UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE FISCAL YEAR ENDED DECEMBER 25, 1993
OR
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File Number 1-3258
LUKENS INC.
50 South First Avenue, Coatesville, PA 19320-0911
(610) 383-2000
Incorporated in Delaware
I.R.S. Employer Identification Number 23-2451900
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
Common Stock, $.01 Par Value New York Stock Exchange
7.625% Notes Due 2004 Not Listed
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
Based on the closing price of March 4, 1994, the aggregate market value
of common stock held by nonaffiliates of the registrant was $521.9
million.
The number of common shares outstanding of the registrant was 14,536,712
as of March 4, 1994.
DOCUMENTS INCORPORATED BY REFERENCES
(1) Proxy Statement for Stockholder Meeting on April 27, 1994 .. Part III
PART I
ITEM 1. BUSINESS.
General
Lukens Inc. is a holding company incorporated in Delaware. In 1992,
Lukens expanded into stainless steel product lines with the acquisition
of Washington Steel Corporation for $273.7 million. Subsidiaries of
Lukens are involved primarily in the manufacture of carbon, alloy and
clad steel plate, and stainless steel plate, sheet, strip, hot band and
slabs. As part of a program adopted in 1993 to focus Lukens' resources
on its steel businesses, the subsidiaries previously reported in the
Corrosion Protection Group, Safety Products Group and most subsidiaries
in the Diversified Group are for sale. These subsidiaries are now
reported as discontinued operations, with their results reported
separately from continuing operations. Production facilities and markets
are located primarily in the United States.
Business Groups
Lukens has two business groups--Lukens Steel and Washington
Stainless. Financial information for these business groups is
incorporated herein by reference to Note 3 of the 1993 Annual Report to
stockholders. The chart below outlines the business group composition
of consolidated net sales for each of the last three years. The
Washington Stainless Group percent represents sales from the acquisition
date on April 24, 1992.
Business Group Sales-
Percent of Consolidated Net Sales
1993 1992 1991
Lukens Steel % 51.6 60.0 100.0
Washington Stainless 48.4 40.0 -
----- ----- -----
Total % 100.0 100.0 100.0
===== ===== =====
Lukens Steel Group
Lukens Steel Company specializes in the production of carbon, alloy
and clad steel plate. It ranks as one of the three largest domestic
plate steel producers and is the largest domestic producer in the alloy
plate market. There are several domestic and foreign competitors. Major
competitors are United States Steel, a subsidiary of the USX Corporation,
and Bethlehem Steel Corporation. During 1993, trade rulings by the U.S.
International Trade Commission upheld most of the steel-plate cases on
unfair trading practices.
Lukens Steel's competitive position is enhanced by a concentration
on plate with a product line that includes a wide range of plate sizes
and grades. In addition to price and quality, customer satisfaction,
measured by shipped-on-time performance and production lead times, has
become increasingly important in the competitive environment. Given the
overcapacity in the steel industry, price competition has been and is
expected to remain intense.
Products are sold primarily by an in-house sales force. Steel
service centers are the largest market for the group with annual
shipments ranging between 38 and 42 percent of total shipments in the
last three years. The Lukens Steel Group and service center industry
supply a wide range of markets in the capital-goods sector of the
economy, including markets for:
- Machinery and Industrial Equipment
- Infrastructure
- Environmental and Energy
- Transportation
- Military and Defense.
Some sales involve government contracts which, under certain
circumstances, are subject to termination or renegotiation. Terminations
for convenience of the government generally provide for payments to a
contractor for its costs and a portion of its profit. Lukens does not
expect any material portion of its business to be terminated or
renegotiated.
Raw materials used in the production of steel plate include carbon
scrap, alloy scrap and alloy additives. Generally, these materials are
purchased in the open market and are available from several sources.
Prices and availability are affected by the operating level of the
domestic steel industry, the quantity of scrap exported and world
political and economic conditions. Scrap costs increased significantly
in 1993. These costs historically have moved with changes in selling
prices. In 1993, this trend did not continue and it remains to be seen
if there has been a fundamental change in the scrap market. Principal
energy sources used in production include electricity and natural gas.
Propane gas back-up systems are available at the group's primary
manufacturing facility in the event of natural gas supply restrictions.
Washington Stainless Group
Washington Steel Corporation is the largest subsidiary in the group,
representing 68 percent of the group sales in 1993. This subsidiary
specializes in the manufacture and marketing of stainless steel plate,
sheet, strip, hot band and slabs. Primary competitors include Allegheny
Ludlum Corporation, J&L Specialty Products Corporation and Armco Inc.
Although these competitors have larger market shares, Washington Steel's
competitive position is built on the ability to serve niche markets by
providing a wide range of quality products.
Similar to the competitive environment in the Lukens Steel Group,
customer satisfaction, measured by shipped-on-time performance and
production lead times, has become increasingly important. During 1993,
increased foreign competition put pressure on selling prices.
Washington Specialty Metals Corporation is a service and
distribution center that specializes in stainless steel. The competitive
environment is characterized by numerous competitors on both a national
and a regional scale. Washington Specialty Metals is a leading
distributor of flat-rolled stainless steel.
Products are sold primarily by the group's own sales organizations.
The primary market of the group is service centers, which represented
over 56 percent of shipments in 1993. The Washington Stainless Group and
the service center industry supply diverse markets, including:
- Food Service Equipment
- Architecture and Construction
- Process Industries
- Transportation
- Consumer Durables.
Raw materials used in production include stainless scrap, chrome and
nickel. Generally, these materials are purchased in the open market and
are available from several sources. Prices and availability are affected
by the operating level of the domestic steel industry, the quantity of
scrap exported and world political and economic conditions. Principal
energy sources used in production include electricity and natural gas.
Discontinued Operations
Safety Products
The Flex-O-Lite subsidiary is a leading supplier in the United
States of glass beads used to make highway paint striping, sheeting and
signs reflective. Glass beads are also used in industrial cleaning
applications. Other product lines include reflective tape, traffic cones
and barrels, flashing lights, safety vests and warning flags. Glass
beads are primarily marketed by an inside sales force. Highway
construction-zone safety products are marketed by an inside sales force
and by agents, distributors and representatives.
Competitors are primarily domestic producers marketing on a national
or regional basis. Approximately one-third of the group's sales are made
to state and local governments under a competitive bidding process.
Raw materials used by the group include crushed glass, silicates and
polyethylene. They are readily available from several sources of supply.
Principal energy sources used in production are natural gas and
electricity.
Corrosion Protection
ENCOAT is one of the leading suppliers of protective and insulative
coatings for steel pipe in the United States. Cathodic Protection
Services provides services to protect steel and other metal structures
from corrosion. The primary market of this group is the oil and gas
industry. There are a number of domestic competitors, many of which are
small with sales generally limited to areas near their production
facilities. Products and services are marketed by the group's own sales
organizations.
Raw materials, all of which are readily available from several
suppliers, include polyethylene, epoxy powders, cement, coal tar enamel,
magnesium, graphite and aluminum alloy.
Diversified
Subsidiaries include two relatively small subsidiaries that
manufacture materials-handling and screening equipment and a short-line
railroad. The major market of the materials-handling subsidiaries is the
aggregate industry. Principal raw materials include plate steels, steel
rods and wire, and polyurethane resins. The short-line railroad serves
agricultural customers.
Sales Order Backlog
(Dollars in thousands)
Listed below is the backlog from continuing operations at the end
of 1993 and 1992. The backlog at year-end 1993 is anticipated to be
shipped in 1994.
December December
25, 1993 26, 1992
Lukens Steel $ 58,712 68,084
Washington Stainless 42,883 46,229
------- -------
Total $ 101,595 114,313
======= =======
Environment
In 1993, capital expenditures for environmental compliance projects
were $2.7 million. Capital expenditures are anticipated to be
approximately $4.7 million in 1994 and $4.5 million in 1995.
The trend for tighter environmental standards is expected to
continue and result in higher waste disposal costs and additional capital
expenditures in the long term. Lukens has an environmental committee
that meets quarterly to review environmental and remediation issues.
Outside consultants are also used on various technical issues. Although
it is difficult to project long-term requirements in this area, we are
not aware of any environmental problems that would jeopardize our
competitive position.
Employees
The average number of employees during 1993 was 4,769.
ITEM 2. PROPERTIES.
Capital Expenditure Program
Capital expenditures in 1993 of $67.4 million were part of a five-
year program of approximately $400 million. The program is aimed at
promoting synergies between the Lukens Steel Group and Washington
Stainless Group, and expanding our product lines to take advantage of the
anticipated long-term growth in stainless markets. The centerpiece of
the program is the installation of a plate and sheet processing system
at our Conshohocken, Pennsylvania facility. The new system, scheduled
to start up late in 1994, will utilize Steckel rolling technology and is
designed to lower production costs and expand the product range of both
the Lukens Steel Group and Washington Stainless group. Other
expenditures in the program include the expansion of stainless steel
melting capacity.
Lukens Steel Group
Raw steel is produced by electric arc furnaces at the Coatesville,
Pennsylvania, plant. Approximately 70 percent of 1993 production was
continuously cast into slabs at this facility. Rolling and fabrication
facilities are located in Coatesville and Conshohocken, Pennsylvania.
Other relatively small properties include a fabrication facility located
in Newton, North Carolina and a real estate development and management
company in New Castle, Delaware. The group operated near capacity in
1993. Capacity of facilities is considered adequate to support projected
sales.
Washington Stainless Group
Washington Steel Corporation has melting, continuous casting and
rolling facilities in Houston, Pennsylvania. Both the Washington,
Pennsylvania, and Massillon, Ohio, facilities have rolling and finishing
facilities. Utilization of these facilities ranged between 70 and 100
percent in 1993 and is considered adequate to support projected sales.
Washington Specialty Metals Corporation has fabrication and
distribution facilities in Wheeling, Illinois, and Lawrenceville,
Georgia. Additional distribution centers are located in:
- Carrollton, Texas
- Youngsville, North Carolina
- Tampa, Florida
- Brampton, Ontario, Canada
- Vaudreuil, Quebec, Canada.
Discontinued Operations
Safety Products
Manufacturing facilities include three glass bead plants and four
plants for highway construction-zone safety products. These plants
operated between 80 and 100 percent of capacity in 1993.
Corrosion Protection
Manufacturing facilities include nine plants for pipe coating and
one plant for anodes that are used in cathodic protection services.
Capacity utilization continued to be low in 1993.
Diversified
Materials-handling manufacturing facilities include four plants.
A short-line railroad is located in South Central Florida.
Plant and Equipment Pledged as Collateral
Plant and equipment with a net depreciated cost of $50.4 million are
pledged as collateral for various loans.
ITEM 3. LEGAL PROCEEDINGS.
As of year-end 1993, approximately 350 workers' compensation claims
alleging hearing loss have been asserted against Lukens Steel Co., a
wholly-owned subsidiary, by current and former employees before the
Pennsylvania Workers' Compensation Board. Claimants are seeking
compensation under state laws governing workers' compensation. A $5.6
million reserve has been established to cover potential awards and
defense costs resulting from these claims.
The company is party to various claims, disputes, legal actions and
other proceedings involving product liability, contracts, equal
employment opportunity, occupational safety, environmental issues and
various other matters. In the opinion of management, the outcome of
these matters should not have a material adverse effect on the
consolidated financial condition of the company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were voted upon during the fourth quarter of 1993.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following executive officers were elected by the Board of
Directors for the ensuing year and until their respective successors are
elected:
Executive Officer
Executive Officer/Title Age Since
R. W. Van Sant 55 October 1991
Chairman and Chief Executive Officer
Robert E. Heaton 64 April 1992
Senior Vice President-
Vice Chairman-Stainless Group
Dennis M. Oates 41 February 1987
Senior Vice President-
President and Chief Operating Officer-Carbon and Alloy Group
T. Grant John 55 February 1993
Vice President-
President and Chief Operating Officer-Washington Steel
John H. Bucher 54 April 1993
Vice President-Technology
Richard D. Luzzi 42 February 1993
Vice President-Human Resources
John N. Maier 42 January 1992
Vice President and Controller
James J. Norton 37 April 1992
Vice President-
President and Chief Operating Officer-Washington Specialty Metals
Frederick J. Smith 50 April 1993
Vice President-Manufacturing Services
William D. Sprague 52 October 1988
Vice President, General Counsel and Secretary
John C. van Roden, Jr. 45 February 1987
Vice President and Treasurer
Listed below are executive officers that have not been employed by
Lukens in an executive or managerial capacity during the last five years.
R. W. Van Sant was previously the president and chief executive
officer and a director of Blount, Inc. Prior to his association with
Blount in 1987, he served as president and chief operating officer and
a director of the Cessna Aircraft Company. He had earlier served as
vice president of manufacturing and engineering at Deere and Company
where he was employed for 26 years.
Robert E. Heaton, prior to the acquisition of Washington Steel
Corporation by Lukens in 1992, was president and chief operating officer
of Washington Steel since 1989 and served as president and chief
executive officer from 1978.
T. Grant John was previously with the Axel Johnson Group, a
privately-owned Swedish company with extensive holdings of stainless
steel businesses. During his 14 years with Axel Johnson, Mr. John held
operating and management positions in the corporation's United States
operations. Since 1985, Mr. John was a corporate vice president of Axel
Johnson, Inc.
Richard D. Luzzi joined Rockwell International Corporation in 1980
and became vice president-human resources at Rockwell Graphic Systems,
Inc. in 1988. In 1991, he assumed the additional responsibility of vice
president-international human resources for Rockwell International.
John N. Maier spent 14 years with various divisions of the
Continental Group, including director of capital plans and special
projects, Continental Forest Industries; vice president of finance,
Continental Woodlands, Inc.; and vice president and controller, Kiewit
Continental.
James J. Norton, prior to the acquisition of Washington Steel
Corporation by Lukens in 1992, was president of the service center group.
Previously, he was the chief financial officer of Mercury Stainless
Corporation, including Washington Steel, from 1986 to 1991.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The information required by this item is incorporated herein by
reference to the sections entitled "Dividends" and "Quarterly Financial
Data" included in Item 7 of this form 10-K.
ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
Selected Financial Highlights for Eleven Years
<CAPTION> 1993(a) 1992(a) 1991
--------- --------- ---------
<S> <C> <C> <C>
FOR THE YEAR
Net sales $ 862,072 695,772 423,154
Operating earnings (loss) 36,602 51,820 22,006
Net non-operating (expense) income (16,319) (12,737) 225
Income tax expense (benefit) 7,161 15,289 8,432
Earnings (loss) from continuing operatio 13,122 23,794 13,799
Discontinued operations, net of tax 2,780 9,261 9,197
Net earnings (loss) before cumulative
effect of accounting changes 15,902 33,055 22,996
Per common share - primary
Continuing operations .76 1.63 .96
Discontinued operations .19 .68 .72
Net earnings (loss) .95 2.31 1.68
Percent of stockholders' investment -
start of year % 4.8 13.3 9.7
Shares and equivalents outstanding -
weighted average 14,781 13,603 12,699
Cash dividends - common 14,508 13,374 12,397
Per share 1.00 1.00 1.00
Cash flow from operations 72,290 59,184 66,344
Depreciation and amortization 45,488 39,232 25,833
Capital expenditures 67,424 36,002 34,696
Average number of employees 4,769 4,240 3,884
AT YEAR END
Inventories $ 160,060 150,187 74,600
Current assets 307,739 294,388 203,930
Working capital 146,034 142,466 104,752
Current ratio 1.9 1.9 2.1
Plant and equipment, net of depreciation 431,853 410,206 210,578
Total assets 817,178 760,045 432,360
Long-term debt 220,768 218,903 46,637
Total debt 226,589 223,275 53,262
Stockholders' investment 266,754 329,073 248,323
Per common share 18.36 22.77 19.69
Common shares outstanding 14,529 14,455 12,610
Stockholders of record 5,600 4,700 4,400
(a) Includes results from the Washington Steel Corporation acquisition
April 24, 1992.
Selected Financial Highlights for Eleven Years (continued)
<CAPTION> 1990 1989 1988
--------- --------- ---------
<S> <C> <C> <C>
FOR THE YEAR
Net sales $ 488,217 476,838 450,779
Operating earnings (loss) 59,376 60,025 51,732
Net non-operating (expense) income (686) (2,758) (4,739)
Income tax expense (benefit) 21,829 21,275 17,205
Earnings(loss) from continuing operations 36,861 35,992 29,788
Discontinued operations, net of tax 7,291 5,502 3,600
Net earnings (loss) before cumulative
effect of accounting changes 44,152 41,494 33,388
Per common share - primary
Continuing operations 2.80 2.72 2.33
Discontinued operations .58 .43 .28
Net earnings (loss) 3.38 3.15 2.61
Percent of stockholders' investment -
start of year % 21.8 22.9 22.1
Shares and equivalents outstanding -
weighted average 12,572 12,732 12,812
Cash dividends - common 11,796 9,245 5,925
Per share .94 .74 .46
Cash flow from operations 92,112 38,456 49,054
Depreciation and amortization 25,789 23,709 22,623
Capital expenditures 35,018 25,471 35,153
Average number of employees 3,960 3,878 3,838
AT YEAR END
Inventories $ 71,854 95,685 90,337
Current assets 183,975 169,971 162,608
Working capital 96,442 87,629 68,936
Current ratio 2.1 2.1 1.7
Plant and equipment, net of depreciation 201,720 185,537 181,503
Total assets 411,919 376,660 353,054
Long-term debt 54,553 57,359 47,075
Total debt 59,034 62,683 51,044
Stockholders' investment 236,239 202,893 181,332
Per common share 18.90 16.40 14.06
Common shares outstanding 12,497 12,371 12,894
Stockholders of record 3,900 3,400 3,200
Selected Financial Highlights for Eleven Years (continued)
<CAPTION> 1987 1986 1985
--------- --------- ---------
<S> <C> <C> <C>
FOR THE YEAR
Net sales $ 363,614 276,027 293,134
Operating earnings (loss) 37,358 14,190 3,247
Net non-operating (expense) income (5,725) (5,772) (5,550)
Income tax expense (benefit) 14,188 4,772 (1,864)
Earnings(loss) from continuing operations 17,445 3,646 (439)
Discontinued operations, net of tax 4,217 5,128 (3,750)
Net earnings (loss) before cumulative
effect of accounting changes 21,662 8,774 (4,189)
Per common share - primary
Continuing operations 1.38 .32 (.03)
Discontinued operations .34 .45 (.33)
Net earnings (loss) 1.72 .77 (.36)
Percent of stockholders' investment -
start of year % 16.7 7.6 (3.3)
Shares and equivalents outstanding -
weighted average 12,585 11,462 11,483
Cash dividends - common 3,802 2,429 2,450
Per share .30 .21 .21
Cash flow from operations 23,555 45,055 14,043
Depreciation and amortization 21,626 21,805 20,743
Capital expenditures 25,762 9,831 21,343
Average number of employees 3,552 3,352 3,570
AT YEAR END
Inventories $ 79,954 61,520 52,534
Current assets 150,533 121,765 112,310
Working capital 65,252 42,483 43,943
Current ratio 1.8 1.5 1.6
Plant and equipment, net of depreciation 163,158 176,482 187,935
Total assets 326,251 312,469 308,594
Long-term debt 55,661 65,671 92,413
Total debt 61,304 73,730 98,846
Stockholders' investment 151,222 129,428 115,190
Per common share 11.90 10.49 10.42
Common shares outstanding 12,704 12,344 11,051
Stockholders of record 2,700 3,100 3,500
Selected Financial Highlights for Eleven Years (continued)
<CAPTION> 1984 1983
--------- ---------
<S> <C> <C>
FOR THE YEAR
Net sales $ 300,324 247,623
Operating earnings (loss) 8,952 (17,529)
Net non-operating (expense) income (5,565) (5,015)
Income tax expense (benefit) 1,335 (9,422)
Earnings(loss) from continuing operations 2,052 (13,122)
Discontinued operations, net of tax 2,649 (890)
Net earnings (loss) before cumulative
effect of accounting changes 4,701 (14,012)
Per common share - primary
Continuing operations .17 (1.12)
Discontinued operations .23 (.08)
Net earnings (loss) .40 (1.20)
Percent of stockholders' investment -
start of year % 3.8 (10.0)
Shares and equivalents outstanding -
weighted average 11,615 11,637
Cash dividends - common 2,066 2,070
Per share .18 .18
Cash flow from operations 33,942 17,505
Depreciation and amortization 19,343 19,699
Capital expenditures 17,086 8,575
Average number of employees 3,590 3,737
AT YEAR END
Inventories $ 52,896 47,742
Current assets 113,379 98,107
Working capital 40,118 47,689
Current ratio 1.5 1.9
Plant and equipment, net of depreciation 189,421 188,408
Total assets 313,015 295,645
Long-term debt 74,798 84,598
Total debt 80,894 88,719
Stockholders' investment 125,845 123,438
Per common share 10.83 10.64
Common shares outstanding 11,622 11,600
Stockholders of record 3,900 4,200
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Dollars in thousands except per share amounts
The Year In Review
The following discussion focuses on the results of operations, both from
a consolidated and a business group perspective, and on the financial
condition of Lukens. As part of a program adopted in 1993 to focus
Lukens' resources on its steel business, the subsidiaries previously
reported in the Corrosion Protection Group, Safety Products Group and
most subsidiaries in the Diversified Group are for sale. These
subsidiaries are now reported as discontinued operations, with their
results reported separately from continuing operations results in 1993
and prior years. At the end of April 1992, Lukens acquired Washington
Steel Corporation, reported as the Washington Stainless Group, which had
a significant effect on our results and financial condition.
This section should be read in conjunction with the consolidated
financial statements and notes.
Summary of Results
<TABLE>
<CAPTION> 1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Continuing operations
Net sales $ 862,072 695,772 423,154
Operating earnings $ 36,602 51,820 22,006
Interest income $ 61 826 2,237
Interest expense $ 16,380 13,563 2,012
Income tax expense $ 7,161 15,289 8,432
Effective income tax rate % 35.3 39.1 37.9
Net earnings-continuing operations $ 13,122 23,794 13,799
Discontinued operations
Earnings from operations, net of tax $ 5,552 9,261 9,197
Loss provision, net of tax $ (2,772) - -
--------- --------- ---------
Net earnings before cumulative
effect of accounting changes $ 15,902 33,055 22,996
--------- --------- ---------
</TABLE>
Consolidated Results From Continuing Operations
Net Sales. Sales from continuing operations were up 24 percent in 1993.
The increase primarily reflected the comparison of Washington Stainless
Group 1993 sales to 1992, which was for a partial year from the
acquisition to year end. The Lukens Steel Group benefited from strong
shipment levels and also recorded higher sales.
Sales in 1992 were 64 percent higher compared to 1991 with the increase
coming from the Washington Stainless Group. Sales were slightly down in
the Lukens Steel Group, primarily from lower selling prices.
Bar Graph of Net Sales for 1991, 1992 and 1993 included here.
Operating Earnings. Operating earnings for 1993 were down 29 percent
from 1992. The decrease was attributable to the Lukens Steel Group, which
experienced a less profitable shipment mix combined with higher scrap
prices. The group also recorded a $14,921 fourth quarter charge,
primarily for a work force reduction program. Selling and administrative
expenses increased 43 percent in 1993. The increase reflected the
comparison of Washington Stainless Group 1993 expenses to a partial year
in 1992. Additionally, higher retiree benefit costs associated with the
adoption of a new accounting standard discussed in Note 1, and increased
pension expense and consulting fees contributed to higher expenses.
Operating earnings in 1992 were more than double 1991 earnings. The
increase was attributable to Washington Stainless Group results and the
comparative effect of a 1991 fourth quarter labor strike in the Lukens
Steel Group that resulted in a quarterly loss. Earnings in 1992 were
reduced by lower selling prices in the Lukens Steel Group.
Interest Income. To help finance the April 1992 acquisition of
Washington Steel, the balance of cash equivalents and short-term
investments was used. Since the acquisition, excess cash flows have been
used to reduce short-term debt. The drop in 1993 interest income
reflected this lower investment level. Similarly, interest income in 1992
was lower than 1991 primarily because of lower investment levels.
Interest Expense. Acquisition-related interest for a full year in 1993
compared to 1992 expense from the April 1992 acquisition resulted in a
21 percent increase in interest expense. The increase also reflected
interest on the $150,000 of long-term notes, 7.625 percent coupon rate,
issued in the third quarter of 1992 compared to lower short-term interest
rates incurred prior to the issuance of the notes.
Income Tax Expense. The effective tax rate was 35.3 percent in 1993 and
39.1 percent in 1992. Included in the 1993 rate was a favorable
adjustment of $727, or 3.6 percent, that resulted from the revaluation
of the net deferred tax asset position of Lukens. The revaluation
reflected a 1 percent increase in the Federal corporate tax rate to 35
percent.
The 1993 effective tax rate was based on the new accounting statement for
income taxes, discussed in Note 1. The deferred tax assets recognized in
the adoption of the statement were based on the combination of future
reversals of existing taxable temporary differences, carryback
availability, tax planning strategies and future taxable income.
The effective tax rate in 1992 of 39.1 percent compared to 37.9 percent
in 1991. Higher state taxes and the impact of non-deductible expenses
associated with the Washington Steel acquisition contributed to the
increase.
Earnings From Continuing Operations. Lower operating earnings and higher
interest expense translated into a 45 percent drop in 1993 earnings from
continuing operations before the cumulative effect of accounting changes.
Higher operating earnings partially offset by increased interest expense
resulted in a 72 percent increase in 1992 earnings compared to 1991.
Earnings From Discontinued Operations. During the fourth quarter of
1993, a $4,500 provision, $2,772 after tax, was recorded to recognize a
change in realizable value of the subsidiaries. Earnings, net of taxes,
in 1993 were down 40 percent. Lower activity for large pipe-coating
orders at our ENCOAT subsidiary and weaker market conditions experienced
by the other subsidiaries resulted in the decline. Earnings from
discontinued operations in 1992 were up slightly compared to 1991.
Earnings Before Cumulative Effect of Accounting Changes. As a result of
the factors discussed above, 1993 earnings before the cumulative effect
of accounting changes were down 52 percent. 1992 earnings were up 44
percent from 1991.
Bar graph on net earnings before cumulative effect of accounting changes
for 1991, 1992 and 1993 included here.
Net Earnings (Loss). During 1993, Lukens adopted two new accounting
statements for retiree medical and life insurance benefits and for income
taxes, discussed in Note 1. The cumulative effect, or catch-up net
expense was $65,901. As a result, a net loss of $49,999 was recorded for
1993.
Business Groups
Summary of Business Group Results
<TABLE>
<CAPTION> 1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Lukens Steel
Sales $ 445,075 417,528 423,154
Operating earnings $ 17,341 42,215 36,450
Washington Stainless
Sales $ 416,997 278,244 -
Operating earnings $ 37,395 22,749 -
</TABLE>
Lukens Steel. Strong shipment levels partially offset by a lower-value
shipment mix resulted in a 7 percent increase in 1993 sales. Shipments
for the year were 711,800 tons, up 10 percent from 1992 shipped tons of
646,100.
Operating earnings in 1993 were down 59 percent with a $14,921 fourth
quarter charge contributing to the decline. The fourth quarter charge
included a $9,660 work force reduction provision and other charges for
environmental remediation and workers' compensation claims. Additionally,
the impact of a less profitable shipment mix and higher scrap costs
squeezed profit margins. Increased employee benefit costs also were
incurred from the recognition of accrual expense for retiree medical and
life insurance benefits resulting from the adoption of SFAS No. 106 and
from higher pension expense.
1992 sales were slightly below 1991 sales because of lower selling prices
partially offset by a higher sales volume. Shipments in 1992 were up 2
percent from 1991 shipments of 633,100 tons. Higher sales volume was not
attributable to improved business conditions, however, but to the
comparative effect of the 1991 fourth quarter labor strike that resulted
in low shipment levels for the quarter. As the recession continued into
1992, selling price competition intensified and the group experienced
historically low selling prices.
Operating earnings in 1992 were up 16 percent compared to 1991, primarily
due to the comparative effect of the losses incurred during the 1991
fourth quarter labor strike. Through three quarters of 1992, earnings
were running behind 1991 levels because of lower selling prices and a
less profitable shipment mix. Earnings in 1992 were reduced by a $3,500
provision for workers' compensation claims alleging hearing loss.
Washington Stainless. Sales for 1993 were up 50 percent and operating
earnings were up 64 percent compared to 1992 results. The increases
partially reflected the comparison of 1993 to 1992 results that were from
the acquisition of the group in late April. 1993 results benefited from
production efficiencies, lower nickel costs and better results from the
service center operations. On the negative side, increased imports put
pressure on 1993 selling prices. Shipped tons for 1993 were 208,800 and
147,500 tons in 1992.
Business Outlook
In the Lukens Steel Group, strong shipment levels are expected to
continue. We are beginning to see improvements in selling prices and are
cautiously optimistic for continued improvement in 1994. Scrap costs that
increased dramatically in 1993 remain a concern. These costs historically
have moved with changes in selling prices. In 1993, this trend did not
continue and it remains to be seen if there has been a fundamental change
in the scrap market. Efforts to reduce production costs that were
initiated in 1993 will be important to improve margins in 1994. The
backlog of orders at the end of 1993 was $58,712, down 14 percent from
the beginning of the year.
The Washington Stainless Group enters 1994 with increased foreign
competition that is contributing to selling price pressure. Efforts to
improve production efficiencies will continue in 1994. Margins in the
service center operations are expected to remain tight. The backlog of
orders at the end of 1993 was $42,883, down 7 percent from the beginning
of the year.
By 1995, we anticipate that the benefits from our five-year capital
expenditure program, discussed in the following Liquidity -Long Term
section, will improve earnings from 1993 levels and those expected in
1994. Additionally, the expansion into stainless steel markets from the
1992 acquisition of Washington Steel provides us with access to markets
with long-term growth potential.
Financial Condition
Capital Structure. To finance the 1992 acquisition of Washington Steel,
the capital structure of Lukens changed significantly. In 1992, $150,000
of long-term notes were issued along with 1,132,300 shares of common
stock.
At the end of 1993, cash and cash equivalents totaled $11,483, a decrease
of $3,487 from the end of 1992. Working capital of $146,034 was up $3,568
with deferred income tax assets recognized from the adoption of SFAS No.
109 contributing to the increase.
Bar graph of Current Assets and Working Capital for 1991, 1992 and 1993
included here
Debt at the end of 1993 was $226,589, a $3,314 increase from year-end
1992. The long-term notes at year end were rated Baa2 by Moody's and BBB+
by Standard and Poor's. Included in year-end debt was $26,209 of ESOP
debt, which is guaranteed by Lukens. The ratio of long-term debt to total
capital (long-term debt plus stockholders' investment) was 45.3 percent
at the end of 1993, which compared to 39.9 percent at year-end 1992. The
increase in the ratio reflected the net reduction in stockholders'
investment following the adoption of the new accounting statements
discussed in Note 1. The reduction in stockholders' investment did not
trigger any debt covenant violations, nor did it change the borrowing
availability of Lukens.
In the first quarter of 1993, Lukens entered into a two-year, $75,000
interest rate swap agreement. The swap was structured to convert a fixed
interest rate of 4.317 percent to a variable rate based on the six-month
LIBOR. During the third quarter, the swap was terminated which resulted
in cash proceeds of $317.
At the Annual Meeting of Stockholders on April 28, 1993, stockholders
approved a 20,000,000 increase in the number of authorized common shares
and also approved stock option plan changes. These capital structure
changes are discussed in Notes 7 and 10.
Liquidity - Short Term. Cash flow from operating activity was $72,290
in 1993 compared to $59,184 in 1992. The increase was partially
attributable to a full year of Washington Stainless Group cash flows
compared to a partial year in 1992. The cumulative effect of the
accounting changes, although resulting in a net loss in 1993, did not
impact cash flows and the accounting changes are not anticipated to
impact future cash flow. Financing activity required $9,681 with dividend
payments of $17,115 partially offset by a net increase in debt and
proceeds from stock options exercised. Primarily due to capital
expenditures of $67,424, investing activity required $66,096.
Based on our business outlook, we do not anticipate any significant
increases to our cash flow from operating activity in the short term. In
the Lukens Steel Group, liquidity continues to be impacted by a less
profitable shipment mix and higher raw material costs. Partially
offsetting these negative factors have been recent rulings by the U. S.
International Trade Commission that upheld most of the steel plate cases
on unfair trading practices. Additionally, the decline in selling prices
over the past few years appears to have ended and we anticipate higher
selling prices in 1994. No significant changes in operating cash flows
from the Washington Stainless Group are anticipated in 1994. The total
of Lukens Steel Group and Washington Stainless Group backlog of orders
at year-end 1993 was $101,595, down 11 percent from the beginning of the
year.
The divestiture of the discontinued operations is not anticipated to
significantly affect cash flow from operating activity.
Capital expenditure projections for 1994 are historically high at
$144,000. We anticipate funding these expenditures primarily through the
combination of cash flow from operations, debt under an existing
committed line of credit and proceeds from the sale of discontinued
operations. Additional short-term borrowings may be needed during 1994.
Bar graph on Capital Expenditures for 1991, 1992 and 1993 included here.
Liquidity - Long Term. In the long term, Lukens relies on the ability
to generate sufficient cash flows from operating activity to fund
investing and financing requirements and to maintain a target long-term
debt to capital ratio of 35 percent. As the chart below indicates, Lukens
has consistently generated cash from operations totaling $197,818 from
the past three years.
Bar Graph on Cash Flow from Operations for 1991, 1992 and 1993 included
here.
Capital expenditures in 1993 were part of a five-year program of
approximately $400,000. The program is primarily aimed at promoting
synergies between the Lukens Steel Group and Washington Stainless Group,
and expanding our product lines to take advantage of the anticipated
long-term growth in stainless steel markets. The centerpiece of the
program is the installation of a plate and sheet processing system at our
Conshohocken, Pennsylvania facility. The new system, scheduled to start
up late in 1994, will utilize Steckel rolling technology and is designed
to lower production costs and expand the product range of both the Lukens
Steel Group and Washington Stainless Group. Other expenditures in the
program include the expansion of stainless steel melting capacity.
Because of this capital expenditure program, we anticipate exceeding our
target long-term debt to capital ratio of 35 percent until the projected
benefits of the program improve cash flow from operations. We anticipate
funding these expenditures primarily through the combination of cash flow
from operations, debt under an existing committed line of credit and
proceeds from the sale of discontinued operations. Additional short-term
borrowings may be needed during this period.
Other long-term commitments include a contract for the supply of oxygen
and related products to a Lukens Steel Group manufacturing facility. The
contract runs until 2007 and includes take-or-pay provisions totaling
$32,989 at the end of 1993. The $150,000 of long-term notes issued in
1992 to finance the acquisition are due in 2004.
Regarding environmental compliance requirements, we are projecting
capital expenditures of approximately $4,700 in 1994 and $4,500 in 1995.
The trend for tighter environmental standards is expected to continue and
result in higher waste disposal costs and additional capital expenditures
in the long term. Although it is difficult to project these amounts, we
are not aware of any environmental problems that would jeopardize our
competitive position.
Supporting both our short- and long-term liquidity positions is an
agreement for a committed line of credit. At the end of 1993, Lukens
could borrow an additional $93,000 under this agreement that expires in
1996.
On average, inflation rates for the domestic economy have not been severe
over the past few years. With the exception of 1993 scrap cost increases
in the Lukens Steel Group, Lukens generally has not incurred significant
increases in production costs. One problem area, however, is the cost of
employee medical benefit packages. Inflation rates for these employee
benefits have consistently run much higher than average inflation rates.
Because Lukens structures benefit packages to be competitive in the labor
market, these increased costs are incurred, and they are expected to
remain relatively high in the near term. Although long-term inflation
rates are difficult to predict, Lukens believes it has the flexibility
in operations and capital structure to maintain a competitive position.
Dividends. Lukens paid $1.00 per share in common stock dividends in 1993.
A quarterly common dividend of $.25 per share was paid on February 18,
1994. It is our objective to pay common dividends approximating 35
percent of net earnings over a number of years. The Series B Convertible
Preferred Stock held by the ESOP carries a cumulative annual dividend of
$4.80 per share.
Bar graph with Net Earnings Per Common Share/Dividends Per Common Share
for 1991, 1992 and 1993 included here.
As of February 7, 1994, there were approximately 5,600 common
stockholders of record.
Lukens' common stock is listed and traded on the New York Stock Exchange,
ticker symbol "LUC." Dividends and stock market price ranges for the last
two years are included Item 8 of this Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Report of Independent Public Accountants
To the Stockholders and Board of Directors,
Lukens Inc.:
We have audited the accompanying consolidated balance sheets of Lukens
Inc. (a Delaware Corporation) and subsidiaries as of December 25, 1993
and December 26, 1992 and the related consolidated statements of
earnings, cash flows and stockholders' investment for each of the three
fiscal years in the period ended December 25, 1993. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Lukens Inc. and subsidiaries as of December 25, 1993 and December 26,
1992, and the consolidated results of their operations and their cash
flows for each of the three fiscal years in the period ended December 25,
1993 in conformity with generally accepted accounting principles.
As discussed in Notes 1 the consolidated financial statements, effective
December 27, 1992, the Company changed its methods of accounting for post
retirement benefits other than pensions and income taxes.
Arthur Andersen & Co.
Philadelphia, Pennsylvania
February 1, 1994
Consolidated Financial Statements
<TABLE>
Consolidated Statements of Earnings (Note 2)
for the 52 weeks ended December 25, 1993, December 26, 1992,
and December 28, 1991
Dollars and shares in thousands except per share amounts
<CAPTION> 1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Net Sales $ 862,072 695,772 423,154
Operating Costs and Expenses
(Notes 4, 5, 7, 8 and 11)
Cost of products sold 754,899 601,974 371,092
Selling and administrative expenses 59,945 41,978 30,056
Unusual item - work force reduction provision 10,626 - -
--------- --------- ---------
Total operating costs and expenses 825,470 643,952 401,148
--------- --------- ---------
Operating Earnings 36,602 51,820 22,006
Interest income 61 826 2,237
Interest expense (Note 9) (16,380) (13,563) (2,012)
--------- --------- ---------
Earnings Before Income Taxes 20,283 39,083 22,231
Income tax expense (Note 6) 7,161 15,289 8,432
--------- --------- ---------
Earnings from Continuing Operations-
Before Cumulative Effect of Accounting Changes 13,122 23,794 13,799
Discontinued Operations (Note 2)
Earnings from operations, net of tax 5,552 9,261 9,197
Loss provision, net of tax (2,772) - -
--------- --------- ---------
Earnings Before Cumulative Effect
of Accounting Changes 15,902 33,055 22,996
Cumulative Effect of Accounting Changes, Net of Tax
Postretirement benefits-SFAS No. 106 (Note 1) (67,222) - -
Income taxes-SFAS No. 109 (Note 1) 1,321 - -
--------- --------- ---------
Net Earnings (Loss) $ (49,999) 33,055 22,996
========= ========= =========
Dividend requirements for preferred
stock (Note 10) (1,905) (1,613) (1,643)
--------- --------- ---------
Net Earnings (Loss) Applicable to Common Stock $ (51,904) 31,442 21,353
========= ========= =========
Earnings (Loss) Per Common Share (Notes 1 and 10)
Primary
Earnings before cumulative
effect of accounting changes $ .95 2.31 1.68
Net earnings (loss) $ (3.51) 2.31 1.68
Fully diluted
Earnings before cumulative
effect of accounting changes $ .93 2.17 1.60
Net earnings (loss) $ (3.51) 2.17 1.60
Common Shares and Equivalents Outstanding
(Notes 1 and 10)
Primary 14,781 13,603 12,699
Fully diluted 16,409 15,261 14,354
Cash Dividends on Common Stock-
Per Share (Note 10) $ 1.00 1.00 1.00
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
Consolidated Balance Sheets
as of December 25, 1993, and December 26, 1992
Dollars in thousands
<CAPTION>
1993 1992
---------- ----------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents (Note 1) $ 11,483 14,970
Receivables, less allowance of $11,444 in 1993
and $9,836 in 1992 114,951 124,180
Inventories (Note 8) 160,060 150,187
Deferred income taxes (Note 6) 15,070 -
Prepaid expenses and other 6,175 5,051
---------- ----------
Total current assets 307,739 294,388
Plant and Equipment (Notes 1, 9 and 11)
Buildings 101,025 97,853
Machinery and equipment 642,404 603,387
Construction in progress 28,703 16,965
Land 17,648 17,919
---------- ----------
789,780 736,124
Less accumulated depreciation 357,927 325,918
---------- ----------
Net plant and equipment 431,853 410,206
Intangible Assets, net of accumulated amortization
of $9,817 in 1993 and $6,428 in 1992 (Notes 2 and 5) 54,594 51,788
Deferred Income Taxes (Note 6) 20,498 -
Other Assets 2,494 3,663
---------- ----------
Total Assets $ 817,178 760,045
========== ==========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities
Accounts payable $ 75,540 75,476
Accrued employment costs (Notes 5 and 7) 52,339 49,819
Other accrued expenses 28,005 22,255
Current maturities of long-term debt (Note 9) 5,821 4,372
---------- ----------
Total current liabilities 161,705 151,922
Long-term Debt (Note 9) 220,768 218,903
Retirement Benefits (Note 5)
Pensions 19,055 16,250
Medical and life insurance 136,056 -
Deferred Income Taxes (Note 6) - 29,276
Other Liabilities 12,840 14,621
---------- ----------
Total liabilities 550,424 430,972
Commitments and Contingencies (Note 11)
Stockholders' Investment
Series preferred stock (Note 10) 32,467 32,662
Common stock (Note 10) 158 158
Capital in excess of par value (Note 10) 82,625 81,040
Earnings invested 193,977 260,366
Foreign currency translation adjustments (1,641) (1,088)
Deferred compensation - ESOP (Note 7) (26,209) (28,595)
Repurchased stock, at cost (14,623) (15,470)
---------- ----------
Total stockholders' investment 266,754 329,073
---------- ----------
Total Liabilities and Stockholders' Investment $ 817,178 760,045
========== ==========
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
Consolidated Statements of Stockholders' Investment
for the 52 weeks ended December 25, 1993, December 26, 1992,
and December 28, 1991
Dollars in thousands except per share amounts
<CAPTION>
1993
Shares Dollars
------------ -----------
<S> <C> <C>
Series Preferred Stock (Note 10)
(1,000,000 shares authorized)
Series B
Balance at beginning of year 544,374 $ 32,662
Conversion (3,251) (195)
------------ -----------
Balance at end of year 541,123 32,467
------------ -----------
Common Stock (Note 10)
(40,000,000 shares authorized)
Balance at beginning of year 15,813,259 158
Issued - -
Stock split - -
------------ -----------
Balance at end of year 15,813,259 158
------------ -----------
Capital in Excess of Par Value
Balance at beginning of year 81,040
Common stock issued (Note 10) -
Common stock split (Note 10) -
Stock option activity (Note 7) 1,502
Conversion of Series B preferred stock 83
-----------
Balance at end of year 82,625
-----------
Earnings Invested
Balance at beginning of year 260,366
Net earnings (loss) (49,999)
Dividends
Preferred ($4.80 per share) (2,602)
Common ($1.00 per share) (14,508)
Tax benefit on ESOP preferred stock dividends 720
-----------
Balance at end of year 193,977
-----------
Foreign Currency Translation Adjustments
Balance at beginning of year (1,088)
Effect of rate changes (553)
Sale of subsidiary -
-----------
Balance at end of year (1,641)
-----------
Deferred Compensation - ESOP
Balance at beginning of year (28,595)
Allocations to employees 2,386
-----------
Balance at end of year (26,209)
-----------
Repurchased Stock, at cost
Balance at beginning of year 1,358,717 (15,470)
Common stock split (Note 10) - -
Stock option activity (Note 7) (64,725) 737
Conversion of Series B preferred stock (9,719) 110
------------ -----------
Balance at end of year 1,284,273 (14,623)
------------ -----------
Stockholders' Investment $ 266,754
===========
Consolidated Statements of Stockholders' Investment (continued)
for the 52 weeks ended December 25, 1993, December 26, 1992,
and December 28, 1991
Dollars in thousands except per share amounts
<CAPTION>
1992
Shares Dollars
------------ -----------
<S> <C> <C>
Series Preferred Stock (Note 10)
(1,000,000 shares authorized)
Series B
Balance at beginning of year 547,584 $ 32,855
Conversion (3,210) (193)
------------ -----------
Balance at end of year 544,374 32,662
------------ -----------
Common Stock (Note 10)
(40,000,000 shares authorized)
Balance at beginning of year 9,410,178 94
Issued 1,132,300 11
Stock split 5,270,781 53
------------ -----------
Balance at end of year 15,813,259 158
------------ -----------
Capital in Excess of Par Value
Balance at beginning of year 19,814
Common stock issued (Note 10) 58,518
Common stock split (Note 10) (53)
Stock option activity (Note 7) 2,679
Conversion of Series B preferred stock 82
-----------
Balance at end of year 81,040
-----------
Earnings Invested
Balance at beginning of year 242,295
Net earnings (loss) 33,055
Dividends
Preferred ($4.80 per share) (2,619)
Common ($1.00 per share) (13,374)
Tax benefit on ESOP preferred stock dividends 1,009
-----------
Balance at end of year 260,366
-----------
Foreign Currency Translation Adjustments
Balance at beginning of year 112
Effect of rate changes (1,083)
Sale of subsidiary (117)
-----------
Balance at end of year (1,088)
-----------
Deferred Compensation - ESOP
Balance at beginning of year (30,452)
Allocations to employees 1,857
-----------
Balance at end of year (28,595)
-----------
Repurchased Stock, at cost
Balance at beginning of year 1,003,343 (16,395)
Common stock split (Note 10) 501,675 -
Stock option activity (Note 7) (136,718) 816
Conversion of Series B preferred stock (9,583) 109
------------ -----------
Balance at end of year 1,358,717 (15,470)
------------ -----------
Stockholders' Investment $ 329,073
===========
Consolidated Statements of Stockholders' Investment (continued)
for the 52 weeks ended December 25, 1993, December 26, 1992,
and December 28, 1991
Dollars in thousands except per share amounts
<CAPTION>
1991
Shares Dollars
------------ -----------
<S> <C> <C>
Series Preferred Stock (Note 10)
(1,000,000 shares authorized)
Series B
Balance at beginning of year 550,433 $ 33,026
Conversion (2,849) (171)
------------ -----------
Balance at end of year 547,584 32,855
------------ -----------
Common Stock (Note 10)
(40,000,000 shares authorized)
Balance at beginning of year 9,410,178 94
Issued - -
Stock split - -
------------ -----------
Balance at end of year 9,410,178 94
------------ -----------
Capital in Excess of Par Value
Balance at beginning of year 18,631
Common stock issued (Note 10) -
Common stock split (Note 10) -
Stock option activity (Note 7) 1,106
Conversion of Series B preferred stock 77
-----------
Balance at end of year 19,814
-----------
Earnings Invested
Balance at beginning of year 233,340
Net earnings (loss) 22,996
Dividends
Preferred ($4.80 per share) (2,634)
Common ($1.00 per share) (12,397)
Tax benefit on ESOP preferred stock dividends 990
-----------
Balance at end of year 242,295
-----------
Foreign Currency Translation Adjustments
Balance at beginning of year 135
Effect of rate changes (23)
Sale of subsidiary -
-----------
Balance at end of year 112
-----------
Deferred Compensation - ESOP
Balance at beginning of year (31,699)
Allocations to employees 1,247
-----------
Balance at end of year (30,452)
-----------
Repurchased Stock, at cost
Balance at beginning of year 1,078,887 (17,288)
Common stock split (Note 10) - -
Stock option activity (Note 7) (69,893) 802
Conversion of Series B preferred stock (5,651) 91
------------ -----------
Balance at end of year 1,003,343 (16,395)
------------ -----------
Stockholders' Investment $ 248,323
===========
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
Consolidated Statements of Cash Flows
for the 52 weeks ended December 25, 1993, December 26, 1992,
and December 28, 1991
Dollars in thousands
<CAPTION> 1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Operating Activity
Net earnings (loss) $ (49,999) 33,055 22,996
Adjustments to Reconcile Net Earnings (Loss) to
Cash Flow from Operating Activity
Depreciation and amortization 45,488 39,232 25,833
Cumulative effect of accounting changes 65,901 - -
Income taxes deferred (8,549) 6,519 2,424
Work force reduction provision 10,626 - -
Loss (gain) on disposition of assets/
subsidiaries 4,500 (471) 539
Provision for uncollectible accounts 12,997 9,268 5,326
Retirement benefit funding less than expense 3,238 3,572 2,151
Changes in working capital affecting operations
Accounts receivable (5,847) (16,766) 2,051
Inventories (9,873) (4,838) (3,436)
Prepaid expenses and other (1,029) 962 289
Accounts payable 68 (6,664) 6,073
Accrued expenses 4,847 935 3,273
Other, net (78) (5,620) (1,175)
--------- --------- ---------
Cash flow from operating activity 72,290 59,184 66,344
Financing Activity
Long-term debt
Borrowed 22,000 439,731 -
Repaid (16,164) (279,797) (4,525)
Proceeds from common stock issued - 58,529 -
Dividends paid (17,115) (15,997) (15,035)
Proceeds from stock options exercised 1,598 2,557 1,467
Other, net - (3,377) -
--------- --------- ---------
Net from (for) financing activity (9,681) 201,646 (18,093)
Investing Activity
Acquisitions, net of cash acquired of $271 - (274,441) -
Capital expenditures (67,424) (36,002) (34,696)
Purchase of short-term investments - (338) (15,550)
Proceeds from sale of short-term investments - 15,888 -
Proceeds from sale of assets/subsidiaries 1,013 1,066 908
Proceeds from sale of equity securities - 3,604 7,546
Other, net 315 (24) 2,708
--------- --------- ---------
Net for investing activity (66,096) (290,247) (39,084)
Cash and Cash Equivalents
Increase (decrease) (3,487) (29,417) 9,167
Start of year 14,970 44,387 35,220
--------- --------- ---------
End of year $ 11,483 14,970 44,387
--------- --------- ---------
The accompanying notes are an integral part of these statements.
</TABLE>
Notes to Consolidated Financial Statements
Dollars in thousands except per share amounts
1. Accounting Policies
Consolidation and Fiscal Year. The consolidated financial statements
include the accounts of Lukens Inc. and all majority-owned subsidiaries.
Our fiscal year is the 52- or 53-week period that ends on the last
Saturday of December. Certain subsidiaries are consolidated on a calendar
year basis.
Cash and Cash Equivalents. Highly liquid investments with maturities of
three months or less when purchased are recognized as cash equivalents.
Inventories. Inventories are recorded at the lower of cost or market.
Cost is determined by the last-in, first-out (LIFO) method for most
product and raw material inventories. Supplies are valued at the lower
of average cost or market. Additional inventory disclosures are included
in Note 8.
Plant and Equipment. Plant and equipment are stated at cost and are
depreciated using the straight-line method over the estimated useful
life. The useful life ranges from 20 to 40 years for buildings and from
7 to 18 years for most production machinery and equipment. The cost of
plant and equipment retired in the normal course of business is generally
charged against accumulated depreciation. Gains and losses on other
retirements are reflected in earnings.
Earnings Per Share. Primary earnings per common share are calculated by
dividing net earnings applicable to common stock by the average of common
stock outstanding and common stock equivalents. On a fully-diluted basis,
both net earnings and shares outstanding are adjusted to assume the
conversion of convertible preferred stock.
During 1992, Lukens issued long-term notes and common stock (Notes 9 and
10) to refinance the Washington Steel acquisition (Note 2). If the
long-term notes and common stock had been issued on the acquisition date,
primary earnings per common share reported for 1992 would not have been
significantly different.
Accounting Changes - Income Taxes. In the first quarter of 1993, Lukens
adopted Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes." The new statement requires an asset and
liability approach to determine the tax provision and related deferred
tax assets and liabilities. We elected to record the cumulative effect
of this accounting change by the recognition of a $1,321 gain, or $.09
per common share.
As a result of adopting SFAS No. 109, the tax benefit on the Lukens'
preferred stock dividends for the shares allocated to employee stock
ownership plan (ESOP) participants is recognized as a reduction to the
income tax provision. In prior years, this amount was recognized as a
direct increase to retained earnings.
Recognition of income taxes in prior years has not been restated. The
provision for income taxes under the previous deferral method was based
on financial accounting earnings. Deferred taxes were recognized because
some financial accounting income and expense items were recognized in
different years in determining taxable income. Note 6 covers our income
tax disclosures.
Accounting Changes - Retiree Medical & Life Insurance Benefits. In the
first quarter of 1993, Lukens adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." The new
statement requires the liability and expense be actuarially determined
in a framework similar to the one used to measure defined benefit pension
plans. We elected to record the cumulative effect of this accounting
change by the recognition of a $108,000 expense, which represented the
accumulated postretirement benefit obligation for current and future
retirees at the beginning of 1993. On an after-tax basis, the expense was
$67,222, or $4.55 per common share. The adoption of the new statement
also changed the accounting for our 1992 acquisition of Washington Steel,
discussed in Note 2.
The recognition of retiree medical and life insurance benefits in prior
years was on a cash basis, and results for prior years have not been
restated. Note 5 covers our retiree benefit disclosures.
2. Acquisitions and Discontinued Operations
Acquisitions. On April 24, 1992, Washington Steel Corporation was
acquired for $273,718 in cash. Washington Steel is a stainless steel
producer with two production facilities in Pennsylvania and one in Ohio.
Also included in the acquisition were seven stainless service centers in
the United States and Canada.
The acquisition was accounted for as a purchase with the results of
Washington Steel included from the acquisition date. As a result of the
adoption of SFAS No. 106, discussed in Note 1, purchase accounting was
adjusted in 1993 to reflect the accumulated postretirement benefit
obligation assumed of $19,300. Recognition of this liability was offset
by $12,200 of goodwill and $7,100 of net long-term deferred tax assets.
The fair value of assets acquired as adjusted for the adoption of SFAS
No. 106, was $385,876 and liabilities assumed totaled $112,158. Included
in assets was $41,150 of goodwill, which is being amortized over 25 years
on a straight-line basis.
The pro forma consolidated results listed below are unaudited and reflect
purchase accounting adjustments assuming the acquisition occurred at the
beginning of each year presented.
<TABLE>
<CAPTION> 1992 1991
--------- ---------
<S> <C> <C>
Net sales $ 823,672 812,424
Operating earnings $ 61,838 29,998
Net earnings $ 35,986 13,746
Earnings Per Common Share
Primary $ 2.53 .95
Fully diluted $ 2.36 .95
</TABLE>
Discontinued Operations. As part of a program adopted in 1993 to focus
Lukens resources on its steel businesses, the subsidiaries previously
reported in the Corrosion Protection Group, Safety Products Group and
most subsidiaries in the Diversified Group are for sale. These
subsidiaries are reported as discontinued operations, and prior period
results are restated.
Net sales and income tax expense of the discontinued operations and an
earnings per common share reconciliation (before the cumulative effect
of accounting changes) are listed below.
<TABLE>
<CAPTION> 1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Net sales $ 171,267 184,869 205,620
Income tax expense (benefit)
Earnings from operations $ 3,461 5,580 5,424
Loss provision $ (1,728) - -
Earnings per common share-primary
Continuing operations $ .76 1.63 .96
Discontinued operations .19 .68 .72
--------- --------- ---------
$ .95 2.31 1.68
--------- --------- ---------
Earnings per common share-fully diluted
Continuing operations $ .76 1.56 .96
Discontinued operations .17 .61 .64
--------- --------- ---------
$ .93 2.17 1.60
--------- --------- ---------
</TABLE>
During the fourth quarter of 1993, a $4,500 provision was recognized to
revise estimates of the realizable value of discontinued operations. On
an after-tax basis, the provision was $2,772, or $.19 per common share.
Net assets of the discontinued operations at the end of 1993 were
$87,857.
3. Business Groups
As a result of the discontinued operations presentation discussed in Note
2, the previously reported Safety Products, Corrosion Protection, and
Diversified business groups have been eliminated from our business group
presentation. Two subsidiaries in the Diversified Group were not
classified as discontinued operations, and they are now reported in the
Lukens Steel Group. The Washington Stainless Group resulted from the
acquisition discussed in Note 2.
Listed below is a description of our business groups, which operate
primarily in the United States. Sales to foreign countries and sales
between business groups are not significant.
- - Lukens Steel Group - specializes in the production of carbon, alloy
and clad plate steels.
- - Washington Stainless Group - specializes in stainless steel plate,
sheet, strip, hot band and slabs. The group also operates stainless
service centers.
Summary business group information is included in the following chart.
<TABLE>
<CAPTION> 1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Net sales
Lukens Steel $ 445,075 417,528 423,154
Washington Stainless (b) 416,997 278,244 -
--------- --------- ---------
$ 862,072 695,772 423,154
========= ========= =========
Operating earnings (loss)
Lukens Steel (a) $ 17,341 42,215 36,450
Washington Stainless (b) 37,395 22,749 -
Corporate (c) (18,134) (13,144) (14,444)
--------- --------- ---------
$ 36,602 51,820 22,006
========= ========= =========
Assets
Lukens Steel $ 299,638 259,335 248,374
Washington Stainless 398,204 369,232 -
Corporate (d) 17,370 19,573 70,259
Discontinued Operations 101,966 111,905 113,727
--------- --------- ---------
$ 817,178 760,045 432,360
========= ========= =========
Depreciation and amortization
Lukens Steel $ 18,408 17,698 17,752
Washington Stainless (b) 18,597 12,313 -
Corporate 725 1,634 313
Discontinued Operations 7,758 7,587 7,768
--------- --------- ---------
$ 45,488 39,232 25,833
========= ========= =========
Capital expenditures
Lukens Steel $ 38,206 25,015 24,628
Washington Stainless (b) 25,554 6,557 -
Corporate 362 209 120
Discontinued Operations 3,302 4,221 9,948
--------- --------- ---------
$ 67,424 36,002 34,696
========= ========= =========
</TABLE>
a. Lukens Steel Operating Earnings: 1993 - In the fourth quarter, charges
of $14,921 were recognized that included $9,660 of expense for a work
force reduction program (Note 4). The remaining charges included
provisions for environmental remediation and workers' compensation
claims. The adoption of a new accounting standard for retiree medical
and life insurance benefits (Note 1) resulted in additional accrual
expense of $4,610 over the cash claims. Results from prior years only
include the cash claims. 1992 -In the fourth quarter, a provision for
workers' compensation claims alleging hearing loss reduced results by
$3,500. Also in the fourth quarter of 1992, a favorable LIFO inventory
accounting adjustment increased earnings by $2,719. 1991 - A labor strike
resulted in an $8,597 loss for the fourth quarter.
b. Washington Stainless Group Results 1992 results are for a partial
year, from the acquisition date on April 24, 1992 to year end.
c. Corporate Expenses: 1993 - The increase in 1993 expenses included
higher consulting fees and expenses from a work force reduction program.
1991 expenses included $2,665 of severance packages for executives. Gains
from the sale of corporate assets partially offset these expenses.
d. Corporate Assets Corporate assets consist primarily of cash and cash
equivalents, refundable income taxes, and office facilities. Assets in
1993 included deferred income taxes. Short-term investments and
marketable equity securities were included in 1991 assets.
4. Unusual Item
During the fourth quarter of 1993, $10,626 of expenses for a work force
reduction program were recognized. The expenses were primarily for
pension and medical benefits associated with an early retirement program.
On an after-tax basis, the provision reduced net earnings before the
cumulative effect of accounting changes by $6,247, or $.43 per common
share.
5. Retiree Benefits
Pensions. Lukens has several defined benefit plans that provide pension
and survivor benefits for most employees. Benefits are primarily based
on the combination of years of service and compensation. Plans are funded
in accordance with applicable regulations.
The components of pension expense are listed below.
<TABLE>
<CAPTION> 1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Service cost for benefits earned $ 7,460 6,184 4,211
Interest cost on projected benefit
obligation 26,672 23,322 18,226
Actual return on assets (33,384) (22,742) (38,699)
Amortization and deferrals
Deferred return on assets 5,679 (3,055) 17,821
Prior service cost 2,880 2,069 1,454
Other, net (138) (609) 29
--------- --------- ---------
Net pension expense (a) $ 9,169 5,169 3,042
========= ========= =========
</TABLE>
a. The increase in 1993 pension expense resulted primarily from plan
improvements for Lukens Steel Group salary employees. The increase was
also attributable to a full year of Washington Stainless Group expense
compared to 1992, which was from the acquisition on April 24.
Higher pension expense in 1992 compared to 1991 primarily reflected costs
from a new labor contract in the Lukens Steel Group. Pension expense from
the plans assumed in the Washington Steel acquisition also contributed
to the increase.
The following table reconciles the net funded status of our plans to
amounts recognized in the Consolidated Balance Sheets.
<TABLE>
<CAPTION> 1993 1992
--------- ---------
<S> <C> <C>
Actuarial present value of
Vested benefit obligation (a) $(304,388) (273,855)
Nonvested benefit obligation (a) (33,089) (27,558)
--------- ---------
Accumulated benefit obligation (a) (337,477) (301,413)
Effect of projected future compensation (a) (36,927) (27,826)
--------- ---------
Projected benefit obligation (a) (374,404) (329,239)
Plan assets at fair value (b) 303,538 299,579
--------- ---------
Plan assets less than projected benefit obligation (70,866) (29,660)
--------- ---------
Unrecognized net loss (gain) 21,496 (14,811)
Unrecognized prior service cost 33,651 34,200
Unrecognized net obligation at transition 436 484
Adjustment to recognize minimum liability (4,641) (4,199)
--------- ---------
Net pension liability recognized in the
consolidated balance sheet $ (19,924) (13,986)
========= =========
</TABLE>
a. The increase in the 1993 benefit obligations primarily reflected a
lower discount rate. Additionally, incentives offered in an early
retirement program (Note 4) increased benefit obligations by $7,716.
b. Plan assets primarily consist of stocks, bonds and short-term
investments. Included in plan assets is Lukens' common stock totaling
$10,585 in 1993 and $12,637 in 1992.
The net pension liability was comprised of:
<TABLE>
<CAPTION> 1993 1992
--------- ---------
<S> <C> <C>
Accrued employment costs $ (2,720) (3,669)
Other liabilities (19,055) (16,250)
Intangible assets 1,851 5,933
--------- ---------
Net pension liability $ (19,924) (13,986)
--------- ---------
</TABLE>
Significant assumptions used in the calculation of pension expense and
obligations were:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Discount rate % 7.2 8.3 8.4
Rate of compensation increase % 3-7 3-7 3-7
Long-term rate of return on plan assets % 9.5 9.5 9.5
</TABLE>
Retiree Health & Life Insurance Benefits. Lukens provides retiree health
and life insurance benefits for most employees if they continue to work
for the company until they reach retirement age. These benefits are
funded as the claims are submitted.
During 1993, Lukens adopted a new accounting standard, SFAS No. 106, for
these retiree benefits. As discussed in Note 1, we elected to recognize
the cumulative effect of adopting the standard in 1993. The adoption also
resulted in a change in the Washington Steel acquisition accounting for
the obligations assumed, discussed in Note 2. The combination of the
cumulative effect and acquisition obligations totaled $127,300 at the
beginning of 1993. Accrual expense under the new standard is
significantly higher than the expense recognized under the previous
cash-basis method. Cash payments in 1992 were $6,514 and $5,818 in 1991.
The 1993 expense components are listed below.
<TABLE>
<CAPTION> 1993
---------
<S> <C>
Service cost for benefits earned $ 2,752
Interest cost on accumulated postretirement
benefit obligation 10,453
---------
Net postretirement benefit cost $ 13,205
---------
</TABLE>
The table below reconciles the actuarial present value of year-end 1993
obligations to the liability recognized in the Consolidated Balance
Sheets.
<TABLE>
<CAPTION>
1993
---------
<S> <C>
Accumulated postretirement benefit obligation
Retirees $ (82,099)
Fully eligible active participants (44,843)
Other active participants (31,458)
---------
Total accumulated postretirement benefit obligation (a) (158,400)
Unrecognized loss 22,344
---------
Accrued postretirement benefit liability $(136,056)
---------
</TABLE>
a. Obligations include $14,430 for life insurance benefits.
Significant assumptions used in the calculation of expense and
obligations are listed below.
<TABLE>
<CAPTION>
1993
---------
<S> <C>
Discount rate (a) % 7.4
Health care cost increase (b) % 9.5-12
Rate of compensation increase % 5-7
</TABLE>
a. Recognition of the cumulative effect at adoption was based on a
discount rate of 8.3 percent.
b. Health-care cost increase assumptions are reduced to a rate of 5
percent over 10 years.
A one-percentage point increase in the medical cost trend rate for each
year would increase the accumulated postretirement benefit obligation by
approximately $26,000 and would increase expense by approximately $2,800.
6. Income Taxes
During 1993, Lukens adopted a new income tax accounting standard,
discussed in Note 1. Because we elected to recognize the cumulative
effect of adopting the standard in 1993, prior years accounted for under
the deferral method have not been restated.
The reconciliation between the federal statutory rate applicable to
Lukens' earnings from continuing operations and our effective rate is
listed below. Essentially all earnings are from United States sources.
<TABLE>
<CAPTION>
Deferral Method
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Federal statutory rate % 35.0 34.0 34.0
Federal statutory rate change (3.6) - -
State income taxes net of federal
tax benefit 1.6 3.8 3.7
Non-deductible expenses 2.0 1.2 0.6
Other 0.3 0.1 (0.4)
--------- --------- ---------
Effective income tax rate % 35.3 39.1 37.9
========= ========= =========
</TABLE>
The components of the deferred income tax assets and liabilities at the
end of 1993 are listed below.
<TABLE>
<CAPTION>
1993
---------
<S> <C>
Deferred tax assets
Retirement benefits $ 64,724
Other deductible temporary differences 20,955
Valuation allowance (3,062)
---------
82,617
Deferred tax liabilities
Plant and equipment (36,718)
Other taxable temporary differences (10,331)
---------
Deferred tax liabilities (47,049)
---------
Net deferred tax asset $ 35,568
=========
</TABLE>
The current and deferred components of the income tax provision are
listed below.
<TABLE>
<CAPTION>
Deferral Method
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Current
U.S. Federal $ 11,868 9,599 7,062
State and other 491 1,513 2,030
--------- --------- ---------
12,359 11,112 9,092
Deferred to future years
U.S. Federal (4,901) 3,120 (376)
State and other 159 1,057 (284)
--------- --------- ---------
(4,742) 4,177 (660)
Change in tax rate (727) - -
Change in valuation allowance 271 - -
--------- --------- ---------
Income tax expense $ 7,161 15,289 8,432
========= ========= =========
</TABLE>
Deferred income taxes recognized under the deferral method were the
result of the timing differences between financial reporting and taxable
earnings listed below.
<TABLE>
<CAPTION>
1992 1991
--------- ---------
<S> <C> <C>
Depreciation $ 5,917 1,085
Pensions (1,534) (636)
Vacations 319 (311)
Other (525) (798)
--------- ---------
Deferred income tax expense $ 4,177 (660)
========= =========
</TABLE>
On a cash basis, Lukens paid the following amounts of income taxes,
including payments for discontinued operations.
1993 1992 1991
$18,938 $10,960 $19,031
7. Compensation Plans
Stock Options. The 1985 Stock Option and Appreciation Plan provides for
the issuance of non-qualified stock options and incentive stock options
(ISOs) to officers and other executives. At the Annual Meeting of
Stockholders on April 28, 1993, stockholders approved an amendment to the
plan that increased the number of shares that can be granted by 600,000,
and extended the expiration date of the plan until February 26, 1998.
A maximum of 1,837,500 options to purchase Lukens' common stock can be
granted at an exercise price not less than the fair market value on the
grant date. Once granted, options can be exercised after one year, and
they will expire in ten years.
Also at the 1993 Annual Meeting of Stockholders, stockholders approved
a stock option plan for non-employee directors. This plan provides for
the issuance of 75,000 non-qualified options to purchase Lukens Inc.
common stock at an exercise price based on the fair market value on the
grant date.
During 1991, 330,000 non-qualified stock options were granted to Mr. Van
Sant as part of his employment agreement. These options become
exercisable ratably over 11 years. The options carry an exercise price
of $23.38 per share, which was 85 percent of the fair market value on the
grant date. Compensation expense from this discount from fair market
value is being recognized on a straight-line basis over the expected
service period.
A summary of stock option activity is presented below.
<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Options outstanding, beginning of year 668,643 751,446
Granted at
$46.56 to $47.25 per share 80,600
$31.00 per share 102,750
Exercised at
$16.63 to $31.00 per share (64,725)
$5.56 to $24.75 per share (174,753)
Terminated at
$16.63 per share (600)
$16.63 to $31.00 per share (10,800)
--------- ---------
Options outstanding, end of year, at
$6.72 to $47.25 per share 683,918
$6.72 to $31.00 per share 668,643
========= =========
Exercisable 333,318 270,543
========= =========
Available for grant 774,625 179,625
========= =========
</TABLE>
Incentive Compensation. Most Lukens' employees participate in incentive
compensation plans that are based on the consolidated results of Lukens
Inc. and on the results of various subsidiaries. Compensation expense
under these plans is listed below.
1993 1992 1991
$19,419 $13,016 $9,312
Employee Stock Ownership Plan (ESOP). In 1989, an ESOP within an
existing 401(k) employee savings plan for most salaried employees was
established. The ESOP was designed to provide 401(k) employer matching
benefits in the form of convertible preferred stock that was acquired
with the proceeds from a $33,075 term loan (Note 9). The stock is
released for allocation to participants' accounts based on the
relationship of debt and interest repayments to the total of all
scheduled debt and interest payments. Dividends on allocated stock are
paid, in-kind, with preferred stock. The projected maturities of the ESOP
loan over the next five years are listed below.
1994 1995 1996 1997 1998
$4,354 $4,971 $6,232 $7,630 $3,022
The loan is guaranteed by Lukens, and the outstanding balance is
recognized as debt in the Consolidated Balance Sheets. An offsetting
amount, representing deferred compensation measured by the stated value
of convertible preferred stock, is recognized in the stockholders'
investment section. Debt service requirements of the ESOP are met by the
combination of Lukens' cash contributions to the ESOP and dividends on
the preferred stock.
Regarding expense recognition, cash contributions to the ESOP are
recorded as compensation expense, and preferred stock dividends reduce
retained earnings. This recognition results in interest expense incurred
on the ESOP debt not being recognized as interest expense on Lukens'
financial statements. Cash contributions are listed below.
1993 1992 1991
$2,222 $1,597 $1,177
8. Inventories
The components of inventory are listed below.
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Products finished and in process $ 121,437 117,054
Raw materials 32,596 27,079
Supplies 6,027 6,054
--------- ---------
Inventories $ 160,060 150,187
========= =========
</TABLE>
The estimated cost to replace inventories at year end is listed below.
1993 1992 1991
$197,000 $180,000 $108,000
Reductions in inventory quantities resulted in a liquidation of LIFO
inventory carried at lower costs from prior years. The effect of these
liquidations reduced cost of products sold as listed below.
1993 1992 1991
$213 $3,234 $929
9. Long-Term Debt and Interest
Listed below is a summary of long-term debt outstanding.
<TABLE>
<CAPTION> Years
Due 1993 1992
--------- --------- ---------
<S> <C> <C>
Notes Payable, face amount 2004 $ 150,000 150,000
Unamortized discount (679) (743)
Coupon interest at 7.625%
Effective interest at 7.691%
Short-term notes (a) 1996 32,000 24,000
Industrial revenue bonds
At percentage of prime (b) 1994-2000 6,288 7,606
At 4% to 6.25% 1994-2009 4,596 5,192
Term loans at 7% to 9.85% 1994-2007 8,175 8,625
ESOP debt guarantee (c) 1994-1998 26,209 28,595
--------- ---------
Total debt (d) 226,589 223,275
Less current portion 5,821 4,372
--------- ---------
Long-term debt (e) $ 220,768 218,903
========= =========
</TABLE>
a. The weighted-average interest rate at year-end 1993 was 3.7% and 4.2%
at year-end 1992. Short-term notes were classified as long-term because
they are supported by the revolving credit agreements discussed below.
b. The weighted-average interest rate was 4.9% at year-end 1993 and 1992.
c. The ESOP debt guaranteed by Lukens carries an 8.26% interest rate on
$21,744 as of December 25, 1993. The remaining ESOP debt carries a
variable rate of 80.5% of prime. For a discussion on ESOP accounting, see
Note 7.
d. Annual maturities of long-term debt, excluding the ESOP debt
guarantee, over the next five years are listed below.
1994 1995 1996 1997 1998
$1,467 $3,159 $37,789 $691 $693
e. Plant and equipment with a net depreciated cost of $50,400 are pledged
as collateral for secured loans.
Long-term Notes. On August 4, 1992, Lukens issued $150,000 of notes due
in 2004 at a discount of 99.487% of the face amount. The notes carry an
interest rate of 7.625%, payable semi-annually. Proceeds, net of issuance
expenses, were $148,218 and were used to reduce the debt incurred to
finance the acquisition discussed in Note 2. The notes are currently
rated Baa2 by Moody's and BBB+ by Standard and Poor's.
Revolving Credit Agreements. To finance the acquisition discussed in
Note 2, Lukens initially borrowed $262,000 under a new debt agreement.
The revolving credit and term loan agreement was structured with a
three-year revolving credit line of $125,000 and a five-year term loan
of $200,000. With the proceeds from common stock issued (Note 10) and
long-term notes issued, the term loan was repaid. Subsequently, the
revolving credit and term loan agreement was amended. The amended
agreement provides for a $125,000 committed line of credit until
September 30, 1996.
Interest is based on one of the following rates:
* The higher of the Prime Rate or the Federal Funds Rate plus 1/2 of 1%
* London Inter-Bank Offered Rate (LIBOR) adjusted for applicable
reserves; plus 3/8 of 1%, 1/2 of 1%, or 7/8 of 1% depending on the
Standard and Poor's or Moody's rating of the long-term notes of Lukens
* Competitively bid rates from lenders.
A fee is required on the unused portion (defined in the agreement) of the
loan commitment. The commitment fee structure listed below is based on
the lower of Standard and Poor's Moody's rating of the long-term notes.
A-/A3 or higher 3/16 of 1%
BBB-/Baa3 to BBB+/Baa1 1/4 of 1%
Below BBB-/Baa3 3/8 of 1%
The amended agreement includes covenants that require a maximum leverage
ratio (defined in the agreement) of 55 percent and restrictions on
additional debt and asset dispositions. At year end, we are in compliance
with these covenants, and additional borrowings of $93,000 were
available.
Interest Rate Swaps. During the first quarter of 1993, Lukens entered
into a two-year, $75,000, interest rate swap agreement. The swap was
structured to convert a fixed rate of 4.317% to a variable interest rate
that was measured by the six-month LIBOR. During the third quarter,
Lukens realized $317 from the termination of the swap. The gain on
termination is being recognized over the original term of the agreement.
At December 25, 1993, Lukens is party to interest rate exchange
agreements with a notional principal of $81,250 decreasing through the
expiration date in 1994. These agreements, which fix the interest rate
at 6.2%, are accounted for as hedges. Lukens is exposed to credit risk
from nonperformance by the other parties to the swap agreements.
Interest Expense. Capitalized interest was not significant in the last
three years. For a discussion on ESOP debt accounting, see Note 7. Listed
below are the amounts of interest, debt set-up costs and interest rate
swap fees that were paid in cash.
1993 1992 1991
$15,702 $10,449 $1,990
Fair Value of Debt and Interest Rate Swaps. Approximately $160,000
represented the fair value of the long-term notes (face amount $150,000)
at year-end 1993. The fair value of the other instruments at year-end
1993 and 1992 were not significantly different from the amount recognized
in the Consolidated Balance Sheets. Regarding the interest rate swap
agreements, the fair value of the obligations at year-end 1993 totaled
$1,500 and $2,500 at the end of 1992. Fair value was calculated by using
year-end interest rates and market conditions.
10. Stockholders' Investment
Common Stock. At the Annual Meeting of Stockholders on April 28, 1993,
a 20,000,000 increase in the number of authorized common shares was
approved. The increase, which was designed to provide greater flexibility
in future capital structure requirements, brought the total number of
shares authorized to 40,000,000. The par value remained at $.01 per
share.
On July 28, 1992, Lukens issued 1,132,300 shares of common stock. The net
proceeds of $58,529 were used to reduce the debt incurred to finance the
Washington Steel acquisition. On September 28, 1992, a three-for-two
common stock split was completed in the form of a 50 percent stock
dividend. As a result of the split, $53, representing the par value of
the additional shares, was transferred from capital in excess of par
value to common stock. Common shares and equivalents outstanding and per
share amounts in this Annual Report have been restated to reflect the
stock split.
Under the stock option plans discussed in Note 7, 2,242,500 shares of
common stock have been reserved.
Preferred Stock. There are 1,000,000 shares of series preferred stock,
par value $.01 per share, authorized. An ESOP was established in 1989
with the issuance of 551,250 shares of Series B Convertible Preferred
Stock. The preferred stock is stated at its liquidation preference of $60
per share and carries an annual cumulative dividend of $4.80 per share.
Each share may be converted into three shares of common stock within the
guidelines of an employee 401(k) savings plan. The stock is redeemable
in common stock, cash, or a combination at the option of Lukens at a
price of $64.80 per share. The redemption price declines gradually each
year to $60 per share on or after July 2, 2000.
Holders of the Series B preferred stock are entitled to vote upon all
matters submitted to the holders of common stock for a vote. The number
of votes is equal to the number of common shares into which the preferred
shares are convertible.
Shareholder Rights Plan. Lukens has a Shareholder Rights Plan designed
to deter coercive or unfair takeover tactics and to prevent a buyer from
gaining control of Lukens without offering a fair price to stockholders.
The plan entitles each outstanding share of common stock to four-ninths
(reflects adjustment for 1988 and 1992 common stock splits) of a right.
Each right entitles stockholders to buy one one-hundredth of a share of
Series A Junior Participating Preferred Stock at an exercise price of
$110. The rights become exercisable if a person or group acquires or
makes a tender or exchange offer for 20 percent or more of common stock
outstanding. The rights can also become exercisable if the Board of
Directors determines, with the concurrence of outside directors, that a
person has certain interests adverse to Lukens and has acquired at least
10 percent of common stock outstanding.
If the company is then acquired in a merger or other business combination
transaction, each right will entitle the holder to receive, upon
exercise, common stock of either Lukens or the acquiring company having
a value equal to two times the exercise price of a right.
Lukens will generally be entitled to redeem the rights at $.05 per right
at any time until the tenth day following public announcement that a 20
percent position has been acquired. The purchase rights will expire on
August 10, 1997. Of the 1,000,000 shares of series preferred stock
authorized, 75,000 have been reserved for the Series A preferred stock
discussed above. As of December 25, 1993, there were 6,457,327 rights
outstanding.
11. Commitments and Contingencies
Leases. Lukens has various operating leases primarily for real estate
and production equipment. At year-end 1993, minimum rental payments under
noncancelable leases totaled $27,294. Listed below are the scheduled
payments over the next five years for these leases.
1994 1995 1996 1997 1998
$5,474 $4,696 $4,159 $3,413 $2,300
Rent expense for all operating leases is listed below.
1993 1992 1991
$12,245 $10,100 $5,758
Litigation. During 1992, approximately 300 workers' compensation claims
alleging hearing loss were filed against Lukens Steel Co., a wholly-owned
subsidiary. A $3,500 reserve was established in the fourth quarter of
1992 to cover potential awards and defense costs resulting from these
claims. In 1993, additional claims were filed bringing the total number
of claims to approximately 350. An additional $2,100 reserve was
established in the fourth quarter of 1993.
The company is party to various claims, disputes, legal actions and other
proceedings involving product liability, contracts, equal employment
opportunity, occupational safety, environmental issues and various other
matters. In the opinion of management, the outcome of these matters
should not have a material adverse effect on the consolidated financial
condition or results of operations of the company.
Commitments. At year-end 1993, purchase commitments for capital
expenditures were $75,500. Capital expenditures projected for 1994 are
historically high at $144,000. These expenditures are part of a
five-year, $400,000 program that began in 1993.
Lukens Steel Company has a long-term contract for the supply of oxygen
and related products to its facility in Coatesville, Pennsylvania. The
contract runs until 2007 and has take-or-pay provisions totaling $32,989
for the remaining term. Annual minimum commitments are $2,490, which can
be adjusted for inflation. Subsequent to year-end 1993, Washington Steel
Corporation entered into a three-year, $36,000 purchase contract for
nickel.
Quarterly Financial Data (Unaudited)
<TABLE>
Quarterly Financial Data (Unaudited)
<CAPTION>
First Second Third Fourth Fiscal
Quarter Quarter Quarter Quarter Year
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
1993
Net sales $221,116 226,871 211,405 202,680 862,072
Cost of products sold $194,041 196,407 183,776 180,675 754,899
Earnings before cumulative
effect of accounting changes $ 6,178 9,529 7,949 (7,754)b 15,902
Net earnings (loss) $(59,723) 9,529 7,949 (7,754)b(49,999)
1992 (c)
Net sales $100,360 187,495 203,130 204,787 695,772
Cost of products sold $ 87,400 162,736 176,042 175,796 d601,974
Net earnings $ 5,240 10,144 9,165 8,506 d 33,055
PER COMMON SHARE
1993
Primary earnings (a)
Earnings before cumulative
effect of accounting changes $ .39 .61 .51 (0.57) .95
Net earnings (loss) $ (4.07) .61 .51 (0.57) (3.51)
Fully diluted earnings (a)
Earnings before cumulative
effect of accounting changes $ .37 .57 .48 (0.57) .93
Net earnings (loss) $ (4.07) .57 .48 (0.57) (3.51)
Dividends $ .25 .25 .25 .25 1.00
1992
Primary earnings (a) $ .38 .76 .62 .55 2.31
Fully diluted earnings (a) $ .36 .70 .58 .52 2.17
Dividends $ .25 .25 .25 .25 1.00
MARKET PRICES OF COMMON STOCK
1993
High $ 49 5/8 52 7/8 47 7/8 40 52 7/8
Low $ 40 7/8 40 36 1/2 31 1/4 31 1/4
Close $ 44 47 38 1/2 34 1/8
1992
High $ 33 1/8 37 1/2 39 42 5/8 42 5/8
Low $ 25 3/8 29 5/8 34 33 25 3/8
Close $ 31 35 5/8 35 1/8 40 7/8
</TABLE>
a. Earnings per share calculations were based on the weighted-average
shares and equivalents outstanding during the period reported. No
adjustments were made that would be anti-dilutive or reduce the loss per
share. Consequently, the sum of the quarterly earnings per share amounts
may not equal the annual per share amounts.
b. During the fourth quarter of 1993, $10,626 of expenses from a work
force reduction program were recognized. On an after-tax basis, the
provision was $6,247, or $.43 per common share. Also during the fourth
quarter, a $4,500 provision was recognized to revise estimates of the
realizable value of discontinued operations. On an after-tax basis, the
provision was $2,772, or $.19 per common share.
c. Consolidated results since April 24, 1992 include the results from
the Washington Steel acquisition.
d. A $3,500 provision for workers' compensation claims alleging hearing
loss, reduced net earnings by $2,027, or $.14 per share.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
a. Directors
The information contained in the section entitled "Election of
Directors" of the Lukens Inc. 1994 Proxy Statement is incorporated herein
by reference in response to this item.
b. Executive Officers of the Registrant
Information required by this item is contained in Part I of
this Form 10-K in the section entitled "Executive Officers of the
Registrant."
c. Compliance With Section 16(a)
Information contained in the section entitled "Section 16
Compliance" of the Lukens Inc. 1994 Proxy Statement is incorporated
herein by reference in response to this item.
ITEM 11. EXECUTIVE COMPENSATION.
The information contained in the sections entitled "Management" and
"Report of Executive Development & Compensation Committee" of the Lukens
Inc. 1994 Proxy Statement is incorporated herein by reference in response
to this item.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information contained in the sections entitled "Principal
Holders of Stock" and "Management" of the Lukens Inc. 1994 Proxy
Statement is incorporated herein by reference in response to this item.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
a. Documents filed as a part of this report.
1. Financial Statements
No financial statements have been filed with this Form 10-K
other than those incorporated by reference in Item 8.
2. Financial Statement Schedules
<TABLE>
SCHEDULE V - PLANT AND EQUIPMENT
SCHEDULE VI - ACCUMULATED DEPRECIATION
FOR THE FIFTY-TWO WEEKS ENDED DECEMBER 25, 1993
(Dollars in Thousands)
<CAPTION> 1993
Balance ----------------------------- Balance
December Additions Retire- Other Add December
26, 1992 (Transfers ments (Deduct) 25, 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PLANT AND EQUIPMENT, AT COST
Land $ 17,919 - - (271) 17,648
Buildings 97,853 3,832 648 (12) 101,025
Machinery and equipment 603,387 51,682 12,229 (436) 642,404
Construction in progress 16,965 11,910 - (172) 28,703
--------- --------- --------- --------- ---------
$ 736,124 67,424 12,877 (891) 789,780
========= ========= ========= ========= =========
ACCUMULATED DEPRECIATION
Buildings $ 40,512 3,613 340 197 43,982
Machinery and equipment 285,406 38,486 9,353 (594) 313,945
--------- --------- --------- --------- ---------
$ 325,918 42,099 a 9,693 (397) 357,927
========= ========= ========= ========= =========
(a) Depreciation was determined by the straight-line method, using
estimated useful service lives of 20 to 40 years for buildings and 7 to 18
years for most machinery and equipment.
</TABLE>
<TABLE>
SCHEDULE V - PLANT AND EQUIPMENT
SCHEDULE VI - ACCUMULATED DEPRECIATION
FOR THE FIFTY-TWO WEEKS ENDED DECEMBER 26, 1992
(Dollars in Thousands)
<CAPTION> 1992
Balance ----------------------------- Balance
December Additions Retire- Other Add December
28, 1991 (Transfers ments (Deduct) 26, 1992
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PLANT AND EQUIPMENT, AT COST
Land $ 12,431 641 16 4,863 17,919
Buildings 76,573 1,434 16 19,862 97,853
Machinery and equipment 397,218 36,937 1,956 171,188 603,387
Construction in progress 17,211 (3,010) - 2,764 16,965
--------- --------- --------- --------- ---------
$ 503,433 36,002 1,988 198,677 b 736,124
========= ========= ========= ========= =========
ACCUMULATED DEPRECIATION
Buildings $ 37,356 3,089 16 83 40,512
Machinery and equipment 255,499 32,760 2,061 (792) 285,406
--------- --------- --------- --------- ---------
$ 292,855 35,849 a 2,077 (709) 325,918
========= ========= ========= ========= =========
(a) Depreciation was determined by the straight-line method, using
estimated useful service lives of 20 to 40 years for buildings and 7 to 18
years for most machinery and equipment.
(b) Principally the acquisition of Washington Steel Corporation.
</TABLE>
<TABLE>
SCHEDULE V - PLANT AND EQUIPMENT
SCHEDULE VI - ACCUMULATED DEPRECIATION
FOR THE FIFTY-TWO WEEKS ENDED DECEMBER 28, 1991
(Dollars in Thousands)
<CAPTION> 1991
Balance ----------------------------- Balance
December Additions Retire- Other Add December
29, 1990 (Transfers ments (Deduct) 28, 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PLANT AND EQUIPMENT, AT COST
Land $ 12,330 163 12 (50) 12,431
Buildings 74,320 2,616 - (363) 76,573
Machinery and equipment 374,568 24,598 392 (1,556) 397,218
Construction in progress 9,892 7,319 - - 17,211
--------- --------- --------- --------- ---------
$ 471,110 34,696 404 (1,969)b 503,433
========= ========= ========= ========= =========
ACCUMULATED DEPRECIATION
Buildings $ 34,670 2,949 - (263) 37,356
Machinery and equipment 234,720 21,876 389 (708) 255,499
--------- --------- --------- --------- ---------
$ 269,390 24,825 a 389 (971)b 292,855
========= ========= ========= ========= =========
(a) Depreciation was determined by the straight-line method, using
estimated useful service lives of 20 to 40 years for buildings and 7 to 18
years for most machinery and equipment.
(b) Principally the sale of assets used in the Safety Products Group.
</TABLE>
<TABLE>
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
(Dollars in Thousands)
ALLOWANCE FOR DOUBTFUL RECEIVABLES AND CUSTOMER CLAIMS
<CAPTION> Additions Charged to
Balance at --------------------- Balance at
Beginning Costs and Deductions End of
Fiscal Year Ended of Period Expenses Other (b) Period
- ------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
December 25, 1993 $ 9,836 12,997 - 11,389 11,444
December 26, 1992 $ 4,352 9,268 5,701 a 9,485 9,836
December 28, 1991 $ 3,563 5,326 - 4,537 4,352
(a) Balance assumed in the Washington Steel Corporation acquisition.
(b) Amounts determined not to be collectible, net of recoveries.
DEFERRED INCOME TAX ASSET VALUATION ALLOWANCE
Additions Charged to
Balance at --------------------- Balance at
Beginning Costs and End of
Fiscal Year Ended of Period Expenses Other Deductions Period
- ------------------- ---------- ---------- ---------- ---------- ----------
December 25, 1993 $ 2,791 a 271 - - 3,062
(a) Included in cumulative effect of accounting changes from the adoption
of SFAS No. 109.
DISCONTINUED OPERATIONS VALUATION RESERVE
Additions Charged to
Balance at --------------------- Balance at
Beginning Costs and End of
Fiscal Year Ended of Period Expenses Other Deductions Period
- ------------------- ---------- ---------- ---------- ---------- ----------
December 25, 1993 $ - 4,500 - - 4,500
</TABLE>
<TABLE>
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
(Dollars in Thousands)
<CAPTION> Charged to Costs and Expenses
During the Fiscal Years Ended
--------------------------------
December December December
Item 25, 1993 26, 1992 28, 1991
- ------------------------------ ---------- ---------- ----------
<S> <C> <C> <C>
Maintenance and repairs $ 97,936 81,349 70,356
Depreciation $ 42,099 35,849 24,825
Amortization of intangible assets $ 3,389 3,383 1,008
</TABLE>
Schedules other than those listed above have been omitted
because they are not applicable or because the required information is
reported in the financial statements or notes.
3. Exhibits
See Index to Exhibits.
b. Reports on Form 8-K.
No reports on Form 8-K were filed during the fourth quarter of 1993
that ended on December 25, 1993.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
LUKENS INC.
(Registrant)
Date: March 2, 1994 By R. W. Van Sant
--------------
R. W. Van Sant
Chairman and
Chief Executive Officer
SIGNATURES (continued)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below, as of March 2, 1994, by the following
persons on behalf of the registrant and in the capacities indicated.
Signature and Title
Michael O. Alexander Robert L. Seaman
- -------------------- --------------------
Michael O. Alexander Robert L. Seaman
Director Director
Frederick R. Dusto
- -------------------- --------------------
Frederick R. Dusto Harry C. Stonecipher
Director Director
Ronald M. Gross Joab L. Thomas
- -------------------- --------------------
Ronald M. Gross Joab L. Thomas
Director Director
Nancy Huston Hansen W. Paul Tippett
- -------------------- --------------------
Nancy Huston Hansen W. Paul Tippett
Director Director
William H. Nelson, III R. W. Van Sant
- -------------------- --------------------
William H. Nelson, III R. W. Van Sant
Director Chairman and
Chief Executive Officer
Stuart J. Northrop John N. Maier
- -------------------- --------------------
Stuart J. Northrop John N. Maier
Director Vice President and
Controller
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in the Lukens
Inc. 1993 Annual Report to stockholders, included or incorporated by
reference in this Form 10-K, and have issued our report thereon dated
February 1, 1994. Our report on the financial statements includes an
explanatory paragraph with respect to the change in the method of
accounting for income taxes in 1993 as discussed in Note 1 to the
financial statements. Our audits were made for the purpose of forming
an opinion on those statements taken as a whole. The financial statement
schedules referred to in Item 14 are the responsibility of the Company's
management and are presented for purposes of complying with the
Securities and Exchange Commission's rules and are not part of the basic
financial statements. The financial statement schedules have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, fairly state in all material
respects the financial data required to be set forth therein in relation
to the basic financial statements taken as a whole.
Arthur Andersen & Co.
Philadelphia, Pennsylvania
February 1, 1994
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports dated February 1, 1994 included or incorporated by
reference in this annual report on Form 10-K, into the Company's
previously filed: Form S-8 Registration Statements File No. 33-6673,
33-23405, 33-29105, and 33-69780, and Form S-3 Registration Statement
File No. 33-6792.
Arthur Andersen & Co.
Philadelphia, Pennsylvania
March 23, 1994
INDEX TO EXHIBITS (Note 1)
( 3) Certificate of incorporation and by-laws (Note 2)
(10) Material Contracts
(10.1) Lukens Inc. Supplemental Retirement Plan for Target Incentive
Plan Participants, as amended, effective January 1, 1988 (Note 4)
(10.2) Lukens Inc. Supplemental Retirement Plan as amended and restated,
effective January 1, 1990 (Note 6)
(10.3) Lukens Inc. Supplemental Retirement Plan for Designated
Executives, effective January 1, 1990 (Note 5)
(10.4) Lukens Inc. 1985 Stock Option and Appreciation Plan As Amended
(10.5) Lukens Inc. Stock Option Plan for Non-employee Directors
(10.6) Employment Agreement dated October 12, 1991, between R. William
Van Sant and the company (Note 4)
(10.7) Severance Agreement dated October 12, 1991, between R.
William Van Sant and the company (Note 4)
(10.8) Lukens Inc. Severance Plan for Participants in the Lukens Inc.
1983 Target Incentive Plan and the Lukens Inc. 1985 Division
Incentive Compensation Plan (Note 4)
(10.9) Severance Agreement dated October 31, 1990, between Dennis M.
Oates and the company (Note 5)
(10.10) Severance Agreement dated October 31, 1990, between John C. van
Roden, Jr. and the company (Note 5)
(10.11) Severance Agreement dated October 31, 1990, between William D.
Sprague and the company (Note 5)
(10.12) Severance Agreement dated January 9, 1992, between John N.
Maier and the company (Note 3)
(10.13) Lukens Inc. 1983 Target Incentive Compensation Plan as amended
through January 1, 1993 (Note 3)
(10.14) Lukens Inc. Directors' Deferred Payment Plan (Note 8)
(10.15) Guaranty Agreement dated as of June 28, 1989, between Lukens
Inc., and The Toronto-Dominion Bank & Trust Company as Agent for
the Guaranteed Parties (Note 6)
(10.16) Retirement Plan, as amended, for Non-Employee Directors of
Lukens Inc. (Note 5)
(10.17) Indemnification Agreement dated February 24, 1988, between
Frederick R. Dusto and the company (Note 6)
(10.18) Indemnification Agreement dated October 17, 1988, between
William D. Sprague and the company (Note 6)
(10.19) Indemnification Agreement dated September 27, 1989, between W.
Paul Tippett and the company (Note 6)
(10.20) Indemnification Agreement dated November 30, 1988, between R.
William Van Sant and the company (Note 6)
(10.21) Indemnification Agreement dated January 27, 1988, between
William H. Nelson, III and the company (Note 6)
(10.22) Indemnification Agreement dated January 27, 1988, between Nancy
Huston Hansen and the company (Note 6)
(10.23) Indemnification Agreement dated January 27, 1988, between
Stuart J. Northrop and the company (Note 6)
(10.24) Indemnification Agreement dated January 27, 1988, between
Robert L. Seaman and the company (Note 6)
(10.25) Indemnification Agreement dated January 27, 1988, between
Dennis M. Oates and the company (Note 6)
(10.26) Indemnification Agreement dated January 28, 1988, between John
C. van Roden, Jr. and the company (Note 6)
(10.27) Indemnification Agreement dated September 25, 1991, between
Ronald M. Gross and the company (Note 4)
(10.28) Indemnification Agreement dated September 25, 1991, between
Harry C. Stonecipher and the company (Note 4)
(10.29) Indemnification Agreement dated December 2, 1992, between Joab
Thomas and the company (Note 3)
(10.30) Indemnification Agreement dated January 27, 1993, between
Michael O. Alexander and the company
(10.31) Indemnification Agreement dated January 9, 1992, between John
N. Maier and the company (Note 3)
(10.32) Indemnification Agreement dated February 1, 1993, between T.
Grant John and the company
(10.33) Indemnification Agreement dated February 1, 1993, between
Richard D. Luzzi and the company
(10.34) Indemnification Agreement dated April 15, 1993, between
Frederick J. Smith and the company
(10.35) Indemnification Agreement dated April 15, 1993, between John
H. Bucher and the company
(10.36) Revolving Credit and Term Loan Agreement, dated April 22, 1992,
among Lukens Inc. and Lukens Steel Company, as the Borrowers,
Certain Commercial Lending Institutions, the Toronto-Dominion
Bank, and NBD Bank, N.A., as the Co-Agents, and Provident
National Bank, as the Administrative Agent (Note 9)
(10.37) Amended and Restated Credit Agreement, dated as of April 22,
1992, and Amended and Restated as of September 30, 1992 (Note 3)
(10.38) Lease Agreement among Washington Steel Corporation, Blount,
Inc. and C.I.T. Financial Services, Inc., dated as of December 15,
1980 (Note 3)
(10.39) Allied Corporation - Washington Steel Corporation Equipment
Lease and Maintenance Agreement, dated September 22, 1986 (Note 3)
(10.40) Lease among PNC Leasing Corp., Blount, Inc., and Washington
Steel Corporation, dated as of October 1, 1986 (Note 3)
(10.41) Lease Amendment No. 1, dated July 22, 1987, among PNC Leasing
Corp., Blount, Inc. and Washington Steel Corporation (Note 3)
(10.42) Lease Amendment No. 2, Assumption and Consent among PNC Leasing
Corp., Blount, Inc. and Washington Steel Corporation, dated as of
October 18, 19888 (Note 3)
(10.43) Lease Amendment No. 3, Assumption and Consent among PNC Leasing
Corp., Lukens Inc. and Washington Steel Corporation, dated as of July 21,
1992 (Note 3)
(10.44) Lease Agreement among Wells Fargo Leasing Corporation, Blount,
Inc. and Washington Steel Corporation, dated as of April 2, 1981
(Note 3)
(10.45) Agreement, dated May 27, 1988, between Robert E. Heaton and
Blount, Inc. (Note 3)
(10.46) Executive Employment Contract, dated March 13, 1989, between
Robert E. Heaton and Washington Steel Corporation (Note 3)
(10.47) Amendment No. 1 to Employment Agreement between Robert E.
Heaton, Washington Steel Corp. and Mercury Stainless Corp., dated as of
February 17, 1989 (Note 3)
(10.48) Agreement, dated October 31, 1989, between Robert E. Heaton and
Washington Steel Corp. (Note 3)
(10.49) Memorandum, dated April 30, 1990, regarding Incentive
Compensation Amendment to the Executive Employment Contract (Note
3)
(10.50) First Amendment to Executive Employment Contract between Robert
E. Heaton and Washington Steel Corp., dated November 26, 1990
(Note 3)
(10.51) Second Amendment to Executive Employment Agreement between
Robert E. Heaton and Washington Steel Corp., dated November 28, 1990
(Note 3)
(10.52) Washington Steel Division Annual Bonus Plan for Elected
Officers (Note 3)
(10.53) Agreement between James J. Norton and Mercury Stainless Corp.,
Mercury Stainless, Inc., Mercury Stainless Canada Inc.,
Washington Steel Corp. and Kramo Corp., dated October 31, 1989
(Note 3)
(10.54) Memorandum, dated April 30, 1990, regarding Incentive
Compensation Amendment to the Norton Employment Contract (Note 3)
(10.55) Amended and Restated Employment Contract between James J.
Norton and Mercury Stainless Corp., Mercury Stainless, Inc, Kramo Corp.
and Washington Steel Corp., dated as of October 9, 1990 (Note 3)
(10.56) First Amendment to Amended and Restated Employment Contract
between James J. Norton and Mercury Stainless Corp., Mercury
Stainless, Inc, Kramo Corp. and Washington Steel Corp., dated as
of January 3, 1991 (Note 3)
(10.57) Second Amendment to Amended and Restated Employment Contract
between James J. Norton and Mercury Stainless Corp., Mercury
Stainless, Inc, Kramo Corp. and Washington Steel Corp., dated as
of July 3, 1991 (Note 3)
(10.58) Agreement dated July 16, 1993, between Robert Schaal and the
company
(11) Statement regarding Computation of Per Share Earnings
(13) Annual Report to Security Holders
Except for the portions of that report expressly incorporated into
this Form 10-K by reference, the Lukens' 1993 Annual Report to
stockholders is not deemed filed as part of this filing.
(21) Subsidiaries of the Registrant
(23) Consent of Arthur Andersen & Co. (Note 10)
Notes to Exhibits
1. Copies of exhibits will be supplied upon request. There is no
charge for a copy of Lukens' 1993 Annual Report to stockholders (Exhibit
13). Other exhibits will be provided at $.25 per page requested.
2. Certificate of incorporation is incorporated by reference to
exhibits included in the Lukens Inc. Post-Effective Amendment No. 1 to
the Registration Statement on Form S-8, File No. 33-23405. By-laws as
amended and restated June 26, 1991, are incorporated by reference to
exhibits included in the company's report on Form 10-Q for the quarter
ended June 29, 1991.
3. Incorporated by reference to exhibits included in the company's
report on Form 10-K for the fiscal year ended December 26, 1992.
4. Incorporated by reference to exhibits included in the company's
report on Form 10-K for the fiscal year ended December 28, 1991.
5. Incorporated by reference to exhibits included in the company's
report on Form 10-K for the fiscal year ended December 29, 1990.
6. Incorporated by reference to exhibits included in the company's
report on Form 10-K for the fiscal year ended December 30, 1989.
7. Incorporated by reference to exhibits included in the company's
report on Form 10-K for the fiscal year ended December 31, 1988.
8. Incorporated by reference to exhibits included in the Lukens Inc.
Registration Statement on Form S-4, File No. 33-10935.
9. Incorporated by reference to exhibits included in the Lukens Inc.
Form 10-Q for the quarter ended March 28, 1992.
10. Incorporated by reference to page 15 of this Form 10-K.
EXHIBIT 10.4
LUKENS INC.
1985 STOCK OPTION AND APPRECIATION PLAN
As Amended December 17, 1986, February 25, 1987
April 27, 1988, August 15, 1988, January 31, 1990
and April 28, 1993
The Lukens, Inc. 1985 Stock Option and Appreciation Plan is hereby
amended and renamed the Lukens Inc. 1985 Stock Option and Appreciation
Plan (the "Plan). This Plan has been amended to conform to the changes
in the law under the Tax Reform Act of 1986, to reflect a deletion of
the requirement of tender of Shares by the Participant to the Company,
to increase the number of Shares issuable under the Plan, to reflect
a three for two stock split effected August 15, 1988, and to provide
for acceleration of Options upon a Change in Control.
The purpose of the Plan is to furnish an incentive to those officers
and other key employees who have demonstrated a capacity to contribute
to the success of the Company and its present or future subsidiaries
by making available to them a larger common stock ownership in the
Company, to induce the continued service of such employees, and to
stimulate their efforts for the continued success of the Company.
Options granted under the Plan may be either incentive stock options,
as defined in Section 422A(b) of the Internal Revenue Code of 1986, as
amended (the "Code"), or options which do not meet the requirements of
said Section 422A(b) of the Code, herein referred to as non-qualified
stock options.
ARTICLE I. Definitions
1.1 As used in this Plan, the following definitions apply to the
terms indicated below:
(a) "Board" means the Board of Directors of Lukens Inc.
(b) "Change in Control" means any of the following events:
(i) Any "person" or "group" (as such terms are used in Sections
3(a)(9), 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934,
as amended), considered together with its or their "affiliates" and
"associates" (as such terms are defined in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as
amended), is or becomes the beneficial owner (as defined in Rule 13d-3
of the General Rules and Regulations under the Securities Exchange Act
of 1934, as amended), or acquires or holds voting control, directly or
indirectly, of securities of the Company which, when considered
together with any other securities which by their terms are
convertible, even if not then convertible, represent twenty percent
(20%) or more of the voting power of the then outstanding securities
of the Company; or
(ii) A change in the composition of a majority of the Board within 24
months after any "person" or "group" (as such terms are used in
Sections 3(a)(9), 13(d)(3) and 14(d)(2) of the Securities Exchange Act
of 1934, as amended), considered together with its or their
"affiliates" or "associates" (as such terms are defined in Rule 12b-2
of the General Rules and Regulations under the Securities Exchange Act
of 1934, as amended), is or becomes the beneficial owner (as defined
in Rule 13d-3 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended) or acquires or holds voting control,
directly or indirectly, of securities of the Company which, when
considered together with any other securities held by such person or
group or their affiliates or associates which by their terms are
convertible, even if not then convertible, represent twenty percent
(20%) of the voting power of the then outstanding securities of the
Company; or
(iii) Any "person" or "group" (as such terms are used in Section
3(a)(9), 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934,
as amended) commences a tender offer or exchange offer for securities
of the Company if, upon consummation thereof, the offeror, considered
together with its "affiliates" and "associates" (as such terms are
defined in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended), would own or control,
directly or indirectly, securities of the Company which, when
considered together with any other securities held by such person or
group or their affiliates or associates which by their terms are
convertible, even if not then convertible, represent thirty percent
(30%) or more of the voting power of the then outstanding securities
of the Company.
The terms "person and "group", as used in this Section (b), shall not
include (i) the Company; (ii) any corporation in which the Company
owns, directly or indirectly, voting securities sufficient to elect at
least a majority of the directors of such corporation; (iii) any
employee benefit plan of the Company or of any corporation described
in clause (ii) above; (iv) any individual or entity organized,
appointed or established by the Company for, or pursuant to the terms
of any employee benefit plan described in clause (iii) above; and (v)
a Participant. (as amended January 31, 1990)
(c) "Committee" means the Committee appointed pursuant to Section 9.1
of the Plan.
(d) "Company" means Lukens Inc.
(e) "Eligible Employee" means any employee, who on the date of the
granting of an Option hereunder, is an officer or other key employee
of the Company or of any Subsidiary Corporation and who, in the opinion
of the Committee, has demonstrated a capacity for contributing to the
success of the Company and its subsidiaries.
(f) "Option" means a right to purchase Shares granted pursuant to the
Plan and evidenced by an option certificate in such form as the
Committee may adopt for general use from time to time.
(g) "Participant" means an Eligible Employee to whom an Option is
granted pursuant to this Plan.
(h) "Plan" means the Lukens Inc. 1985 Stock Option and Appreciation
Plan.
(i) "Shares" mean shares of the Company's common stock, par value
$.01.
(j) "Subsidiary Corporation" means any corporation, as defined in
Section 425(f) of the Code, now or hereafter existing in which the
Company owns, directly or indirectly, in an unbroken chain of
corporations, stock possessing 50% or more of the total combined voting
power of all classes of stock of such corporation.
1.2 An Option shall be deemed "granted" under this Plan on the date
on which the Committee, by appropriate action, awards the Option to an
Eligible Employee, or on such subsequent date as the Committee may
designate.
1.3 As used herein, the masculine includes the feminine and the plural
includes the singular.
1.4 For purposes of the Plan, the fair market value of the Shares on
a valuation date shall be the mean between the highest and lowest
prices at which the Company's stock was sold on the New York Stock
Exchange on such date (or if such date shall not be a business day,
then the next preceding day which shall be a business day), or if no
sale takes place, then the mean between the bid and asked prices on
such date; if no bid and asked prices are quoted for such date then
such value as shall be determined by such method as the Committee shall
deem to reflect fair market value as of such date.
ARTICLE II. Shares Subject to the Plan
2.1 The aggregate number of Shares which may be delivered
upon exercise of Options granted under the Plan (including Shares
delivered under Section 4.7 hereof) shall not exceed 1,837,500, subject
to appropriate adjustment in the event the number of issued Shares
shall be increased or reduced by a change in par value, combination,
split-up, merger, reclassification, distribution of a dividend payable
in stock, or the like. Shares covered by Options which have lapsed or
expired may again be optioned pursuant to the Plan. (as amended April
27, 1988, August 15, 1988 and April 28, 1993)
ARTICLE III. Grants of Options
3.1 The Committee may, at any time during the term of the Plan, grant
to any Eligible Employee an Option to purchase any number of Shares,
subject to the limitation in Section 3.2 hereof.
3.2 With respect to incentive stock options granted prior to January
1, 1987, the aggregate fair market value (determined as of the date the
Option is granted) of the Shares for which any Participant may be
granted Options intended to be incentive stock options in any calendar
year (under all plans of the Company and its subsidiaries) shall not
exceed $100,000 plus any unused limit carry-over (as described in
Section 422A(c)(4) of the Code prior to amendment by the Tax Reform Act
of 1986) to such year. With respect to all incentive stock options
granted after December 31, 1986, the aggregate fair market value
(determined as of the date the Option is granted) of the Shares for
which any Participant may first exercise Options intended to be
incentive stock options in any calendar year (under all plans of the
Company and its subsidiaries) shall not exceed $100,000. (as amended
December 17, 1986)
3.3 No Option intended to be an incentive stock option shall be
granted to an employee who, at the time the Option is granted, owns
(within the meaning of Section 422A(b)(6) of the Code) stock possessing
more than 10 percent of the total combined voting power of all classes
of stock of the corporation employing such employee or of its parent
corporation or subsidiary corporation (as defined in Sections 425(e)
and 425(f), respectively, of the Code).
3.4 The Committee may in its discretion grant Options that are not
intended to constitute incentive stock options. Such Options may be
granted in excess of the limitations provided in this Section or on
terms differing from those provided in Section 4.4 hereof.
3.5 Each Option shall be evidenced by a written instrument, in such
form as the Committee shall from time to time approve, which shall
state the terms and conditions of the Option in accordance with the
Plan and also shall contain such additional provisions as may be
necessary or appropriate under applicable laws, regulations and rules.
ARTICLE IV. Terms of Options
4.1 At the time of granting the Option the Committee shall establish
an Option exercise price per Share not less than 100 percent of the
fair market value of a Share on the date the Option is granted.
4.2 Options shall not be transferable otherwise than by will or the
laws of descent and distribution. No Option shall be subject, in whole
or in part, to attachment, execution or levy of any kind.
4.3 A Participant may exercise an Option, subject to the terms of this
Plan and applicable rules and regulations of the Committee, only after
such Participant has completed one year of full time employment
immediately following the date of the grant of such Option.
4.4 Any Option granted before January 1, 1987, intended to be an
incentive stock option may not be exercised in whole or in part while
there is outstanding any incentive stock option which was granted
before the granting of such Option to such Participant to purchase
stock in his or her employer corporation or in a corporation which at
the time of grant of such Option is a parent corporation or subsidiary
corporation (as defined in Section 425(e) and 425(f) respectively, of
the Code prior to amendment by the Tax Reform Act of 1986) of the
employer corporation or in a predecessor of any such corporations. For
this purpose, an incentive stock option shall be treated as outstanding
until it is exercised in full or expires by reason of lapse of time.
(as amended December 17, 1986)
4.5 The expiration date of each Option shall be no more than ten years
after the date of grant.
4.6 All Options shall be exercisable during a Participant's lifetime
only by such Participant.
4.7 An Option may, in the discretion of the Committee, provide that
upon the exercise of the Option the Participant shall receive, in
addition to the Shares purchased upon exercise of the Option, an amount
equal to the excess of the then fair market value of the Shares
purchasable on exercise of the Option over the exercise price of the
Option provided that such amount receivable shall not exceed the
exercise price of the Option. Such additional amount shall be
delivered to the Participant in cash, in Shares (valued at their then
fair market value) or in a combination of cash and Shares as the
Committee in its sole discretion shall determine.
4.8 No Participant shall have any rights to dividends or other rights
of a stockholder with respect to Shares subject to an Option prior to
the purchase of such Shares upon the exercise of the Option.
4.9 An Option may, in the discretion of the Committee, provide that
in the event of a Change in Control, such Option shall automatically
become fully exercisable, notwithstanding any other provisions of the
Plan to the contrary. (as amended January 31, 1990)
ARTICLE V. Exercise Rights Upon Termination of Employment
5.1 If a Participant retires, the Participant's Option shall terminate
three years after the date of such retirement, but in no event later
than the date on which it would have expired if the Participant had not
retired; provided, however, that if the Option is exercised later than
three months after the date of retirement, it shall not constitute an
incentive stock option. After the date of retirement, the Participant
may exercise the Option, in whole or in part, notwithstanding the
limitations of Section 4.3 hereof.
5.2 If a Participant becomes disabled, the Participant may exercise
the Option (i) within one year after the date of disability, but in no
event later than the date on which it would have expired if the
Participant had not become disabled, or (ii) within such other period,
not exceeding three years after the date of disability as shall be
prescribed in the Option instrument; provided, however, that if the
Option is exercised later than one year after the date of disability
it shall not constitute an incentive stock option. During any such
period the Participant may exercise the Option in whole or in part,
notwithstanding the limitations of Section 4.3 hereof. For this
purpose, a Participant shall be deemed to be disabled if he or she is
unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to
last for continuous period of not less than 12 months.
5.3 If a Participant dies during a period in which he or she is
entitled to exercise an Option (including the periods referred to in
Sections 5.1, 5.2 and 5.4 hereof), the Participant's Option shall
terminate three years after the date of death, but in no event later
than the date on which it would have expired if the Participant had
lived. During such period, the Option may be exercised by the
Participant's executor or administrator or by any person or persons who
shall have acquired the Option directly from the Participant by bequest
or inheritance. The Option may be exercised in whole or in part
notwithstanding the limitations of Section 4.3 hereof.
5.4 If a Participant ceases to be employed by the Company or a
Subsidiary Corporation for any reason other than retirement, disability
or death, the Participant's Option shall terminate three months after
the date of such cessation of employment, but in no event later than
the date on which it would have expired if such cessation of employment
had not occurred. During such period the Option may be exercised only
to the extent that the Participant was entitled to do so under Section
4.3 hereof at the date of cessation of employment unless the Committee,
in its sole discretion, permits exercise of the Option to a greater
extent. The employment of a Participant shall not be deemed to have
ceased upon his or her absence from the Company or a Subsidiary
Corporation on a leave of absence granted in accordance with the usual
procedures of the Company or such Subsidiary Corporation.
ARTICLE VI. Delivery of Shares
6.1 No Shares will be delivered upon exercise of an Option until the
exercise price of the Option is paid (i) in full in cash, (ii) by the
delivery to the Company of Shares with fair market value equal to the
exercise price of the Option, or (iii) partly in cash and partly in
Shares valued at their fair market value provided, however, that Shares
received upon exercise of an Option under this Plan may be delivered
in payment of the exercise price only after they have been held by the
Participant for one year subsequent to such prior exercise. The
Committee will establish procedures implementing the holding period
requirement. Fair market value shall be determined as of the close of
the business day immediately preceding the date on which the Option is
exercised, in the manner described in Section 1.4 hereof. If required
by the Committee, no Shares will be delivered upon the exercise of the
Option unless a Participant has given the Company a satisfactory
written statement that the Shares are being acquired for the
Participant's account and not with a view to the distribution of the
Shares.
6.2 Share certificates issued to Participants upon exercise of Options
may, at the sole discretion of the Committee, bear language limiting
their transfer otherwise than in accordance with the Plan and
applicable state and federal law.
ARTICLE VII. Continuation of Employment
7.1 Neither this Plan nor the grant of any Option hereunder shall
confer upon any Participant the right to continue in the employ of the
Company or any Subsidiary Corporation or limit in any respect the right
of the Company or any Subsidiary Corporation to terminate his
employment at any time.
ARTICLE VIII. Reorganization of the Company
8.1 In the event the Company is succeeded by another corporation in
a reorganization, which term includes a merger, consolidation,
acquisition of all or substantially all of the assets or common stock
of the Company, separation or liquidation, the Participant shall, at
the same cost, be entitled upon the exercise of an Option, to receive
(subject to any required action by stockholders) such securities of the
surviving or resulting corporation and such additional amount as
provided in Section 4.7 hereof as the board of directors of such
corporation shall determine to be equivalent, as nearly as practicable,
to the nearest whole number and class of shares of stock or other
securities and related additional amount determined under Section 4.7
to which the Participant would have been entitled under the terms of
the agreement of reorganization, (without adjustment for any fractional
interest thereby eliminated), as if, immediately prior to such event,
the Participant had been the holder of record of the number of Shares
which were then subject to such Option. Such shares of stock or other
securities shall, after such reorganization be deemed to be Shares for
all purposes of the Plan including the right to an additional amount
as provided in Section 4.7 of the Plan.
ARTICLE IX. Administration
9.1 The Plan shall be administered by a Committee, consisting of not
less than three directors, appointed by the Board to serve at the
pleasure of the Board. No member of the Committee shall be eligible
to receive Options hereunder while serving thereon.
9.2 The Committee shall be empowered, subject to the provisions of the
Plan and to any other directives issued by the Board, to prescribe,
amend and rescind rules and regulations of general application relating
to the operation of the Plan and to make all other determinations
necessary or desirable for its proper administration. Decisions of the
Committee shall be final, conclusive and binding upon all parties,
including the Company, the stockholders and the Eligible Employees.
9.3 Neither the Company, any Subsidiary Corporation, nor any director
or officer thereof, nor the Committee nor any member of the Committee
shall be liable for any act, omission, interpretation, construction or
determination made in connection with the Plan in good faith. The
Committee and each of its members shall be entitled to indemnification
and reimbursement by the Company in respect of any claim, loss, damage
or expense (including counsel fees) arising therefrom to the full
extent permitted by law and under any directors and officers liability
insurance coverage which may be in effect from time to time.
ARTICLE X. Disposition of Shares
10.1 Each Participant, by accepting an incentive stock option
hereunder prior to February 28, 1987, agrees that, before disposing of
any Shares acquired pursuant to such Option, he will tender such Shares
to the Company. The Company shall have the right, within five (5) days
following the receipt of tender of such Shares, to purchase such Shares
at a price equal to the fair market value of such Shares, on the date
of such tender. If the Company does not accept the offer to purchase
the Shares so tendered within the five (5) day period such Shares shall
thereafter be free of all restrictions affecting their disposition
under this Article X. (as amended February 28, 1987)
10.2 The instruments evidencing Options intended to be incentive stock
options shall provide that if, within two years from the date of grant
of the Option or within one year after the transfer of Shares of Common
Stock to the Participant on exercise of the Option, the Participant
makes a disposition (as defined in Section 425(c) of the Code) of any
such Shares, the Participant shall notify the Secretary of the Company
within 10 days after such disposition. The Committee may direct that
a legend restricting transfer in the absence of appropriate
notification be affixed to any stock certificates representing Shares
transferred under the Plan.
ARTICLE XI. Amendment and Discontinuance
11.1 The Board is authorized to make such changes in the Plan as shall
be necessary to bring it into conformity with any regulations of any
governmental body having jurisdiction; and may otherwise alter the Plan
subject, however, to the prior approval of the stockholders of the
Company if such alteration would: (a) materially increase benefits to
Participants, (b) materially increase the number of Shares issuable
under the Plan, or (c) materially modify the requirements as to
eligibility for participation in the Plan. The Board may at any time
suspend or discontinue the Plan. No action of the Board or of the
stockholders, however, shall alter or impair any Option theretofore
granted under the Plan except as herein provided.
ARTICLE XII. Miscellaneous
12.1 It is expressly understood that this Plan grants powers to the
Committee but does not require their exercise; nor shall any person,
by reason of the adoption of this Plan, be deemed to be entitled to the
grant of any Option; nor shall any rights be deemed to accrue under the
Plan except as Options may actually be granted hereunder.
12.2 The adoption of this Plan shall not preclude the Board from
granting options to purchase Shares to any person in connection with
his employment by the Company or by a Subsidiary Corporation without
reference to, and outside of, this Plan.
12.3 All expenses of the Plan, including the cost of maintaining
records, shall be borne by the Company.
12.4 The Company and any Subsidiary Corporation shall have the right
to deduct from all cash payments any federal, state, or local taxes
required by law to be withheld with respect to such cash payments.
12.5 The Plan shall be construed in accordance with and be governed
by the laws of the Commonwealth of Pennsylvania.
ARTICLE XIII. Plan Adoption and Term
13.1 This Plan shall become effective upon its adoption by the Board,
and Options may thereafter be granted, provided, however, that the Plan
shall be submitted to the Company's stockholders for their approval at
the next following Annual Meeting of Stockholders. If the Plan is not
approved by the affirmative vote of the holders of at least a majority
of the Shares entitled to vote at the meeting, then the Plan and all
Options then outstanding shall immediately automatically terminate and
be of no force or effect.
13.2 Subject to the provisions of the Plan relating to amendment or
discontinuance, this Plan shall continue in effect until February 26,
1998. No Option may be granted hereunder after such date, but Options
granted before such date may extend beyond the termination date of the
Plan. (as amended April 28, 1993)
Executed this _____ day of _______________, 1993.
______________________________
Secretary to the Board
of Lukens Inc.
Section 2.1 of the Lukens Inc. 1985 Stock Option and Appreciation Plan
is amended to read as follows:
"The aggregate number of Shares which may be delivered upon exercise
of Options granted under the Plan (including Shares delivered under
Section 4.7 hereof) shall not exceed 1,837,500, subject to appropriate
adjustment in the event the number of issued Shares shall be increased
or reduced by a change in par value, combination, split-up, merger,
reclassification, distribution of a dividend payable in stock, or the
like. Shares covered by Options which have lapsed or expired may again
be optioned pursuant to the Plan."
Section 13.2 of the Lukens Inc. 1985 Stock Option and Appreciation Plan
is amended to read as follows:
"Subject to the provisions of the Plan relating to amendment or
discontinuance, this Plan shall continue in effect until February 26,
1998. No Option may be granted hereunder after such date, but Options
granted before such date may extend beyond the termination date of the
Plan."
EXHIBIT 10.5
LUKENS INC.
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
The purpose of the Lukens Inc. Stock Option Plan for
Non-Employee Directors (the "Plan") is to furnish an incentive to
non-employee directors of the Company by making available to them
a larger common stock ownership in the Company, to induce the
continued service of such directors, and to stimulate their
efforts for the continued success of the Company. Options
granted under the Plan are non-qualified stock options
(i.e., options that do not qualify as "incentive stock options"
under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code")).
ARTICLE I. Definitions
1.1 As used in this Plan, the following definitions
apply to the terms indicated below:
(a) "Board" means the Board of Directors of
Lukens Inc.
(b) "Change in Control" means any of the
following events:
(i) Any "person" or "group" (as such terms
are used in Sections 3(a)(9), 13(d)(3) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended), considered together
with its or their "affiliates" and "associates" (as such terms
are defined in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended), is or
becomes the beneficial owner (as defined in Rule 13d-3 of the
General Rules and Regulations under the Securities Exchange Act
of 1934, as amended), or acquires or holds voting control,
directly or indirectly, of securities of the Company which, when
considered together with any other securities which by their
terms are convertible, even if not then convertible, represent
twenty percent (20%) or more of the voting power of the then
outstanding securities of the Company; or
(ii) A change in the composition of a
majority of the Board within 24 months after any "person" or
"group" (as such terms are used in Sections 3(a)(9), 13(d)(3) and
14(d)(2) of the Securities Exchange Act of 1934, as amended),
considered together with its or their "affiliates" or
"associates" (as such terms are defined in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act
of 1934, as amended), is or becomes the beneficial owner (as
defined in Rule 13d-3 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended) or acquires or
holds voting control, directly or indirectly, of securities of
the Company which, when considered together with any other
securities held by such person or group or their affiliates or
associates which by their terms are convertible, even if not then
convertible, represent twenty percent (20%) of the voting power
of the then outstanding securities of the Company; or
(iii) Any "person" or "group" (as such terms
are used in Section 3(a)(9), 13(d)(3) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended) commences a tender
offer or exchange offer for securities of the Company if, upon
consummation thereof, the offeror, considered together with its
"affiliates" and "associates" (as such terms are defined in Rule
12b-2 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended), would own or control, directly
or indirectly, securities of the Company which, when considered
together with any other securities held by such person or group
or their affiliates or associates which by their terms are
convertible, even if not then convertible, represent thirty
percent (30%) or more of the voting power of the then outstanding
securities of the Company.
The terms "person and "group", as used in this
Section (b), shall not include (i) the Company; (ii) any
corporation in which the Company owns, directly or indirectly,
voting securities sufficient to elect at least a majority of the
directors of such corporation; (iii) any employee benefit plan of
the Company or of any corporation described in clause (ii) above;
(iv) any individual or entity organized, appointed or established
by the Company for, or pursuant to the terms of any employee
benefit plan described in clause (iii) above; and (v) a
Participant.
(c) "Committee" means the Committee on the Board.
(d) "Company" means Lukens Inc.
(e) "Eligible Director" means any member of the
Board who, on the date of the granting of an Option hereunder, is
not an officer or an employee of the Company or of any Subsidiary
Corporation.
(f) "Option" means a right to purchase Shares
granted pursuant to the Plan and evidenced by an option
certificate in such form as the Committee may adopt for general
use from time to time.
(g) "Participant" means an Eligible Director to
whom an Option is granted pursuant to this Plan.
(h) "Plan" means the Lukens Inc. Stock Option
Plan for Non-Employee Directors.
(i) "Shares" mean shares of the Company's common
stock, par value $.01.
(j) "Subsidiary Corporation" means any
corporation, as defined in Section 424(f) of the Code, now or
hereafter existing in which the Company owns, directly or
indirectly, in an unbroken chain of corporations, stock
possessing 50% or more of the total combined voting power of all
classes of stock of such corporation.
1.2 An Option shall be deemed "granted" under this
Plan on the date of the Company's annual meeting of stockholders.
1.3 As used herein, the masculine includes the
feminine and the plural includes the singular.
1.4 For purposes of the Plan, the fair market value of
the Shares on a valuation date shall be the mean between the
highest and lowest prices at which the Company's stock was sold
on the New York Stock Exchange on such date, or if no sale takes
place, then the mean between the bid and asked prices on such
date; if no bid and asked prices are quoted for such date then
such value as shall be determined by such method as the Committee
shall deem to reflect fair market value as of such date.
ARTICLE II. Shares Subject to the Plan
2.1 The aggregate number of Shares which may be
delivered upon exercise of Options granted under the Plan shall
not exceed __________, subject to appropriate adjustment in the
event the number of issued Shares shall be increased or reduced
by a change in par value, combination, split-up, merger,
reclassification, distribution of a dividend payable in stock, or
the like. Shares covered by Options which have lapsed or expired
may again be optioned pursuant to the Plan.
ARTICLE III. Grants of Options
3.1 Immediately following the Company's annual meeting
of stockholders in each year during the term of this Plan, each
Eligible Director who was elected a director at such annual
meeting of stockholders, or who continued as a director, shall
automatically be granted an Option to purchase 1,000 Shares
(subject to appropriate adjustment in the event the number of
issued Shares shall be increased or reduced by a change in par
value, combination, split-up, merger, reclassification,
distribution of a dividend payable in stock, or the like). An
individual who ceases to be a director of the Company at the
annual meeting of stockholders shall not be entitled to receive
an Option.
3.2 Each Option shall be evidenced by a written
instrument, in such form as the Committee shall from time to time
approve, which shall state the terms and conditions of the Option
in accordance with the Plan and also shall contain such
additional provisions as may be necessary or appropriate under
applicable laws, regulations and rules.
ARTICLE IV. Terms of Options
4.1 The Option exercise price per Share shall be 100
percent of the fair market value of a Share on the date the
Option is granted.
4.2 Options shall not be transferable otherwise than
by will or the laws of descent and distribution. No Option shall
be subject, in whole or in part, to attachment, execution or levy
of any kind.
4.3 A Participant may exercise an Option, subject to
the terms of this Plan and applicable rules and regulations of
the Committee, beginning one year after the date of the grant of
such Option.
4.4 Options shall expire ten years after the date of
grant.
4.5 All Options shall be exercisable during a
Participant's lifetime only by such Participant.
4.6 No Participant shall have any rights to dividends
or other rights of a stockholder with respect to Shares subject
to an Option prior to the purchase of such Shares upon the
exercise of the Option.
4.7 Options shall, in the event of a Change in
Control, automatically become fully exercisable, notwithstanding
any other provisions of the Plan to the contrary.
ARTICLE V. Exercise Rights Upon Termination of Service
5.1 If a Participant ceases to be a director of the
Company for any reason, the Participant's Option shall terminate
three years after the date on which he or she ceased to be a
director, but in no event later than the date on which it would
have expired if the Participant had continued to be a director.
During such period, the Participant may exercise the Option, in
whole or in part, notwithstanding the limitations of Section 4.3
hereof.
5.2 If a Participant dies during a period in which he
or she is entitled to exercise an Option (including the period
referred to in Section 5.1 hereof), the Participant's Option
shall terminate three years after the date of death, but in no
event later than the date on which it would have expired if the
Participant had lived, by the Participant's executor or
administrator or by any person or persons who shall have acquired
the Option directly from the Participant by bequest or
inheritance. The Option may be exercised, in whole or in part,
notwithstanding the limitations of Section 4.3 hereof.
ARTICLE VI. Delivery of Shares
6.1 No Shares will be delivered upon exercise of an
Option until the exercise price of the Option is paid (i) in full
in cash, (ii) by the delivery to the Company of Shares with fair
market value equal to the exercise price of the Option, or
(iii) partly in cash and partly in Shares valued at their fair
market value, provided, however, that Shares received upon
exercise of an Option under this Plan may be delivered in payment
of the exercise price only after they have been held by the
Participant for one year subsequent to such prior exercise. The
Committee will establish procedures implementing the holding
period requirement. Fair market value of any Shares so delivered
shall be determined as of the close of the business day
immediately preceding the date on which the Option is exercised,
in the manner described in Section 1.4 hereof. If required by
the Committee, no Shares will be delivered upon the exercise of
the Option unless a Participant has given the Company a
satisfactory written statement that the Shares are being acquired
for the Participant's account and not with a view to the
distribution of the Shares. The Company will not be obligated to
issue and sell Shares upon exercise of an Option if, in the
opinion of its counsel, such issuance and sale would violate any
applicable federal or state securities laws.
6.2 Share certificates issued to Participants upon
exercise of Options may, at the sole discretion of the Committee,
bear language limiting their transfer otherwise than in
accordance with the Plan and applicable state and federal law.
ARTICLE VII. Continuation of Service
7.1 Neither this Plan nor the grant of any Option
hereunder shall confer upon any Participant the right to continue
as a director of the Company or obligate the Company to nominate
any Participant for election as a director at any time.
ARTICLE VIII. Reorganization of the Company
8.1 In the event the Company is succeeded by another
corporation in a reorganization, which term includes a merger,
consolidation, acquisition of all or substantially all of the
assets or common stock of the Company, separation or liquidation,
the Participant shall, at the same cost, be entitled upon the
exercise of an Option, to receive (subject to any required action
by stockholders) such securities of the surviving or resulting
corporation as the board of directors of such corporation shall
determine to be equivalent, as nearly as practicable, to the
nearest whole number and class of shares of stock or other
securities to which the Participant would have been entitled
under the terms of the agreement of reorganization (without
adjustment for any fractional interest thereby eliminated) as if,
immediately prior to such event, the Participant had been the
holder of record of the number of Shares which were then subject
to such Option. Such shares of stock or other securities shall,
after such reorganization, be deemed to be Shares for all
purposes of the Plan.
ARTICLE IX. Administration
9.1 The Plan shall be administered by the Committee.
The Committee shall be empowered, subject to the provisions of
the Plan and to any other directives issued by the Board, to
prescribe, amend and rescind rules and regulations of general
application relating to the operation of the Plan and to make all
other determinations necessary or desirable for its proper
administration. Decisions of the Committee shall be final,
conclusive and binding upon all parties, including the Company,
the stockholders and the Eligible Directors.
9.2 Neither the Company, any Subsidiary Corporation,
nor any director or officer thereof, nor the Committee nor any
member of the Committee shall be liable for any act, omission,
interpretation, construction or determination made in connection
with the Plan in good faith. The Committee and each of its
members shall be entitled to indemnification and reimbursement by
the Company in respect of any claim, loss, damage or expense
(including counsel fees) arising therefrom to the full extent
permitted by law and under any directors and officers liability
insurance coverage which may be in effect from time to time.
ARTICLE X. Amendment and Discontinuance
10.1 The Board is authorized to make such changes in
the Plan as shall be necessary to bring it into conformity with
any regulations of any governmental body having jurisdiction; and
may otherwise alter the Plan, subject, however, to the prior
approval of the stockholders of the Company if such alteration
would: (a) materially increase benefits to Participants,
(b) materially increase the number of Shares issuable under the
Plan, or (c) materially modify the requirements as to eligibility
for participation in the Plan. Notwithstanding the foregoing,
the Plan shall not be amended more than once every six months,
other than to comport with changes in the Code, the Employee
Retirement Income Security Act, or the rules thereunder. The
Board may at any time suspend or discontinue the Plan. No action
of the Board or of the stockholders, however, shall alter or
impair any Option theretofore granted under the Plan except as
herein provided.
ARTICLE XI. Miscellaneous
11.1 It is expressly understood that this Plan grants
powers to the Committee but does not require their exercise; nor
shall any person, by reason of the adoption of this Plan, be
deemed to be entitled to the grant of any Option; nor shall any
rights be deemed to accrue under the Plan except as Options may
actually be granted hereunder.
11.2 The adoption of this Plan shall not preclude the
Board from granting options to purchase Shares to any person in
connection with his or her service on the Board without reference
to, and outside of, this Plan.
11.3 All expenses of the Plan, including the cost of
maintaining records, shall be borne by the Company.
11.4 The Plan shall be construed in accordance with
and be governed by the laws of the State of Delaware.
ARTICLE XII. Plan Adoption and Term
12.1 This Plan shall become effective upon the later
to occur of (i) its adoption by the Board and (ii) its approval
by the Company's stockholders at an Annual Meeting of
Stockholders.
12.2 Subject to the provisions of the Plan relating to
amendment or discontinuance, this Plan shall continue in effect
for ten years from the date of its approval by the Company's
stockholders. No Option may be granted hereunder after such ten-
year period, but Options granted within such ten-year period may
extend beyond the termination date of the Plan.
Executed this ____ day of __________, 1993.
______________________________
Secretary to the Board of
Lukens Inc.
EXHIBIT 10.30
Michael O. Alexander
Director
INDEMNIFICATION AGREEMENT
AGREEMENT, effective as of January 27, 1993, between Lukens Inc.,
a Delaware corporation (the "Company"), and Michael O. Alexander (the
"Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as
directors and executive officers the most capable persons available;
WHEREAS, Indemnitee is a director or executive officer of the
Company;
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors
and executive officers of public companies in today's environment;
WHEREAS, the Amended and Restated Certificate of Incorporation of
the Company (the "Charter") requires the Company to indemnify and
advance expenses to its directors and officers to the full extent
permitted by law and the Indemnitee has been serving and continues to
serve as a director or executive officer of the Company in part in
reliance on the Charter;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continue service to the Company in an effective manner, and
Indemnitee's reliance on the Charter, and in part to provide Indemnitee
with specific contractual assurance that the protection promised by the
Charter will be available to Indemnitee (regardless of, among other
things, any amendment to or revocation of the Charter 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 continue 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:
(a) Change in Control: Shall be deemed to have 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 of the Company's assets.
(b) Claim: Any threatened, pending or completed 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 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 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.
(3) 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 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, increase
his beneficial ownership of such securities by five
percentage points (5%) or moreover 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 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 which vote
generally in the election of directors.
2. Basic Indemnification Arrangement.
(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,
prior to a Change in Control, Indemnitee shall not be
entitled to indemnification 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 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 Commonwealth of Pennsylvania or the State of
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 the
Charter, this Agreement or any other agreement or Company By-law 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 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 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 reasonable 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. 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 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 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, the Charter or any other agreement
or Company By-law 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 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 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, 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 b 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 hereunder
shall be in addition to any other rights Indemnitee may have under the
Charter of 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 Charter 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 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 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 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 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, the Charter, Company By-
law or otherwise) of the amounts otherwise indemnifiable hereunder.
15. Binding Effect, Etc. This Agreement shall be 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 executive officer or director of the Company
or of any other enterprise at the Company's request.
16. Severability. The provisions of this Agreement 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 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 as of the date above written.
ATTEST: LUKENS INC.
_______________________ By:___________________________
Secretary R. W. Van Sant
Chairman & CEO
IDEMNITEE:
___________________________
Michael O. Alexander
EXHIBIT 10.32
T. Grant John
Vice President - Planning/Stainless
INDEMNIFICATION AGREEMENT
AGREEMENT, effective as of February 1, 1993, between Lukens Inc.,
a Delaware corporation (the "Company"), and T. Grant John (the
"Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as
directors and executive officers the most capable persons available;
WHEREAS, Indemnitee is a director or executive officer of the
Company;
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors
and executive officers of public companies in today's environment;
WHEREAS, the Amended and Restated Certificate of Incorporation of
the Company (the "Charter") requires the Company to indemnify and
advance expenses to its directors and officers to the full extent
permitted by law and the Indemnitee has been serving and continues to
serve as a director or executive officer of the Company in part in
reliance on the Charter;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continue service to the Company in an effective manner, and
Indemnitee's reliance on the Charter, and in part to provide Indemnitee
with specific contractual assurance that the protection promised by the
Charter will be available to Indemnitee (regardless of, among other
things, any amendment to or revocation of the Charter 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 continue 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:
(a) Change in Control: Shall be deemed to have 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 of the Company's assets.
(b) Claim: Any threatened, pending or completed 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 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 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.
(3) 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 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, increase
his beneficial ownership of such securities by five
percentage points (5%) or moreover 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 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 which vote
generally in the election of directors.
2. Basic Indemnification Arrangement.
(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,
prior to a Change in Control, Indemnitee shall not be
entitled to indemnification 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 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 Commonwealth of Pennsylvania or the State of
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 the
Charter, this Agreement or any other agreement or Company By-law 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 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 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 reasonable 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. 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 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 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, the Charter or any other agreement
or Company By-law 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 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 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, 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 b 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 hereunder
shall be in addition to any other rights Indemnitee may have under the
Charter of 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 Charter 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 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 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 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 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, the Charter, Company By-
law or otherwise) of the amounts otherwise indemnifiable hereunder.
15. Binding Effect, Etc. This Agreement shall be 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 executive officer or director of the Company
or of any other enterprise at the Company's request.
16. Severability. The provisions of this Agreement 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 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 as of the date above written.
ATTEST: LUKENS INC.
_______________________ By:___________________________
Secretary R. W. Van Sant
Chairman & CEO
IDEMNITEE:
___________________________
T. Grant John
EXHIBIT 10.33
T. Grant John
Vice President - Planning/Stainless
INDEMNIFICATION AGREEMENT
AGREEMENT, effective as of February 1, 1993, between Lukens Inc.,
a Delaware corporation (the "Company"), and T. Grant John (the
"Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as
directors and executive officers the most capable persons available;
WHEREAS, Indemnitee is a director or executive officer of the
Company;
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors
and executive officers of public companies in today's environment;
WHEREAS, the Amended and Restated Certificate of Incorporation of
the Company (the "Charter") requires the Company to indemnify and
advance expenses to its directors and officers to the full extent
permitted by law and the Indemnitee has been serving and continues to
serve as a director or executive officer of the Company in part in
reliance on the Charter;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continue service to the Company in an effective manner, and
Indemnitee's reliance on the Charter, and in part to provide Indemnitee
with specific contractual assurance that the protection promised by the
Charter will be available to Indemnitee (regardless of, among other
things, any amendment to or revocation of the Charter 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 continue 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:
(a) Change in Control: Shall be deemed to have 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 of the Company's assets.
(b) Claim: Any threatened, pending or completed 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 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 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.
(3) 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 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, increase
his beneficial ownership of such securities by five
percentage points (5%) or moreover 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 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 which vote
generally in the election of directors.
2. Basic Indemnification Arrangement.
(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,
prior to a Change in Control, Indemnitee shall not be
entitled to indemnification 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 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 Commonwealth of Pennsylvania or the State of
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 the
Charter, this Agreement or any other agreement or Company By-law 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 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 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 reasonable 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. 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 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 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, the Charter or any other agreement
or Company By-law 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 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 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, 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 b 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 hereunder
shall be in addition to any other rights Indemnitee may have under the
Charter of 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 Charter 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 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 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 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 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, the Charter, Company By-
law or otherwise) of the amounts otherwise indemnifiable hereunder.
15. Binding Effect, Etc. This Agreement shall be 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 executive officer or director of the Company
or of any other enterprise at the Company's request.
16. Severability. The provisions of this Agreement 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 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 as of the date above written.
ATTEST: LUKENS INC.
_______________________ By:___________________________
Secretary R. W. Van Sant
Chairman & CEO
IDEMNITEE:
___________________________
T. Grant John
EXHIBIT 10.33
Richard D. Luzzi
Vice President - Human Resources
INDEMNIFICATION AGREEMENT
AGREEMENT, effective as of February 1, 1993, between Lukens Inc.,
a Delaware corporation (the "Company"), and Richard D. Luzzi (the
"Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as
directors and executive officers the most capable persons available;
WHEREAS, Indemnitee is a director or executive officer of the
Company;
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors
and executive officers of public companies in today's environment;
WHEREAS, the Amended and Restated Certificate of Incorporation of
the Company (the "Charter") requires the Company to indemnify and
advance expenses to its directors and officers to the full extent
permitted by law and the Indemnitee has been serving and continues to
serve as a director or executive officer of the Company in part in
reliance on the Charter;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continue service to the Company in an effective manner, and
Indemnitee's reliance on the Charter, and in part to provide Indemnitee
with specific contractual assurance that the protection promised by the
Charter will be available to Indemnitee (regardless of, among other
things, any amendment to or revocation of the Charter 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 continue 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:
(a) Change in Control: Shall be deemed to have 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 of the Company's assets.
(b) Claim: Any threatened, pending or completed 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 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 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.
(3) 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 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, increase
his beneficial ownership of such securities by five
percentage points (5%) or moreover 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 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 which vote
generally in the election of directors.
2. Basic Indemnification Arrangement.
(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,
prior to a Change in Control, Indemnitee shall not be
entitled to indemnification 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 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 Commonwealth of Pennsylvania or the State of
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 the
Charter, this Agreement or any other agreement or Company By-law 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 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 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 reasonable 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. 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 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 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, the Charter or any other agreement
or Company By-law 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 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 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, 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 b 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 hereunder
shall be in addition to any other rights Indemnitee may have under the
Charter of 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 Charter 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 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 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 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 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, the Charter, Company By-
law or otherwise) of the amounts otherwise indemnifiable hereunder.
15. Binding Effect, Etc. This Agreement shall be 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 executive officer or director of the Company
or of any other enterprise at the Company's request.
16. Severability. The provisions of this Agreement 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 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 as of the date above written.
ATTEST: LUKENS INC.
_______________________ By:___________________________
Secretary R. W. Van Sant
Chairman & CEO
IDEMNITEE:
___________________________
Richard D. Luzzi
EXHIBIT 10.34
Frederick J. Smith
Vice President - Manufacturing Services
INDEMNIFICATION AGREEMENT
AGREEMENT, effective as of April 15, 1993, between Lukens Inc.,
a Delaware corporation (the "Company"), and Frederick J. Smith (the
"Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as
directors and executive officers the most capable persons available;
WHEREAS, Indemnitee is a director or executive officer of the
Company;
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors
and executive officers of public companies in today's environment;
WHEREAS, the Amended and Restated Certificate of Incorporation of
the Company (the "Charter") requires the Company to indemnify and
advance expenses to its directors and officers to the full extent
permitted by law and the Indemnitee has been serving and continues to
serve as a director or executive officer of the Company in part in
reliance on the Charter;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continue service to the Company in an effective manner, and
Indemnitee's reliance on the Charter, and in part to provide Indemnitee
with specific contractual assurance that the protection promised by the
Charter will be available to Indemnitee (regardless of, among other
things, any amendment to or revocation of the Charter 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 continue 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:
(a) Change in Control: Shall be deemed to have 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 of the Company's assets.
(b) Claim: Any threatened, pending or completed 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 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 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.
(3) 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 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, increase
his beneficial ownership of such securities by five
percentage points (5%) or moreover 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 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 which vote
generally in the election of directors.
2. Basic Indemnification Arrangement.
(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,
prior to a Change in Control, Indemnitee shall not be
entitled to indemnification 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 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 Commonwealth of Pennsylvania or the State of
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 the
Charter, this Agreement or any other agreement or Company By-law 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 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 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 reasonable 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. 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 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 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, the Charter or any other agreement
or Company By-law 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 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 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, 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 b 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 hereunder
shall be in addition to any other rights Indemnitee may have under the
Charter of 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 Charter 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 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 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 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 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, the Charter, Company By-
law or otherwise) of the amounts otherwise indemnifiable hereunder.
15. Binding Effect, Etc. This Agreement shall be 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 executive officer or director of the Company
or of any other enterprise at the Company's request.
16. Severability. The provisions of this Agreement 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 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 as of the date above written.
ATTEST: LUKENS INC.
_______________________ By:___________________________
Secretary R. W. Van Sant
Chairman & CEO
IDEMNITEE:
___________________________
Frederick J. Smith
EXHIBIT 10.35
John H. Bucher
Vice President - Technology
INDEMNIFICATION AGREEMENT
AGREEMENT, effective as of April 15, 1993, between Lukens Inc.,
a Delaware corporation (the "Company"), and John H. Bucher (the
"Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as
directors and executive officers the most capable persons available;
WHEREAS, Indemnitee is a director or executive officer of the
Company;
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors
and executive officers of public companies in today's environment;
WHEREAS, the Amended and Restated Certificate of Incorporation of
the Company (the "Charter") requires the Company to indemnify and
advance expenses to its directors and officers to the full extent
permitted by law and the Indemnitee has been serving and continues to
serve as a director or executive officer of the Company in part in
reliance on the Charter;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continue service to the Company in an effective manner, and
Indemnitee's reliance on the Charter, and in part to provide Indemnitee
with specific contractual assurance that the protection promised by the
Charter will be available to Indemnitee (regardless of, among other
things, any amendment to or revocation of the Charter 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 continue 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:
(a) Change in Control: Shall be deemed to have 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 of the Company's assets.
(b) Claim: Any threatened, pending or completed 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 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 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.
(3) 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 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, increase
his beneficial ownership of such securities by five
percentage points (5%) or moreover 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 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 which vote
generally in the election of directors.
2. Basic Indemnification Arrangement.
(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,
prior to a Change in Control, Indemnitee shall not be
entitled to indemnification 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 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 Commonwealth of Pennsylvania or the State of
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 the
Charter, this Agreement or any other agreement or Company By-law 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 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 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 reasonable 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. 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 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 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, the Charter or any other agreement
or Company By-law 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 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 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, 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 b 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 hereunder
shall be in addition to any other rights Indemnitee may have under the
Charter of 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 Charter 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 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 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 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 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, the Charter, Company By-
law or otherwise) of the amounts otherwise indemnifiable hereunder.
15. Binding Effect, Etc. This Agreement shall be 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 executive officer or director of the Company
or of any other enterprise at the Company's request.
16. Severability. The provisions of this Agreement 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 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 as of the date above written.
ATTEST: LUKENS INC.
_______________________ By:___________________________
Secretary R. W. Van Sant
Chairman & CEO
IDEMNITEE:
___________________________
John H. Bucher
EXHIBIT 10.58
AGREEMENT
THIS AGREEMENT made as of the 16th day of July, 1993,
between Lukens Inc., a Delaware corporation (the "Company"), and
Robert Schaal, an individual residing at 7 Tullamore Drive, West
Chester, Pennsylvania (the "Executive").
WITNESSETH THAT
WHEREAS, the Company currently employs the Executive as
a Senior Vice President - Consultant; and
WHEREAS, the Company and the Executive have mutually
agreed that the Executive will relinquish his duties as an officer
with the Company but that the Executive will remain employed by the
Company pursuant hereto.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein set forth, the parties
hereto agree as follows:
1. Change in Duties. The Executive shall resign as an
officer (and director, where applicable) of the Company and all of
its subsidiaries effective July 24, 1993 (the "Resignation Date"),
but the Executive shall continue in the employ of the Company
through December 31, 1994 (the "Termination Date"). In his
capacity as an employee, the Executive shall perform such services
as the Company may from time to time reasonably request. In
providing such services, the Executive shall be entitled to all
out-of-pocket expenses normally reimbursed to employees of the
Company. The Executive acknowledges that after the Resignation
Date, except as expressly provided for herein, he will not be
provided with an office or a secretary or any perquisites normally
accorded officers of the Company. Nothing herein shall preclude
the Executive from accepting other employment and/or consulting
opportunities, and accepting such opportunities shall not result in
the elimination or reduction of any benefits described herein,
except as set forth in paragraphs 3 and 6.
2. Salary. Subject to the terms of this Agreement, the
Executive will continue to receive his base salary (which is
$220,000 annually) from the Resignation Date through the
Termination Date.
3. Additional Benefits. Subject to the terms of this
Agreement, between the Resignation Date and the Termination Date
the Executive shall be entitled to continued participation in all
employee benefit plans (except that the Company shall not provide
coverage for short and long-term disability) to the extent to which
he is now so participating under the following terms:
<PAGE>
(a) For purposes of the 1985 Stock Option and
Appreciation Plan (the "Stock Option Plan"), under which the
Executive currently has granted but unexercised options, the date
of termination for purposes of exercising options under the Stock
Option Plan shall be the Termination Date. However, if the
Executive accepts any employment with a person or entity engaged in
"Competitive Activity" (as hereinafter defined) between the
Resignation Date and the Termination Date, the date of termination
for purposes of the Stock Option Plan shall be the date on which
the Executive accepts such employment. The Executive shall not
"pyramid" by paying for stock purchases under the Stock Option Plan
with so-called "immature" stock. The Executive acknowledges that
he shall not be granted any options after the Resignation Date.
(b) The Executive may participate in the Lukens
Inc. Employees Capital Accumulation Plan until the Termination
Date.
(c) The Executive and his covered dependents (as
long as the Executive pays the proper premiums for dependent
coverage) shall continue to be covered under the welfare plans,
health care and life insurance programs of the Company in which he
is participating on the Resignation Date through the Termination
Date or such earlier time, if any, as the Executive accepts
employment with another employer from which he receives coverage
under its welfare plans, health care and insurance programs.
(d) The Executive will continue to accrue benefits
through the Termination Date under all Company sponsored retirement
benefit programs in which the Executive is participating on the
Resignation Date, unless the Executive at any time shall accept
employment with a person or entity engaged in "Competitive
Activity", in which event benefit accrual shall be deemed to have
ceased on the date on which the Executive accepts such employment.
"Competitive Activity" means, without the prior written consent of
the Board of Directors of the Company, the Executive's employment
with, participation in consulting activity for, or management of,
any company or business operation if such company or operation
engages in substantial and direct competition with Lukens Steel
Company or Washington Steel Corporation. The Executive shall be
entitled to only such retirement benefits as are set forth from
time to time in such retirement benefit programs. The Executive's
estimated pension benefits are set forth in Exhibit A attached
hereto and made a part hereof. Such benefits will not be reduced
other than as a result of changes to reflect different benefit
forms or to correct manifest computational errors, all such
corrections to be reasonably determined in good faith.
(e) If the Executive dies prior to the Termination
Date, the compensation and benefits set forth in this Agreement
shall terminate, except that benefits will be payable to his spouse
or other beneficiaries in accordance with the provisions of the
various employee benefit plans sponsored by the Company which
provide for payment of benefits upon the death of an active
employee.
(f) The Executive shall participate in the 1983
Target Incentive Plan ("TIP") for fiscal year 1993 and his
individual performance rating shall be 100%. Such award shall be
payable on or about February 1, 1994.
(g) The Executive will be reimbursed for all unused
vacation accrued through the Resignation Date.
(h) The Executive will be provided with employment
references substantially in the form set forth in Exhibit B
attached hereto and made a part hereof.
4. Company Car. The Company will transfer title to the
Executive's company car to him, and the Company will pay for any
sales or transfer taxes in connection with such transfer, it being
understood that such transfer is subject to and conditioned upon
the understanding that all Federal and state income taxes in
connection therewith will be paid by the Executive and that all
insurance, gasoline, maintenance and other charges with respect to
such car after the Resignation Date are for the account of the
Executive.
5. Outplacement Counseling. The Company shall provide
the Executive with outplacement counseling services at Gateway
Management Group Inc. until such time as the Executive accepts
employment with another employer. Such services shall include
office space, telephone usage, secretarial support, postage and
other amenities normally provided pursuant to Gateway's program of
career transition for executives.
6. Competitive Activity. If the Executive receives
compensation from other employment with a person or entity that is
engaged in "Competitive Activity" prior to Termination Date, the
compensation to be provided by the Company under the provisions of
paragraphs 2 and 3(f) of this Agreement shall be reduced by an
amount equal to the compensation received from such other
employment.
7. Release of Liability; Confidentiality.
(a) The Executive acknowledges and agrees that the
Company has fully performed any obligations it may have to the
Executive and, except with respect to future performance of this
Agreement, the Executive releases the Company from any and all
further liability or obligation to the Executive. In addition, the
Executive hereby releases the Company, its directors, officers,
subsidiaries, agents, employees, attorneys, representatives,
affiliates, successors and assigns (and those of it subsidiaries
and affiliates) (collectively, "Releasees") from any and all
claims, causes of action, damages, attorneys' fees and costs and
all other liabilities of any kind whatsoever arising from, relating
to or based upon the Executive's employment with or resignation
from the Company, its subsidiaries or any of its predecessors,
including, but not limited to, any claim of unlawful age
discrimination under the Age Discrimination in Employment Act of
1967 or the Pennsylvania Human Relations Act; provided, however,
that such release by the Executive does not apply to indemnity
obligations, if any, which the Company may have to the Executive
based on his status as an officer or director of the Company or any
subsidiary thereof.
In consideration of the benefits provided
hereunder, the Executive further agrees that, as long as the
Company complies with its obligations under this Agreement, the
Executive shall not, directly or indirectly, (i) bring or become
voluntarily involved in any lawsuit or other claim against the
Company or any other Releasees based on any event occurring on or
before the date of this Agreement, (ii) disclose to the media or
any persons whatsoever the circumstances resulting in the execution
of this Agreement (other than to confirm his resignation to pursue
other interests) or (iii) make any comments which disparage or are
adverse to the best interests of the Company or any other
Releasees. As long as the Executive complies with this Agreement,
the Company shall not make any negative public comments regarding
the Executive, the circumstances resulting in this Agreement or the
performance of the Executive through the date of this Agreement.
The Executive also acknowledges that he has
consulted with an attorney. The Executive acknowledges that he has
been given twenty-one days within which to consider the waiver set
forth above and the other terms of this Agreement and that he may
revoke this Agreement for a period of seven days following the
execution hereof.
The Company releases the Executive from any and
all claims, causes of action, damages, attorneys' fees and costs
and all other liabilities of any kind whatsoever arising from,
relating to or based upon the Executive's employment with the
Company, it subsidiaries or any of its predecessors.
(b) The Executive represents and warrants that he
has not disclosed to any third party any Confidential Information
(as hereinafter defined), which disclosure was materially
prejudicial to the interests of the Company. The Executive further
represents and warrants that he has not removed from the Company's
premises any document, letter, memorandum, notes or other writing
(or copy thereof) that contained Confidential Information, except
in the ordinary course of the performance of his duties. The
Executive further represents and warrants that he has returned to
the Company all documents in his possession that contain
Confidential Information. The Executive covenants and agrees that,
until expiration of a period of three (3) years after the
Termination Date, he shall not disclose to any third party without
the written consent of the Company any confidential, proprietary or
competitive information belonging to the Company and its
subsidiaries, including without limitation, confidential
manufacturing processes, inventions, cost data, sales data,
marketing information, capital spending or other business plans or
strategies, pricing information, customer lists, forecasts,
personnel records or any other information not previously disclosed
to the public or otherwise generally available to the public or
known by the Company's competitors (collectively, "Confidential
Information"). The Executive covenants and agrees that he shall
not remove from the Company's premises any document, letter,
memorandum, notes or other writing (or copy thereof) that contains
any Confidential Information.
8. Arbitration. Any dispute between the parties hereto
relating to the subject matter hereof shall, at the election of
either party by giving notice thereof to the other party hereto, be
subject to arbitration in accordance with the rules of the American
Arbitration Association then in effect. Unless otherwise agreed by
the parties, the arbitration shall take place in Wilmington,
Delaware, before three arbitrators, one to be selected by the
Company, one to be selected by the Executive and the third to be
selected by the first two arbitrators. The decision of the
arbitrators shall be conclusive and binding on the parties hereto
and may be enforced in any court having jurisdiction. The expenses
of arbitration shall be borne equally by the Company and the
Executive.
9. Severability. If any part of this Agreement shall
be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall remain in full force
and effect to the fullest extent permitted by law.
10. Amendment; Waiver. This Agreement may not be
amended, modified, waived or cancelled, except by a writing signed
by each party hereto. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of any similar or dissimilar
condition or provision at the same or any prior or subsequent time.
<PAGE>
11. Entire Agreement/Parties in Interest. This
Agreement constitutes the entire Agreement between the parties
relative to the subject matter hereof. This Agreement is intended
solely for the benefit of the parties hereto and shall not create
any rights in any third party.
12. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
LUKENS INC.
By: ___________________________
R. W. Van Sant
Chairman and Chief
Executive Officer
EXECUTIVE
________________________________
Robert Schaal
EXHIBIT 11
<TABLE>
Lukens Inc.
Computation of Per Share Earnings
Before Cumulative Effect of Accounting Changes
(Dollars and shares in thousands except per share amounts)
<CAPTION>
For the Fiscal Years Ended
December December December
25, 1993 26, 1992 28, 1991
--------- --------- ---------
<S> <C> <C> <C>
Primary Earnings Per Common Share
Net earnings applicable to common stock $ 13,997 31,442 21,353
========= ========= =========
Shares and equivalents outstanding:
Weighted average of common shares 14,508 13,364 12,566
Common stock equivalents -
Options assuming exercised at average
market price 273 239 133
--------- --------- ---------
Weighted average of common shares outstanding
and equivalents 14,781 13,603 12,699
========= ========= =========
Primary Earnings Per Common Share $ 0.95 2.31 1.68
========= ========= =========
Fully Diluted Earnings Per Common Share
Net earnings applicable to common stock $ 15,291 33,062 22,977
========= ========= =========
Shares and equivalents outstanding:
Weighted average of common shares 14,508 13,364 12,566
Common stock equivalents -
Options assuming exercised at greater
of ending or average market price 274 258 141
Assumed conversion of Series B ESOP
preferred stock 1,627 1,639 1,647
--------- --------- ---------
Weighted average of common shares outstanding
and equivalents 16,409 15,261 14,354
========= ========= =========
Fully Diluted Earnings Per Common Share $ 0.93 2.17 1.60
========= ========= =========
</TABLE>
<TABLE>
Lukens Inc.
Computation of Per Share Earnings
After Cumulative Effect of Accounting Changes
(Dollars and shares in thousands except per share amounts)
<CAPTION>
For the
Fiscal Year
Ended
December
25, 1993
---------
<S> <C>
Primary Earnings Per Common Share
Net earnings (loss) applicable to common stock $ (51,904)
=========
Shares and equivalents outstanding:
Weighted average of common shares 14,508
Common stock equivalents -
Options assuming exercised at average market price 273
---------
Weighted average of common shares outstanding and equivalents 14,781
=========
Primary Earnings (Loss) Per Common Share $ (3.51)
=========
Fully Diluted Earnings Per Common Share
Fully Diluted Earnings (Loss) Per Common Share* $ (3.51)
=========
* Fully diluted calculation is not presented because it is anti-dilutive.
</TABLE>
EXHIBIT 21
LUKENS INC.
SUBSIDIARIES
December 25, 1993
Lukens Inc. has twenty-two direct or indirect wholly-owned
subsidiaries:
State or Other Jurisdiction
of Incorporation
Allegheny Ore and Iron Company Virginia
Brandywine Valley Railroad Company Delaware
Cathodic Protection Services Company Delaware
Encoat North Arlington, Inc. Delaware
Energy Coatings Company Delaware
Flex-O-Lite, Inc. Delaware
Flex-O-Lite, Ltd. Canada
LI Acquisition Corporation Delaware
LI Service Company Pennsylvania
Ludlow-Saylor, Inc. Delaware
Lukens Development Corporation Delaware
Lukens Management Corporation Pennsylvania
Lukens Steel Company Pennsylvania
Pennock Corporation Delaware
Simplicity Engineering, Inc. Delaware
Simplicity Materials Handling Ltd. Canada
South Track Railroad Contracting Co. Florida
Sponsor's Plan Asset Management, Inc. Delaware
Starlite Safety Supply, Inc. Delaware
Washington Specialty Metals Corporation Illinois
Washington Specialty Metals Inc. Canada
Washington Steel Corporation Delaware
