure to make payments provided by such contract, or for the
action of any person which may delay payment or render a contract
null and void or unenforceable in whole or in part.
Section 2.10 Following a Change In Control -
-----------------------------
Following the occurrence of a Change in Control as defined in
Section 3.01, the Trustee shall follow the last funding policy
communicated in writing by the Pension Board or a duly authorized
officer of the Company prior to such Change in Control.
Notwithstanding instructions to the contrary, the maturity of
investment instruments shall at all times be selected to permit
the timely payment of benefits under the Plans.
ARTICLE III
CHANGE IN CONTROL
-----------------
Section 3.01 Definition of Change in Control. For
-------------------------------
purposes of this Trust, a "Change in Control" of the Company
shall be deemed to have occurred if:
(a) a "person" (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), 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 the Exchange Act), directly
or indirectly, of securities of the Company representing 25%
or more of the combined voting power of the Company's then
outstanding securities; or
(b) during any period of two consecutive years (not
including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constitute the Board and any new director (other than a
director designated by a person who has entered into an
agreement with the Company to effect a transaction described
in Section 3.01(a), 3.01(c) or 3.01(d) whose election by the
Board 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
(c) 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 75% of the combined voting
power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger
or consolidation, or
(d) 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 all or substantially
all the Company's assets.
Section 3.02 Definition of a Potential Change in
-----------------------------------
Control. For purposes of this Trust, a "Potential Change in
- -------
Control" of the Company shall be deemed to have occurred if:
(a) the Company enters into an agreement, the
consummation of which would result in the occurrence of a
change in control of the Company,
(b) 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 of
the Company;
(c) 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 10% or more of the combined voting power of the
Company's then outstanding securities, increases his
beneficial ownership of such securities by 5% or more of the
combined voting power of the Company's then outstanding
securities on the effective date of this Agreement; or
(d) the Board of Directors of the Company adopts a
resolution to the effect that, for purposes of this Trust, a
"potential change in control" has occurred. Such a
resolution will be provided to the Trustee in certified
form.
Section 3.03 Requirement of Notice. Notwithstanding
---------------------
the definitions in Sections 3.01 and 3.02, no Change in Control
or Potential Change in Control shall be deemed to have occurred
for purposes of this Trust Agreement unless and until the Trustee
has actual written notice from the Company or from any person who
was an officer of the Company prior to the alleged Change in
Control or the alleged Potential Change in Control that such
Change in Control or Potential Change in Control has occurred.
ARTICLE IV
CONTRIBUTIONS
-------------
Section 4.01 Contributions by the Company.
----------------------------
(a) The Company will deliver contributions hereunder
to the Trustee at such times, and in such amounts, as the
Company may determine to be appropriate to enable the Trust
to accumulate assets sufficient to pay all, or any part, as
determined by the Company, of the benefits payable under the
Plans.
(b) Upon the occurrence of a Potential Change in
Control, the Company, if it so chooses, will deliver to the
Trustee cash and/or marketable securities having a fair
market value in an amount equal to the sum of the amounts,
determined by an actuary selected by the Company, which will
be sufficient to fund fully the Company's obligations to pay
to the Participants the full amount of all Benefits to which
they may become entitled pursuant to the Plans. The
actuarial basis employed by such actuary shall include the
following assumptions: no interest will be earned on plan
assets; Directors' fees will increase at the rate of 10% per
annum; there will be no change in the plan; and, a Director
will be assumed to terminate at such time as to maximize his
benefits under the Plans but not later than age 70. Any
such contribution shall be identified to the Trustee, by the
Company, as a Section 4.01(b) contribution.
(c) In addition to contributions made to the Trust
pursuant to Sections 4.01(a) and 4.01(b), the Company shall
deliver to the Trustee any amounts which the Trustee is
required to pay pursuant to Section 6.02.
(d) The Trustee shall be responsible only for
contributions actually received by it hereunder. The
Trustee shall have no duty or authority to ascertain whether
any contributions should be made to it or to bring any
action or proceeding to enforce any obligation to make any
such contribution.
(e) In the event that the Trust is overfunded; any
amount of such assets constituting the overfunding shall:
(1) first, be transferred to the
Carpenter Technology Corporation Non-Qualified Employee
Benefits Trust ("the Employees' Trust") until the
Employees' Trust becomes overfunded; and
(2) second, returned to the Company.
(f) For the purposes of Section 4.01(e), above, the
Trust is "overfunded" when the amount of assets held in the
Trust Fund exceed 110% of the present value of the future
benefits expected to be paid under the Plans. The present
value of future benefits shall be calculated as the
projected benefit obligation ("PBO"), as described in
Statement No. 87 of the Financial Accounting Standards
Board, except that projected service will be taken into
account as if accrued. The present value shall be
calculated using the actuarial assumptions used to determine
the Company's pension expense for the General Retirement
Plan for Employees of Carpenter Technology Corporation,
except that the discount rate shall be adjusted to the
extent that assets held by the Trust are subject to tax.
The determination of whether the Trust is overfunded shall
be made by a qualified actuary selected by the Human
Resources Committee.
Section 4.02 Accounts.
--------
(a) Before a Change In Control. The Company shall
--------------------------
create a separate Account for each Participant, cause
records to be maintained by the Company, or retain a
separate recordkeeper as the Company's agent, reflecting the
amount, if any, credited to that Participant in accordance
with the terms of the Deferred Compensation Plan for Non-
Management Directors of Carpenter Technology Corporation
(the "Deferred Compensation Plan"). When a contribution is
made, the Company shall notify the Trustee of the amount of
such contribution allocable to each Participant's Account
and/or specific plans. The Trustee shall not be required to
maintain any separate account records, but shall rely solely
upon the information maintained by the Company and the
notice to the Trustee as herein provided. The remainder,
(or all thereof if no allocation is indicated) of such
contribution shall not be specifically allocated to any Plan
or any Participant, but shall be available to discharge the
Company's obligations to make benefit payments under any of
the Plans in accordance with the applicable provisions of
Article V. The Company shall, however, provide to the
Trustee, with respect to each Plan, at such intervals as the
Company shall determine, but in no event less frequently
than annually, a schedule listing each Participant, each
Plan under which that Participant has accrued a benefit and
the amount of such benefit. The Trustee shall have no
responsibility with respect to the determination or accuracy
of any such allocations and/or the accrued benefits due any
participant or plan as herein provided, but shall rely
solely upon such information provided to it by the Company.
(b) Following a Change In Control. Upon notice to the
-----------------------------
Trustee that a Change in Control has occurred, or that a
Potential Change in Control has occurred and that the
Company has invoked the allocation procedures of this
Section 4.02(b), the Trustee, based upon the schedule of
such benefits most recently provided to the Trustee by the
Company, shall allocate all of the Trust Fund's assets as
follows: assets shall first be allocated to the Deferred
Compensation Plan portion of each Participant's Account in
an amount equal to each Participant's accrued benefit
therein not previously allocated thereto. In the event that
the Trust Fund's assets are insufficient to fully fund each
Participant's accrued benefit under the Deferred
Compensation Plan, the assets shall be allocated ratably to
the Participants' Accounts in the ratio that the accrued
benefits in respect of each such Participant under said
Deferred Compensation Plan bear to the total accrued
benefits of all such Participants under said plan. The
balance of the assets shall be allocated to each
participant's account in an amount equal to each
participant's accrued benefit under all of the Plans other
than the Deferred Compensation Plans. If the assets of the
Trust Fund, after making provision for the Deferred
Compensation Plan, are insufficient to fully fund all of the
accrued benefits of all Participants under all of the other
Plans, those assets shall be allocated ratably to the
Participants' Accounts in the ratio that the accrued
benefits in respect of each such Participant under all of
such other Plans bear to the total accrued benefits of all
such Participants under all such other Plans.
Section 4.03 Delivery to the Company. Any Section
-----------------------
4.01(b) contribution delivered to the Trustee shall be returned
to the Company without interest on the 181st day following (and
exclusive of the date of) its receipt by the Trustee, unless
within 180 days following such receipt by the Trustee, a notice
of the "Change in Control" shall have been received by the
Trustee pursuant to Section 3.03. Such 180-day period shall be
extended for an additional 180-day period for any "Potential
Change in Control" which occurs or continues during any initial
or extended 180-day period. The Company will provide the Trustee
with written notice of any extension.
Section 4.04 Trustee's Agent. The Trustee shall be
---------------
entitled to retain such actuarial, accounting, legal and other
services as it may deem necessary to accomplish and/or maintain
such allocations, payments and/or Participant Account records as
are provided for under Articles IV and V hereof or to conduct its
investment responsibilities under Section 2.06, and to pay for
such services as an expense of the Trust Fund out of the assets
of the Trust Fund, unless promptly paid by the Company.
ARTICLE V
PAYMENT OF BENEFITS
-------------------
Section 5.01 Payments by Trustee.
-------------------
(a) Prior to a Change In Control. Until such time as
----------------------------
Section 5.01(b) applies, all payments to Participants in any
of the Plans shall be made by the Company, as agent for the
Trustee, in accordance with the applicable provisions of the
Plans. Upon receipt of written instructions to the Trustee
from the Company of the amount needed to pay such benefits
the Trustee shall promptly disburse such funds to the
Company and, upon that disbursement shall have no further
responsibility with respect to such funds or their
application.
(b) Following a Change In Control. Following notice
-----------------------------
to the Trustee that a Change in Control has occurred, and
subject to the limitation of Section 5.01(c), the Trustee
shall make payments to Participants and their beneficiaries
from the Trust Fund in accordance with the payment schedule
most recently provided by the Company to the Trustee prior
to the occurrence of the Change in Control; provided,
however, that if the Company and a Participant agree to the
substitution of a new payment schedule with respect to such
Participant following the occurrence of a Change in Control,
the Trustee shall instead make payments in accordance with
such substitute payment schedule. In the event that the
Company and a Participant (or in the event of his death, his
Beneficiary) disagree as to the amount, form or duration of
benefit payments under a Plan, the Trustee shall continue to
make benefit payments pursuant to the payment schedule most
recently provided by the Company prior to a Change in
Control until authorized to make payments under a substitute
schedule by both the Participant (or Beneficiary) and the
Company or until the Trustee receives a final non-appealable
order from a court of competent jurisdiction to alter such
benefit payment schedule.
(c) Any amount paid under this Section 5.01 shall be
charged by the Company or the Trustee, as the case may be,
against the Account of the applicable Participant and no
payment with respect to an Account shall be made in excess
of the amount credited to such Account.
(d) The Trustee shall not make any payments to
Participants or beneficiaries from the Trust Fund except as
provided in this Section 5.01 even though it may be informed
from another source that payments are due under a Plan. The
Trustee shall be fully protected in making payments or
omitting to make payments in accordance with Section
5.01(b).
Section 5.02 Determinations by Committee or Company.
--------------------------------------
(a) If at any time the Company or, if Section 5.01(b)
applies, the Trustee, determines that any amount held in the
Trust Fund is includible in the gross income of a
Participant or his beneficiary for federal income tax
purposes prior to payment of such amount from the Trust
Fund, the Trustee, upon notice from the Company or, if
Section 5.01(b) applies, upon notice by a Participant or
Beneficiary, in the format provided in Exhibit B, that based
on a (i) change in the tax or revenue laws of the United
States of America, (ii) a published ruling or similar
announcement issued by the Internal Revenue Service, (iii) a
regulation issued by the Secretary of the Treasury or his
delegate, (iv) a decision by a court of competent
jurisdiction involving the Participant or Beneficiary, or
(v) a closing agreement made under Code Section 7121 that is
approved by the Internal Revenue Service and involves the
Participant or Beneficiary, that Participant or Beneficiary
has recognized or will recognize income for federal income
tax purposes with respect to amounts that are or will be
payable to him under the Plans before they are paid to him,
shall pay such amount to such person in the manner directed
by the Committee or by such notice to the Trustee and the
Participant's Account shall be charged, or his accrued
benefit reduced, accordingly.
(b) If at any time the Company prior to a Change in
Control determines that the amount allocated to the Account
of any Participant exceeds the amount reasonably expected to
be necessary to provide the Benefits payable in respect of
such Participant from such Account, such excess may be
reallocated to the Accounts of other Participants or held as
part of the unallocated Fund, as determined by the Company.
If at any time prior to a Change in Control the Committee
determines that the Benefits in respect of all Participants
have been paid in full, the Committee shall so notify the
Trustee in writing.
Section 5.03 Withholding, Returns and Reports.
--------------------------------
(a) Prior to a Change in Control. Prior to a Change
----------------------------
in Control, the Company shall withhold all required federal,
state and local taxes from benefit payments under any of the
Plans, and remit those withholdings to the appropriate
taxing authorities. The Company shall also be responsible
for the preparation of all information reports, returns,
receipts and other communications required by Chapter 61 of
the Code to be filed with, or distributed to, any person or
governmental entity.
(b) Following a Change in Control. Following a Change
-----------------------------
in Control, the Trustee shall assume the Company's
responsibilities under Section 5.03(a) with respect to
benefit payments under any of the Plans, and shall reduce
such benefit payments by the amount of any such required
withholding. The Trustee shall remit the net benefit
payments to the Participants and shall pay the required tax
withheld to the Company, which shall continue to be
responsible for the preparation and filing of all items
required by Chapter 61 of the Code, as enumerated in Section
5.03(a).
(c) The Company and the Trustee shall cooperate with
each other in providing any information reasonably necessary
to enable the other to carry out any of its responsibilities
under this Section 5.03.
Section 5.04 Company's Continuing Obligations.
--------------------------------
Notwithstanding any provisions of this Trust Agreement to the
contrary, the Company shall remain obligated to pay the Benefits
under the Plan. To the extent the amount in the Trust Fund is
not sufficient to pay any Benefits when due, the Company shall
pay such deficiency directly to the person entitled thereto.
Nothing in this Trust Agreement shall relieve the Company of its
liabilities to pay the Benefits except to the extent such
liabilities are met by the application of Trust Fund assets.
Section 5.05 Company's Income. The Company agrees
----------------
that all income, deductions and credits of the Trust Fund belong
to it as owner for income tax purposes and will be included on
the Company's income tax returns to the extent required by
applicable law.
ARTICLE VI
CONCERNING THE TRUSTEE
----------------------
Section 6.01 Notices to the Trustee. Except as
----------------------
provided in Section 5.02, the Trustee may rely on the
authenticity, truth and accuracy of:
(a) any notice, direction, certification, approval or
other writing of the Company, if evidenced by an instrument
signed in the name of the Company by its Chairman,
President, any Vice President, Secretary, Assistant
Secretary or Treasurer, and believed in good faith by it to
be genuine;
(b) any notice, direction, certification, approval or
other written, oral or other transmitted form of instruction
received by the Trustee and believed by it in good faith to
be genuine and to be sent by or on behalf of the Committee;
or
(c) any copy of a resolution of the Board of Directors
of the Company, if certified by the Secretary or an
Assistant Secretary of the Company under its corporate seal.
(d) The Company shall furnish the Trustee from time to
time with a list of the names and signatures of the officers
or other persons authorized to act under this Section
6.01(a) and (b), or in any other manner authorized to notify
or instruct the Trustee pursuant to the provisions of this
Agreement. Any such list shall be certified by the
Secretary or an Assistant Secretary of the Company, and may
be relied upon by the Trustee until it receives a revised
list.
Section 6.02 Expenses of the Trust Fund. The Trustee
--------------------------
shall pay out of the Trust Fund: (a) all brokerage fees and
transfer tax expenses and other expenses incurred in connection
with the sale or purchase of investments; (b) all real and
personal property taxes, income taxes and other taxes of any kind
at any time levied or assessed under any present or future law
upon, or with respect to, the Trust Fund or any property included
in the Trust Fund; (c) the Trustee's compensation and expenses as
provided in Section 6.03, unless promptly paid by the Company;
and (d) unless promptly paid by the Company, all other reasonable
expenses of administering the Trust. Notwithstanding the
foregoing, the Trustee shall, at Company expense and direction,
contest the validity of any taxes in any manner deemed
appropriate by the Company or its counsel, but only if it has
received an indemnity bond or other security satisfactory to it
to pay any expenses of such contest; provided, however, that the
Trustee shall have no obligation to contest if it receives an
opinion of counsel of its choice to the effect that there is no
basis in law or fact for such contest. Alternatively, the
Company may itself contest the validity of any such taxes.
Section 6.03 Compensation of the Trustee. The
---------------------------
Company will pay to the Trustee compensation for its services
from time to time in accordance with its schedule of fees then in
effect for trusts of similar nature, and will reimburse the
Trustee for all reasonable expenses (including attorneys' fees)
incurred by the Trustee in the administration of the Trust.
Section 6.04 Protection of the Trustee.
-------------------------
(a) The Company agrees to indemnify and hold harmless
the Trustee from and against any and all damages, losses,
claims or expenses as incurred (including expenses of
investigation and fees and disbursements of counsel to the
Trustee and any taxes imposed on the Trust Fund or income of
the Trust) arising out of or in connection with the
performance by the Trustee of its duties hereunder, except
to the extent that any such damages, losses, claims or
expenses result from the negligence or willful misconduct of
the Trustee, its officers, employees or agents.
(b) The Trustee shall incur no liability to any person
in discharging its duties hereunder for any action taken or
omitted in good faith in conformity with the terms of this
Trust Agreement. Each direction, notice, request or
approval provided (whether or not certified to the Trustee
in writing) by the Company, the Pension Board, or the
Committee, shall constitute a certification by the Company
to the Trustee that such direction is in conformity with the
terms of the Plan and applicable law. Under no
circumstances shall the Trustee incur liability to any
person for any indirect, consequential or special damages
(including, without limitation, lost profits) of any form,
whether or not foreseeable and regardless of the form of the
action in which such a claim may be brought, with respect to
the Trust or its role as Trustee, except as otherwise
required by ERISA or New York State law.
Section 6.05 Duties of the Trustee. The Trustee will
---------------------
be under no obligation to perform any duties whatsoever, except
such duties as are specifically set forth as such in this Trust
Agreement, and no implied covenant or obligation will be read
into this Trust Agreement against the Trustee. The Trustee will
not be compelled to take any action toward the execution or
enforcement of the Trust or to prosecute or defend any suit in
respect thereof, unless indemnified to its satisfaction against
loss, costs, liability and expense or there are sufficient assets
in the Trust Fund to provide such indemnity; and the Trustee will
be under no liability or obligation to anyone with respect to any
failure on the part of the Company to perform any of its
obligations under the Plans. Nothing in this Trust Agreement
should be construed as requiring the Trustee to make any payment
in excess of amounts held in the Trust Fund at the time of such
payment.
Section 6.06 Settlement of Accounts of the Trustee.
-------------------------------------
The Trustee shall keep or cause to be kept accurate and detailed
records of all investments, receipts, disbursements and other
transactions hereunder. Such records shall be open to inspection
and audit at all reasonable times during normal business hours by
any person designated by the Company. At least annually, or upon
such more frequent intervals, but not more frequent than monthly,
as the Company may direct, the Trustee shall file with the
Company a written statement, listing the investments of the Trust
Fund and any uninvested cash balance thereof, and setting forth
all receipts, disbursements, payments and other transactions
respecting the Trust Fund not included in any such previous
statement. Any statement, when approved by the Company, will be
binding and conclusive on the Company; and the Trustee will
thereby be released and discharged from any liability or
accountability to the Company with respect to all matters set
forth therein. Omission by the Company to object in writing to
any specific items in any such statement, which shall be deemed
an account stated, within ninety (90) days after its delivery
will constitute approval of the account by the Company. No other
accounts or reports shall be required to be given to the Company,
except as stated herein or except as otherwise agreed to in
writing by the Trustee. Except as provided above, the Trustee
shall not be required to file an accounting, judicial or
otherwise.
Section 6.07 Right to Judicial Settlement. Nothing
----------------------------
contained in this Trust Agreement shall be construed as depriving
the Trustee of the right to have a judicial settlement of its
accounts, and upon any proceeding for a judicial settlement of
the Trustee's accounts or for instructions the only necessary
party thereto in addition to the Trustee shall be the Company.
Section 6.08 Resignation or Removal of the Trustee.
-------------------------------------
The Trustee may at any time resign upon sixty (60) days notice in
writing to the Company (which sixty (60) days notice requirement
may be waived by agreement in writing of the Company). Prior to
a Change in Control, or a Potential Change in Control, the
Trustee may be removed by the Company upon sixty (60) days notice
in writing to the Trustee (which sixty (60) days notice
requirement may be waived by agreement in writing of the
Trustee).
Section 6.09 Appointment of Successor Trustee. In
--------------------------------
the event of the resignation or removal of the Trustee, or in any
other event in which the Trustee ceases to act, a successor
trustee may be appointed by the Company by instrument in writing
delivered to and accepted by the successor trustee. Notice of
such appointment will be given by the Company to the retiring
trustee, and the successor trustee will deliver to the retiring
trustee an instrument in writing accepting such appointment. If
no appointment of a successor trustee is made within a reasonable
time after such a resignation, removal or other event, any court
of competent jurisdiction may appoint a successor trustee.
In the event of such resignation, removal or other
event, the retiring trustee or its successors and assigns shall
file with the Company a final statement to which the provisions
of Section 6.06 shall apply.
In the event of the appointment of a successor trustee,
such successor trustee will succeed to all the right, title and
estate of, and will be, the Trustee; and the retiring trustee
will after the settlement of its final account as provided for in
Section 6.06, and the receipt of any compensation or expenses due
it, deliver the Trust Fund to the successor trustee together with
all such instruments of transfer, conveyance, assignment and
further assurance as the successor trustee may reasonably
require. The retiring trustee will retain a first lien upon the
Trust Fund to secure all amounts due the retiring trustee
pursuant to the provisions of this Trust Agreement. The Company
will provide the Trustee with a ratification and release upon
such resignation, removal or other event.
Section 6.10 Merger or Consolidation of the Trustee.
-------------------------------------
Any corporation continuing as the result of any merger or
resulting from any consolidation to which merger or consolidation
the Trustee is a party, or any corporation to which substantially
all the business and assets of the Trustee may be transferred,
will be deemed automatically to be continuing as the Trustee.
ARTICLE VII
ENFORCEMENT
-----------
Section 7.01 Enforcement of Trust Agreement and Legal
----------------------------------------
Proceedings. The Company shall have the right to enforce any
- -----------
provision of this Trust Agreement in its own name. In any action
or proceeding affecting the Trust, the only necessary parties
shall be the Company and the Trustee and, except as otherwise
required by applicable law, no other person shall be entitled to
any notice or service of process. Any judgment entered in such
an action or proceeding shall, to the maximum extent permitted by
applicable law, be binding and conclusive on all persons having
or claiming to have any interest in the Trust.
ARTICLE VIII
AMENDMENT, REVOCATION AND TERMINATION
-------------------------------------
Section 8.01 Amendment. The Company may from time to
---------
time prior to the occurrence of a Change in Control or a
Potential Change in Control with respect to which the allocation
procedures of Section 4.02(b) are invoked, with the Trustee's
consent, amend in writing, in whole or in part, any or all of the
provisions of this Trust Agreement without the consent of any
Participant or any other person; provided, however, that no such
amendment shall increase the duties or obligations or change the
compensation of the Trustee without the Trustee's written
consent. This Trust Agreement may not be amended following a
Change in Control nor may it be amended following a Potential
Change in Control with respect to which the allocation procedures
of Section 4.02(b) are invoked unless the resulting allocations
are revoked pursuant to Section 4.03.
Section 8.02 Irrevocability. Subject to section
--------------
10.08, the Trust shall be irrevocable and, except as otherwise
provided in Section 8.03 and Article IX, shall be held for the
exclusive purpose of providing the Benefits to Participants and
their beneficiaries and defraying expenses of the Trust in
accordance with the provisions of this Trust Agreement.
Section 8.03 Termination. The Trust shall terminate
-----------
if the Committee provides the Trustee with a written statement to
the effect that the Benefits in respect of all Participants have
been paid in full. As soon as practicable following such event,
the Trustee shall settle its final accounts in accordance with
Section 6.06 and, after receipt of any unpaid fees and expenses,
shall distribute the balance of the Trust Fund to the Company,
provided, however, that after a Change in Control, such Committee
statement shall be accompanied by written approvals of the
Participants then listed on the most recent payment schedule
provided to the Trustee pursuant to Section 4.02. In the event
any such Participant does not approve, Section 5.01(b) shall
apply.
ARTICLE IX
CLAIMS OF COMPANY'S CREDITORS
-----------------------------
Section 9.01 Insolvency. As used in this Article IX,
----------
the Company shall be deemed to be "Insolvent" if (i) the Company
is unable to pay its debts generally as they come due, or (ii)
the Company is subject to a proceeding as a debtor under the
federal Bankruptcy Code (or any successor federal statute). In
the event the Company shall be deemed Insolvent, the assets of
the Trust shall be subject to claims of creditors of the Company
(hereinafter the "Bankruptcy Creditors").
Section 9.02 Discontinuance of Benefits. If at any
--------------------------
time (i) the Company or a person claiming to be a creditor of the
Company alleges in writing to the Trustee that the Company has
become Insolvent, or (ii) the Trustee is served with any order,
process or paper from a court of competent jurisdiction to the
effect that the Company is Insolvent, the Trustee shall give
notice thereof to the Company, shall discontinue Benefit payments
under this Trust Agreement, shall hold the Trust assets for the
benefit of the Company's Bankruptcy Creditors, and shall resume
payment of Benefits under this Trust Agreement in accordance with
Article V only upon: (a) in the case of clause (ii) above, the
receipt of an order of a court of competent jurisdiction
authorizing or requiring such payment, and (b) in the case of
clause (i) above, receipt of written notice from the Company that
the Company is not Insolvent. The Board of Directors of the
Company and the Company's Treasurer shall be obligated to give
the Trustee prompt written notice if the Company becomes
Insolvent, with the same consequences as provided in the
preceding sentence. If payment of Benefits has been discontinued
pursuant to clause (i) of the second preceding sentence, the
Board of Directors of the Company, and the Company's Treasurer,
shall be obligated to give the Trustee prompt written notice in
the event the Company is not Insolvent, and such notice from such
Board of Directors or Treasurer shall be treated as notice from
the Company for purposes of the second preceding sentence. The
Trustee shall not be liable to anyone in the event Benefit
payments are discontinued pursuant to this Section 9.02.
If the Trustee discontinues payment of Benefits
pursuant to this Section 9.02 and subsequently resumes such
payment, to the extent the Trust Fund is sufficient for such
purpose, the first payment to a Participant following such
discontinuance shall include an aggregate amount equal to the
payments which would have been made to such Participant under
this Trust Agreement but for this Section 9.02, as shall be
determined by the Committee or if Section 5.01(b) applies, by the
Trustee. No interest shall be due or payable with respect to any
such payments in arrears.
ARTICLE X
MISCELLANEOUS PROVISIONS
------------------------
Section 10.01 Successors. This Trust Agreement shall
----------
be binding upon and inure to the benefit of the Company and the
Trustee and their respective successors and assigns.
Section 10.02 Nonalienation. Except insofar as
-------------
applicable law may otherwise require:
(a) no amount payable to or in respect of any
Participant at any time under the Trust shall be subject in
any manner to alienation by anticipation, sale, transfer,
assignment, bankruptcy, pledge, attachment, charge or
encumbrance of any kind, and any attempt to so alienate,
sell, transfer, assign, pledge, attach, charge or otherwise
encumber any such amount, whether presently or thereafter
payable, shall be void; and
(b) the Trust Fund shall in no manner be liable for or
subject to the debts or liabilities of any Participant.
Section 10.03 Communications.
--------------
(a) Communications to the Company shall be addressed
to the Company at P.O. Box 14662, Reading, PA 19612-4662,
Attn. Treasurer, Carpenter Technology Corporation, provided,
however, that upon the Company's written request, such
communications shall be sent to such other address as the
Company may specify.
(b) Communications to the Trustee shall be addressed
to its Global Investor Services Division, 4-Chase Metrotech
Center, 18th Floor, Brooklyn, New York 11245; provided,
however, that upon the Trustee's written request, such
communications shall be sent to such other address as the
Trustee may specify.
(c) No communication shall be binding on the Trustee
until it is received by the Trustee, and no communication
shall be binding on the Company until it is received by the
Company.
Section 10.04 Headings. Titles to the Sections of
--------
this Trust Agreement are included for convenience only and shall
not control the meaning or interpretation of any provision of
this Trust Agreement.
Section 10.05 Third Parties. A third party dealing
-------------
with the Trustee shall not be required to make inquiry as to the
authority of the Trustee to take any action nor be under any
obligation to follow the proper application by the Trustee of the
proceeds of sale of any property sold by the Trustee or to
inquire into the validity or propriety of any act of the Trustee.
Section 10.06 Governing Law. This Trust Agreement and
-------------
the Trust established hereunder shall be governed by and
construed, enforced, and administered in accordance with the laws
of the State of New York. The United States District Court for
the Southern District of New York shall have the sole and
exclusive jurisdiction over any lawsuit or other judicial
proceeding relating to or arising from this Agreement. If that
court lacks federal subject matter jurisdiction, the Supreme
Court of the State of New York, New York County shall have sole
and exclusive jurisdiction. Either of these courts shall have
proper venue for any such lawsuit or judicial proceeding, and the
parties waive any objection to venue or their convenience as a
forum. The parties agree to submit to the jurisdiction of any of
the courts specified and to accept service of process to vest
personal jurisdiction over them in any of these courts. The
parties further hereby knowingly, voluntarily and intentionally
waive, to the fullest extent permitted by law, any right to a
trial by jury with respect to any such lawsuit or judicial
proceeding arising or relating to this Agreement or the
transactions contemplated hereby.
Section 10.07 Counterparts. This Trust Agreement may
------------
be executed in any number of counterparts, each of which shall be
deemed to be the original although the others shall not be
produced.
Section 10.8 IRS Ruling - Funded Status. The Company
--------------------------
intends to apply to the Internal Revenue Service for a ruling to
the effect that this Trust is a grantor trust within the meaning
of section 671, et. seq. of the Code and that contributions
hereunder will not be treated as taxable income to Plan
Participants until distributed to those Participants. If the
Company is unable to obtain a satisfactory ruling to that effect,
or if any Plan is finally determined to be funded within the
meaning of Title I of ERISA because of the existence of this
Trust and if a Change in Control has not then occurred, the
Company shall have the right, notwithstanding the provisions of
Article VIII, to further amend or revoke the Trust. If the Trust
is revoked, its assets, after deducting any unpaid fees or
expenses due the Trustee, shall be returned to the Company.
IN WITNESS WHEREOF, this Trust Agreement has been duly
executed by the parties hereto as of the day and year first above
written.
Attest: CARPENTER TECHNOLOGY CORPORATION
John R. Welty
Secretary
By: John A. Schuler
------------------------
Treasurer
Attest: THE CHASE MANHATTAN BANK
Robert Signorino
By: Vito Milillo
-----------------------
STATE OF Pennsylvania )
)
COUNTY OF Berks )
Personally appeared John A. Schuler, Treasurer, of
Carpenter Technology Corporation, signer and sealer of the
foregoing instrument, and acknowledged the same to be his free
act and deed as such and the free act and deed of said company,
before me May 1, 1997.
Anita M. Keltz
-------------------------
Notary Public
STATE OF New York )
) ss.:
COUNTY OF Kings )
Personally appeared Vito Milillo, Vice President, of the
Chase Manhattan Bank, signer and sealer of the foregoing instrument,
and acknowledged the same to be his free act and deed as such Vice
President and the free act and deed of said company, before me
May 20, 1997.
Julia R. Scalia
--------------------------
Notary Public
EXHIBIT "A"
-----------
1. Carpenter Technology Corporation Deferred Compensation Plan
For Non-Management Directors effective January 1, 1995,
subject to any approved amendments.
2. Carpenter Technology Corporation Director Retirement Plan
adopted June 9, 1983, effective August 1, 1981, subject to
any approved amendments.
EXHIBIT "B"
-----------
FORM OF NOTICE CONCERNING EARLY TAXATION
----------------------------------------
I, the undersigned Participant (Beneficiary) under the Carpenter
Technology Corporation Non-Qualified Benefits Trust for Directors
hereby notify The Chase Manhattan Bank, as Trustee, that pursuant
to Section 5.02(a) thereof, the undersigned will recognize income
for federal income tax purposes due to funds held in said Trust and
request payment of all funds held in my account. I do hereby
certify the above to be a true statement and I hereby furnish the
following independent verification of the reasons why I will
recognize income for federal income tax purposes:
[List below the type of independent verification and enclose
a copy of such verification.]