Document:

Exhibit 10.1

 

TRANSITION AGREEMENT

 

This Transition Agreement (“Agreement”) is made this 6th day of September, 2012, by and between Carpenter Technology Corporation (“Employer”) and K. Douglas Ralph (“Executive”).

 

WHEREAS, Executive has been employed by Employer and currently serves Employer as its Chief Financial Officer.

 

WHEREAS, Executive wishes to retire from the Employer.

 

WHEREAS, Employer desires to retain Executive’s services through August 31, 2013, either as Chief Financial Officer or as a special advisor to the Chief Executive Officer to allow for a search for a new Chief Financial Officer and to provide for an orderly transition of the Executive’s duties and responsibilities.

 

WHEREAS, Executive is agreeable to remaining employed by Employer through August 31, 2013, whereupon Executive intends to retire from the Employer.

 

NOW, THEREFORE, in consideration of their mutual promises and intending to be legally bound, the parties agree as follows:

 

1.                                      Cessation of Employment.  Executive and Employer have agreed to end their employment relationship effective August 31, 2013,  due to the retirement of the Executive, resulting in a “Separation from Service” as defined in Section 409A of the Internal Revenue Code.

 

2.                                      Continue Employment.  Executive and Employer agree that Executive will remain employed by the Employer through his retirement date, August 31, 2013, either in the capacity of its Chief Financial Officer or as a special advisor to its Chief Executive Officer.  Upon the appointment of a successor Chief Financial Officer, anticipated to occur on or around

 

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January, 2013, Executive’s duties shall be fulfilled by serving in an advisory role to the Chief Executive Officer.  Upon Executive’s assumption of an advisory role to the Chief Executive Officer, Employer acknowledges that Executive’s duties and responsibilities shall be modified such that he will be deemed as satisfying his duties and responsibilities by being generally available to consult and advise the Chief Executive Officer on such special matters as may require Executive’s participation.  Employer agrees to provide compensation and benefits to Executive up through August 31, 2013 as set forth in this Section 2 unless (a) Executive’s employment is terminated by Employer for “Cause,” as defined under Executive’s Special Severance Agreement dated August 24, 2007 (“Cause”), or as a result of Executive violating the provisions of Section 5 of this Agreement; or (b) Executive’s employment should terminate before August 31, 2013 as a result of Executive’s death, disability or voluntary resignation.  Executive’s compensation and benefits, including adjustments, shall be as follows:

 

i)                 Executive will continue to receive his current base salary through August 31, 2013;

 

ii)              Executive will receive a full fiscal year 2013 earned cash bonus, without any discretionary adjustment, under Employer’s executive compensation program but will forfeit any cash or equity bonus of any kind that remains unvested after August 31, 2013, including any cash or equity bonus for fiscal year 2014 (i.e., there will be no pro-rata cash or equity bonus earned award for July and August of fiscal year 2014);

 

iii)           Employer will continue to allow Executive to participate in Employer’s medical and other employee benefit programs that Employer has established for its employees through August 31, 2013.  Such participation by Executive in Employer’s medical and other employee benefit programs shall be subject to: 1) the terms and conditions

 

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of such programs, 2) Employer’s right to amend and modify such programs, and 3) payment by Employee of any applicable co-payments and deductibles;

 

iv)          Executive, in addition to the compensation and benefits provided under this Agreement, will continue to be entitled to the rights and obligations set forth in the Special Severance Agreement between Employer and Executive dated August 24, 2007 in accordance with its terms and conditions until its expiration on August 24, 2013;

 

v)             Executive is eligible for and will be entitled to any benefits under Employer’s General Retirement Plan for Employees of Carpenter Technology Corporation in accordance with the terms and conditions of such plan, and the Employer’s Supplemental Retirement Plan for Executives of Carpenter Technology Corporation in accordance with the terms and conditions of such plan and the Supplemental Retirement Agreement between the Employer and Executive dated July 9, 2007;

 

vi)          Executive will, on June 30, 2013, to the extent that it is earned, become entitled to the 3 year Total Shareholder Return (“TSR”) equity that vests on June 30, 2013 but will forfeit all unearned 3 year Total Shareholder Return (TSR) equity that would have vested on June 30, 2014 and June 30, 2015;

 

vii)       Executive will become vested on January 19, 2013, in Restricted Stock Units (“RSUs”) granted in January 2010; become vested on June 30, 2013 in RSUs granted July 28, 2011; become vested on June 30, 2013 in one-half of the RSUs granted July 31, 2012 and become vested on August 17, 2013 in RSUs granted August 17, 2010, but will forfeit all unvested RSUs that would have vested on June 30, 2014; and

 

viii)    Executive will become vested in previously granted options that vest in July 2013,

 

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but will forfeit all unvested options that would have vested in July 2014 and July 2015.

 

3.                                      Consideration.   Except as otherwise described in this Section 3, provided Executive remains employed by the Employer through August 31, 2013, and provided the Executive executes and delivers to the Employer, and does not revoke, the form of Release attached hereto as Exhibit A following the Executive’s last day of employment with the Employer and prior to September 21, 2013, all outstanding options granted to the Executive under the Employer’s Stock-Based Incentive Compensation Plan for Officers and Key Employees then held by the Executive and which are then exercisable and vested will continue to be exercisable over the original maximum term of the option without regard to the Executive’s termination of employment.  If Executive is terminated by Employer for reasons other than Cause or other than as a result of his violation of the provisions of Section 5 of this Agreement, Executive shall nevertheless be able to exercise vested options over the original maximum exercise term provided that he executes the form of Release attached hereto as Exhibit “A.”

 

4.                                      No Obligation.  Executive acknowledges and agrees and understands that the consideration described in Paragraph 3 above is not required by the Employer’s policies and procedures and exceeds any and all pay and benefits to which Executive already may have been entitled by contract or law and constitutes good, valuable and sufficient consideration for Executive’s covenants and agreements contained in this Agreement.

 

5.                                      Restrictive Covenants

 

(a)                                  Trade Secrets.  The Executive acknowledges that during his employment with the Employer he has had and will have access to Trade Secrets (as defined under the

 

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Uniform Trade Secrets Act or other applicable law), which are the sole and exclusive property of the Employer.  Executive agrees that while Executive is an Executive of the Employer (or a subsidiary or affiliate of the Employer) and for the maximum period of time thereafter allowable under applicable law, except to the extent necessary to perform the Executive’s obligations under this Agreement, Executive shall not reproduce, use, distribute or disclose any Trade Secrets to any other person, including, without limitation, any competitors or potential competitors of the Employer.

 

(b)                                 Confidential Information.  The Executive acknowledges that he has had and will have access to Confidential Information (as defined herein).  Executive agrees to maintain the confidentiality of all Confidential Information while Executive is an employee of the Employer (or a subsidiary or affiliate of the Employer) and for a period of three (3) years thereafter.  For purposes of this Agreement, the term “Confidential Information” means data and information relating to the business of the Employer which does not rise to the level of a Trade Secret and which is or has been disclosed to the Executive or of which the Executive has become aware as a consequence of or through his employment relationship with the Employer (or such subsidiary or Affiliate) and which has value to the Employer (or such subsidiary or affiliate) and is not generally known to its competitors.  Confidential Information shall not include any data or information that has been voluntarily disclosed to the public by the Employer (except where such public disclosure was effected by the Executive without authorization) or that has been independently developed and disclosed by others or that otherwise enters the public domain through lawful means.

 

(c)                                  No Solicitation.  While the Executive is an Executive of the Employer or a subsidiary or affiliate of the Employer) and until the latest of (i) three (3) years immediately

 

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following the termination of such employment or (ii) eighteen (18) months after the exercise of each stock option extended pursuant to Section 3 (the “Restricted Period”), Executive shall not, for himself or on behalf of or for the benefit of any other person, corporation or entity, seek to employ, solicit or recruit any employee of the Employer, or a subsidiary or affiliate of the Employer, or any of their respective franchisees or licensees for employment by any third party, or induce or encourage any such employee to terminate such employment, nor will Executive knowingly provide the name of any employee of the Employer, any such subsidiary, affiliate, franchisee or licensee for the purpose of solicitation or recruitment by any third party.

 

(d)                                 Non-competition.  During the Restricted Period the Executive agrees that he will not, on his own or together with other persons, either directly or indirectly, (i) own manage, operate, finance, join, control or participate in the ownership, management, operation, financing or control of, or be connected as an officer, director, employee, partner, principal, agent, representative, consultant or otherwise with, or have any financial interest in, any “Competing Business” (as defined below) or by any entity which would require by necessity use of Confidential Information; provided, however, that nothing herein shall prevent Executive from investing in the securities of any company listed on a national securities exchange provided that Executive’s involvement with any such company is solely that of a stockholder of 1% or less of any class of the outstanding securities thereof.  The term “Competing Business” as used herein will mean any business or enterprise that is engaged in the research, development, manufacture, sale, marketing or distribution of stainless steels, titanium alloys, specialty alloys, powder metals, tool steels or metal fabricated parts or components similar to or competitive with those manufactured by the Employer or any of its subsidiaries.

 

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(e)                                  Remedies and Enforcement.  The Executive acknowledges and agrees that if he breaches any of the restrictive covenants contained in this Section (the “Covenants”), the Employer will suffer immediate and irreparable harm and injury for which the Employer will have no adequate remedy at law.  Accordingly, in any action or proceeding to enforce the Covenants, the Executive agrees not to assert the claim or defense that an adequate remedy at law exists.  Rather, if the Executive breaches any of the Covenants, the Employer shall be absolutely entitled to obtain equitable relief, including without limitation temporary restraining orders, preliminary injunctions, permanent injunction, and specific performance.  The Employer will also have the right and remedy to require the Executive to account for and pay over to the employer all compensation, profits, monies, accruals, increments or other benefits derived or received by the Executive as a result of such breach.  The foregoing remedies and relief shall be cumulative and in addition to any other remedies available to the Employer.  In addition to the other remedies in this section to which the Employer may be entitled, all then outstanding options held by the Executive under the Employer’s Stock-Based Incentive Compensation Plan for Officers and Key Employees shall immediately be forfeited and no longer exercisable. the Executive will return to the employer any stock received pursuant to the exercise of any such option (or the proceeds thereof) and the Executive does hereby irrevocably constitute and appoint the Secretary of the employer as attorney in fact, coupled with an interest, to transfer the said stock on the books of the Corporation with full power of substitution in the premises and the Executive will execute any and all additional documents or consents necessary to effectuate the return of such shares..   If the Executive breaches the Covenants in any respect, the Restricted Period will be extended for a period equal to the period that the Executive was in breach.  If a court determines that the Covenants (or any portion thereof) are unenforceable because of their

 

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duration, scope or otherwise, it is the intention of the parties that such court then modify the Covenants to the minimum extent necessary and, in their modified form, for the Covenants to then be enforceable.  Moreover if any court holds the Covenants (or any portion thereof) unenforceable by reason of their duration or scope or otherwise, it is the intention of the parties that such determination not bar or in any way affect the right of the employer to the relief provided above in the courts of any other jurisdiction within the scope of such Covenants.

 

6.                                      Agreement is Voluntary.  Executive acknowledges that he has carefully read and fully understands the terms of this Agreement; that he has been given a reasonable opportunity to discuss this Agreement with an attorney or advisor of his choice; that he has relied upon no representation of any representative of Employer in signing this Agreement; and that he is entering this Agreement knowingly, voluntarily and of his own free will.

 

7.                                      Choice of Law.  This Agreement shall be governed by and construed under the laws of the Commonwealth of Pennsylvania without regard to conflict of laws. In addition, any lawsuit pertaining to this Agreement shall be brought only in a court of competent jurisdiction in the Commonwealth of Pennsylvania and both Employer and Executive consent to the assertion of personal jurisdiction by any such court.

 

8.                                      Severability.  The provisions of this Agreement are severable, and if any part of this Agreement is found by a court of law to be unenforceable, the remainder of the Agreement will continue to be valid and effective, and the reviewing body is authorized to amend relevant provisions of the Agreement to carry out the intent of the parties to the extent legally permissible.

 

9.                                      Compensation Adjustment.  In the event that Employer has not secured a successor Chief Financial Officer by March 1, 2013 and Executive is asked by Employer to

 

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assume both roles of Chief Financial Officer and special advisor to the Chief Executive Officer, Employer agrees to renegotiate the terms of the remaining compensation to be paid to Executive.

 

10.                               Headings.  The headings in this Agreement are for convenience only and shall in no way constrict or modify any term of this Agreement.

 

IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the day and year above written.

 

Carpenter Technology Corporation

 

 

	
By:
    	
/s/ William A. Wulfsohn
    	
 
    	
/s/ K. Douglas Ralph
    
	
 
    	
 
    	
 
    	
K. Douglas Ralph
    
	
 
    	
 
    	
 
    	
Executive
    
	
Title:
    	
President and Chief Executive Officer
    	
 
    	
 
    

 

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EXHIBIT A

RELEASE

 

1.                                                                                      The undersigned, after having had a reasonable opportunity to review the Transition Agreement entered into by and between the undersigned and Carpenter Technology Corporation (the “Employer”) on September     , 2013 (the “Agreement”) and to consult with an advisor or attorney of his choice, for himself and all of his heirs, executors, administrators and assigns, waives, releases, remises and forever discharges the Employer and all of its respective officers, directors, executives, agents and representatives and all those charged or chargeable with liability on behalf of Employer of and from any and all suits, claims, demands, rights, actions and causes of action of whatsoever kind or nature, known and unknown, direct or indirect, that the undersigned ever had, now has or could claim to have against Employer, including, but not limited to, any and all matters arising out of his employment and/or separation from employment with Employer including, but not limited to claims for wrongful discharge, breach of contract, estoppel, impairment of economic opportunity, interference with contractual relations, infliction of emotional harm, negligence, breach of the covenant of good faith or any other tort claims, benefits, reimbursement, wages, vacation or other leave time, unfair labor practices, discrimination on the basis of age, race, color, religion, gender, marital status, national origin and mental or physical disability or handicap including but not limited to all rights or claims under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §2000e-1 et seq., the Americans with Disabilities Act, 42 U.S.C. §12101 et.seq., as well as any other claim arising under any other federal, state or local statute, ordinance, regulation or common law that Executive now has or ever had against Employer from the beginning of time to the date of this release, with the exception of any benefits owed to the Executive under the Employer’s benefit plans and rights of indemnification Executive

 

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may be entitled to under the Employer’s by-laws..

 

2.                                                                                      Advise of Counsel.  Executive hereby acknowledges and agrees that Release and the termination of Executive’s employment and all actions taken in connection therewith are in compliance with the Age Discrimination in Employment Act and the Older Workers Benefit Protection Act and that the releases set forth in Paragraph 1 hereof shall be applicable, without limitation, to any claims brought under these Acts. Executive further acknowledges that Executive is hereby advised by Employer to consult with an attorney in regard to this matter.  Executive further acknowledges that Executive has been given twenty-one (21) days from his last day of employment with the Employer to consider whether to sign it.  If Executive has signed this Release before the end of this twenty-one (21) day period, it is because Executive freely chose to do so after carefully considering its terms.  Finally, Executive shall have seven (7) days from the date Executive signs this Release to revoke the Release.  To revoke, Executive must ensure that written notice is delivered to [insert name],  [insert address], by the end of the seventh calendar day after Executive signs this Release.  If Executive does not revoke this Release within seven (7) days of signing, this Release will become final and binding on the day following such seven (7) day period.

 

3.                                                                                      Covenant Not to Sue.  Executive promises and covenants that he will not hereafter sue or assert any claims against Employer which relate in any way to the claims released in this Release.

 

4.                                                                                      Consequences of Breach.  Should Executive breach any term of this Release, all stock options which have been extended in accordance with the Agreement shall immediately be forfeited and no longer exercisable.

 

	
 
    	
 
    
	
 
    	
K. Douglas Ralph
    

 

11EXHIBIT 4.9

 

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES HEREINAFTER DESCRIBED AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO ANOTHER NOMINEE OF THE DEPOSITORY.

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREON, CEDE & CO., HAS AN INTEREST HEREIN.

 

 

CATERPILLAR INC.

 

3.803% DEBENTURES DUE 2042

 

	
REGISTERED  NO.
    	
 
    	
$
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
CUSIP: 149123 CB5
    
	
 
    	
 
    	
ISIN: US149123CB51
    

 

CATERPILLAR INC., a corporation duly organized and existing under the laws of the State of Delaware (herein called the “Company,” which term includes any successor corporations under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co., as nominee for The Depository Trust Company, or registered assigns, the principal sum of         DOLLARS ($               ) on August 15, 2042, subject to advancement as provided in Annex A hereto, and to pay interest thereon from August 15, 2012, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on February 15 and August 15 of each year, commencing February 15, 2013, at the rate of 3.803% per annum, until the principal hereof is paid or made available for payment and (to the extent that the payment of such interest shall be legally enforceable) at the rate per annum borne by this Security on any overdue principal and on any overdue installment of interest. If an Interest Payment Date or maturity date is not a Business Day, interest or principal will be paid on the next Business Day. However, interest on the payments will not accrue for the period from the original payment date to the date the payment is made. Interest will be calculated based on a 360-day year consisting of twelve 30-day months. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on February 1 or August 1, as the case may be, immediately preceding such Interest Payment Date (whether or not a Business Day). Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

 

Payment of the principal of and interest on this Security due at Maturity in United States dollars will be made in immediately available funds to the depository or its nominee, provided that this Security is presented to the Trustee in time for the Trustee to make such payment in accordance with its normal procedures. Payment of interest (other than interest payable at

 

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Maturity) on this Security in United States dollars will be made by transfer of immediately available funds to the depository or its nominee.

 

This Security shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been manually signed by or on behalf of the Trustee under the Indenture.

 

This Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”), issued and to be issued in one or more series under an Indenture, dated as of May 1, 1987 (as supplemented, the “Indenture”), between the Company and U.S. Bank National Association (as successor to Citibank, N.A., as successor to First National Bank of Chicago), as trustee (the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof, limited initially in aggregate principal amount to $801,649,000 and increased as of August 27, 2012 to an aggregate principal amount of $1,721,536,000.

 

The Company may from time to time, without notice to or the consent of the Holders of the Securities, create and issue further securities having the same terms as the Securities in all respects (except for the issue date, issue price, payment of interest accruing prior to the issue date of the Securities and, in some cases, the initial interest payment date of the Securities), so that such additional securities may be consolidated and form a single series with the Securities and have the same terms as to status, redemption or otherwise as the Securities. If the additional securities are not fungible with the previously outstanding Securities for United States federal income tax purposes, such additional securities will have a separate CUSIP number.

 

The Securities shall have the redemption features summarized in Annex A to this Global Security.

 

The provisions for defeasance and covenant defeasance set forth in Sections 1302 and 1303 of the Indenture, respectively, will apply to the Securities of this series.

 

If any Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.

 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than 66 2/3% in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by

 

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the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

 

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Security at the times, place and rate, and in the coin or currency herein prescribed.

 

As provided in the Indenture and subject to certain limitations therein and herein set forth, the transfer of this Security is registrable in the Security Register upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

 

This Security is a Global Security and shall be exchangeable for Securities registered in the names of Persons other than the depository with respect to this Global Security or its nominee only if (x) such depository notifies the Company that it is unwilling or unable to continue as depository for this Global Security or at any time ceases to be a clearing agency registered as such under the Securities Exchange Act of 1934, as amended, (y) the Company executes and delivers to the Trustee a Company Order that this Global Security shall be exchangeable or (z) there shall have occurred and be continuing an Event of Default with respect to the Securities. If this Global Security is exchangeable pursuant to the preceding sentence, it shall be exchangeable for Securities issuable in a minimum denomination of $2,000 and integral multiples of $1,000 in excess thereof, registered in such names as such depository shall direct.

 

The Securities of this series are issuable only in registered form without coupons and when not represented by one or more Global Securities, (a) will be issuable in a minimum denomination of $2,000 and integral multiples of $1,000 in excess thereof and (b) as provided in the Indenture and subject to certain limitations therein set forth, will be exchangeable for a like aggregate principal amount of Securities of this series of a different authorized denomination, as requested by the Holder surrendering the same.

 

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

 

Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

 

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This Security shall be governed by the laws of the State of New York.

 

All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

 

*                                         *                                         *

 

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IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal.

 

Dated:

 

[SEAL]

 

	
 
    	
 
    	
CATERPILLAR INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Attest:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    	
 
    
					

 

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

 

	
 
    	
 
    	
U.S. BANK NATIONAL   ASSOCIATION, as Trustee
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    

 

 

ANNEX A TO GLOBAL SECURITY

 

Optional Redemption

 

This Security may be redeemed in whole at any time or in part from time to time, at the Company’s option, at a redemption price equal to the greater of:

 

·                  100% of the principal amount of the Securities to be redeemed, or

 

·                  the sum of the present values of the remaining scheduled payments of principal and interest on the Securities to be redeemed, discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Treasury Rate plus 15.0 basis points,

 

in each case, plus accrued and unpaid interest on the principal amount being redeemed to the redemption date.

 

“Business Day” means any calendar day that is not a Saturday, Sunday or legal holiday in New York, New York and on which commercial banks are open for business in New York, New York.

 

“Comparable Treasury Issue” means the United States Treasury security selected by the Independent Investment Banker as having a maturity comparable to the remaining term (“Remaining Life”) of the Securities to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the Remaining Life of such Securities.

 

“Comparable Treasury Price” means (1) the average of five Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest Reference Treasury Dealer Quotations, or (2) if, after seeking at least five Reference Treasury Dealer Quotations and excluding the highest and lowest Reference Treasury Dealer Quotations, the Independent Investment Banker obtains fewer than five such Reference Dealer Quotations, the average of all such quotations.

 

“Independent Investment Banker” means any of Barclays Capital Inc., Citigroup Global Markets Inc. and RBS Securities Inc. and any of their respective successors, as appointed by the Company, or, if any of the foregoing is unwilling or unable to select the Comparable Treasury Issue, a nationally recognized investment banking institution which is a Primary Treasury Dealer appointed by the Company.

 

“Primary Treasury Dealer” means a primary U.S. government securities dealer in New York, New York.

 

“Reference Treasury Dealer” means (1) any of Barclays Capital Inc., Citigroup Global Markets Inc. and RBS Securities Inc. and any of their respective successors, as appointed by the Company, provided, however, that if any of the foregoing shall cease to be a primary U.S. government securities dealer (a “Primary Treasury Dealer”), the Company will substitute for

 

A-1

 

such dealer another Primary Treasury Dealer, and (2) any other nationally recognized Primary Treasury Dealer selected by the Independent Investment Banker and acceptable to the Company.

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York, New York time, on the third Business Day preceding such redemption date.

 

“Treasury Rate” means, with respect to any redemption date, (1) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (or, if no maturity is within three months before or after the Remaining Life, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month), or (2) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield-to-maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price of such redemption date. The Treasury Rate will be calculated on the third Business Day preceding the redemption date.

 

Holders of Securities to be redeemed will receive notice thereof by first-class mail at least 30 and not more than 60 days before the date fixed for redemption. If fewer than all of the Securities are to be redeemed, the Trustee will select the particular Securities or portions thereof for redemption from the outstanding Securities not previously called, pro rata or by lot, or in such other manner as the Company shall direct.

 

A-2

 

 [FORM OF TRANSFER NOTICE]

 

FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto

 

Insert Taxpayer Identification No.

 

	
 
    

 

(Please print or typewrite name and address including zip code of assignee)

 

the within Security and all rights thereunder, hereby irrevocably constituting and appointing

 

attorney to transfer said Security on the books of the Company with full power of substitution in the premises.

 

 

	
Date:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Seller
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
NOTICE: The signature to this assignment must correspond with the name as   written upon the face of the within-mentioned instrument in every particular,   without alteration or any change whatsoever.
    

 

 

	
Signature Guarantee:(1)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By
    	
 
    	
 
    
	
 
    	
To be executed by   an executive officer
    	
 
    

 

(1)  Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Association Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

 

 

SCHEDULE OF EXCHANGES OF SECURITIES

 

The following exchanges of a part of this Global Security for other Securities or a part of another Global Security have been made:

 

	
Date of Exchange
    	
 
    	
Amount of
   decrease in
   principal amount
   of this Global
   Security
    	
 
    	
Amount of
   increase in
   principal amount
   of this Global
   Security
    	
 
    	
Principal amount
   of this Global
   Security following
   such decrease (or
   increase)
    	
 
    	
Signature of
   authorized officer
   of Trustee

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