Date

Name

Address

RE: Special Severance Agreement

Dear Name:

            Carpenter Technology Corporation (the "Company") considers it
essential to the best interests of its stockholders to foster the continuous
employment of key management personnel. In this connection, the Board of
Directors of the Company (the "Board") recognizes that, as is the case with many
publicly held corporations, the possibility of a change in control may exist and
that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its stockholders.

            The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Company’s management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company, although no such change is
now contemplated. If you agree, this letter will replace any previous special
severance agreement.

            In order to induce you to remain in the employ of the Company and in
consideration of your agreement set forth in Subsection 2(ii) hereof, the
Company agrees that you shall receive the severance benefits set forth in this
letter agreement ("Agreement") in the event your employment with the Company is
terminated subsequent to a "change in control of the Company" (as defined in
Section 2 hereof) under the circumstances described below.

 1.  Term of Agreement. This Agreement shall commence on the date hereof and
     shall continue in effect through December 31, 2001; provided, however, that
     commencing on January 1, 2002 and each January 1 thereafter, the term of
     this Agreement shall automatically be extended for one additional year
     unless, not later than the October 31 preceding each such January 1, the
     Company shall have given notice that it does not wish to extend this
     Agreement; provided, further, if a change in control of the Company shall
     have occurred during the original or extended term of this Agreement, this
     Agreement shall continue in effect for the later of (i) the

     original or extended term or (ii) a period of twenty-four (24) months
     beyond the month in which such change in control occurred. Notwithstanding
     the foregoing, in no event shall the term of this Agreement extend beyond
     the date that you attain sixty-five years of age.

 2.  Change in Control. (i) No benefits shall be payable hereunder unless there
     shall have been a change in control of the Company, as set forth below. For
     purposes of this Agreement, a "change in control of the Company" shall be
     deemed to have occurred if (A) any "person" (as such term is used in
     Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
     (the "Exchange Act"), other than a trustee or other fiduciary holding
     securities under an employee benefit plan of the Company or a corporation
     owned, directly or indirectly, by the stockholders of the Company in
     substantially the same proportions as their ownership of stock of the
     Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3
     under the Exchange Act), directly or indirectly, of securities of the
     Company representing 25% or more of the combined voting power of the
     Company’s then outstanding securities; or (B) during any period of two
     consecutive years (not including any period prior to the execution of this
     Agreement), individuals who at the beginning of such period constitute the
     Board and any new director (other than a director designated by a person
     who has entered into an agreement with the Company to effect a transaction
     described in clauses (A), (C) or (D) of this Subsection) whose election by
     the Board or nomination for election by the Company’s stockholders was
     approved by a vote of at least two-thirds (2/3) of the directors then still
     in office who either were directors at the beginning of the period or whose
     election or nomination for election was previously so approved, cease for
     any reason to constitute a majority thereof; or (C) the stockholders of the
     Company approve a merger or consolidation of the Company with any other
     corporation, other than a merger or consolidation which would result in the
     voting securities of the Company outstanding immediately prior thereto
     continuing to represent (either by remaining outstanding or by being
     converted into voting securities of the surviving entity) at least 75% of
     the combined voting power of the voting securities of the Company or such
     surviving entity outstanding immediately after such merger or
     consolidation, or (D) the stockholders of the Company approve a plan of
     complete liquidation of the Company or an agreement for the sale or
     disposition by the Company of all or substantially all the Company’s
     assets.
     
     
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      ii. For purposes of this Agreement, a "potential change in control of the
          Company" shall be deemed to have occurred if (A) the Company enters
          into an agreement, the consummation of which would result in the
          occurrence of a change in control of the Company, (B) any person
          (including the Company) publicly announces an intention to take or to
          consider taking actions which if consummated would constitute a change
          in control of the Company; (C) any person, other than a trustee or
          other fiduciary holding securities under an employee benefit plan of
          the Company or a corporation owned, directly or indirectly, by the
          stockholders of the Company in substantially the same proportions as
          their ownership of stock of the Company, who is or becomes the
          beneficial owner, directly or indirectly, of securities of the Company
          representing 10% or more of the combined voting power of the Company’s
          then outstanding securities, increases his beneficial ownership of
          such securities by 5% or more of the combined voting power of the
          Company’s then outstanding securities on the date hereof; or (D) the
          Board adopts a resolution to the effect that, for purposes of this
          Agreement, a potential change in control of the Company has occurred.
          You agree that, subject to the terms and conditions, of this
          Agreement, in the event of a potential change in control of the
          Company, you will remain in the employ of the Company until the
          earliest of (i) a date which is six (6) months from the occurrence of
          such potential change in control of the Company, (ii) the termination
          by you of your employment by reason of Disability or Retirement as
          defined in Subsection 3(i), or (iii) the occurrence of a change in
          control of the Company.
          
          

 3.  Termination Following Change in Control. If any of the events described in
     Subsection 2(i) hereof constituting a change in control of the company
     shall have occurred, you shall be entitled to the benefits provided in
     Subsection 4(iii) hereof upon the subsequent termination of your employment
     during the term of this Agreement unless such termination is (A) because of
     your death, Disability or Retirement, (B) by the Company for Cause, or (C)
     by you other than for Good Reason.
     
     
      i.   Disability; Retirement. If, as a result of your incapacity due to
           physical or mental illness, you shall have been absent from the
           full-time performance of your duties with the Company for twenty-four
           (24) consecutive months (or twelve (12) consecutive months if you
           have been employed by the Company for less than five (5) years as of
           the date your absence from full-time performance of duties under this
           Subsection begins), and within thirty (30) days after written notice
           of termination is given you shall not have returned to the full-time
           performance of your duties, your employment may be terminated for
           "Disability". Termination by the Company or you of your employment
           based on "Retirement" shall mean termination with your consent in
           accordance with the Company’s Pension Plan (as hereafter defined)
           including early retirement, generally applicable to its salaried
           employees, provided, however, that termination based on "Retirement"
           shall not include retirement in conjunction with termination by you
           for Good Reason.
           
           
      ii.  Cause. Termination by the Company of your employment for "Cause"
           shall mean termination upon (A) the willful and continued failure by
           you to substantially perform your duties with the Company (other than
           any such failure resulting from your incapacity due to physical or
           mental illness or any such actual or anticipated failure after the
           issuance of a Notice of Termination, by you for Good Reason as
           defined in Subsections 3(iv) and 3(iii), respectively) after a
           written demand for substantial performance is delivered to you by the
           Board, which demand specifically identifies the manner in which the
           Board believes that you have not substantially performed your duties,
           or (B) the willful engaging by you in conduct which is demonstrably
           and materially injurious to the Company, monetarily or otherwise. For
           purposes of this Subsection, no act, or failure to act, on your part
           shall be deemed "willful" unless done, or omitted to be done, by you
           not in good faith and without reasonable belief that your action or
           omission was in the best interest of the Company. Notwithstanding the
           foregoing, you shall not be deemed to have been terminated for Cause
           unless and until there shall have been delivered to you a copy of a
           resolution duly adopted by the affirmative vote of not less than
           three-quarters ¾ of the entire membership of the Board at a meeting
           of the Board called and held for such purpose (after reasonable
           notice to you and an opportunity for you, together with your counsel,
           to be heard before the Board), finding that in the good faith opinion
           of the Board you were guilty of conduct set forth above in clauses
           (A) or (B) of the first sentence of this Subsection and specifying
           the particulars thereof in detail.
           
           
      iii. Good Reason. You shall be entitled to terminate your employment for
           Good Reason. For purposes of this Agreement, "Good Reason" shall
           mean, without your express written consent, the occurrence after a
           change in control of the Company of any of the following
           circumstances unless, in the case of paragraphs (A), (E), (F), (G) or
           (H), such circumstances are fully corrected prior to the Date of
           Termination specified in the Notice of Termination, as defined in
           Subsections 3(v) and 3(iv), respectively, given in respect thereof:
           
           
            A. the assignment to you of any duties inconsistent with your
               present status as ______________________________ of the Company
               (or such other title or titles as you may be holding immediately
               prior to the change in control of the Company) or a substantial
               adverse alteration in the nature or status of your
               responsibilities from those in effect immediately prior to the
               change in control of the Company;
               
               
            B. a reduction by the Company in your annual base salary as in
               effect on the date of the change in control of the Company;
               
               
            C. the relocation of the Company’s principal executive offices to a
               location outside of Berks County, Pennsylvania (or, if different,
               the metropolitan area in which such offices are located
               immediately prior to the change in control of the Company) or the
               Company’s requiring you to be based anywhere other than the
               Company’s principal executive offices except for required travel
               on the Company’s business to an extent substantially consistent
               with your present business travel obligations;
               
               
            D. the failure by the Company, without your consent, to pay to you
               any portion of your current compensation, or to pay to you any
               portion of an installment of deferred compensation under any
               deferred compensation program of the Company, within seven (7)
               days of the date such compensation is due;
               
               
            E. the failure by the Company to continue in effect any compensation
               plan in which you participate immediately prior to the change in
               control of the Company which is material to your total
               compensation, including but not limited to the Company’s stock
               option plans, Executive Annual Compensation Plan, Profit Sharing
               Plan for Employees of Carpenter Technology Corporation and the
               Flexible Savings Plan of Carpenter Technology Corporation or any
               substitute plans adopted prior to the change in control, unless
               an equitable arrangement (embodied in an ongoing substitute or
               alternative plan) has been made with respect to such plan, or the
               failure by the Company to continue your participation therein (or
               in such substitute or alternative plan) on a basis not materially
               less favorable, both in terms of the amount of benefits provided
               and the level of your participation relative to other
               participants, as existed at the time of the change in control;
               
               
            F. the failure by the Company to continue to provide you with
               benefits substantially similar to those enjoyed by you under the
               Company’s General Retirement Plan for Employees of Carpenter
               Technology Corporation, Earnings Adjustment Plan of Carpenter
               Technology Corporation, Benefit Equalization Plan of Carpenter
               Technology Corporation, Supplemental Retirement Plan for
               Executives of Carpenter Technology Corporation and Officers’
               Supplemental Retirement Plan of Carpenter Technology Corporation
               (the "Pension Plan" or "Pension Plans") or under any of the
               Company’s other deferred compensation plans, life insurance,
               medical, health and accident, or disability plans in which you
               were participating at the time of the change in control of the
               Company, the taking of any action by the Company which would
               directly or indirectly materially reduce any of such benefits or
               deprive you of any material fringe benefit enjoyed by you at the
               time of the change in control of the Company, or the failure by
               the Company to provide you with the number of paid vacation days
               to which you are entitled on the basis of years of service with
               the Company in accordance with the Company’s normal vacation
               policy for officers in effect at the time of the change in
               control of the Company;
               
               
            G. the failure of the Company to obtain a satisfactory agreement
               from any successor to assume and agree to perform this Agreement,
               as contemplated in Section 5 hereof; or
               
               
            H. any purported termination of your employment which is not
               effected pursuant to a Notice of Termination satisfying the
               requirements of Subsection (iv) below (and, if applicable, the
               requirements of Subsection (ii) above); for purposes of this
               Agreement, no such purported termination shall be effective.
     
           Your right to terminate your employment pursuant to this Subsection
           shall not be affected by your incapacity due to physical or mental
           illness. Your continued employment shall not constitute consent to,
           or a waiver of rights with respect to, any circumstance constituting
           Good Reason hereunder, subject to the applicable notice requirements
           of Subsection (iv) below.
     
      iv.  Notice of Termination. Any purported termination of your employment
           by the Company or by you shall be communicated by written Notice of
           Termination to the other party hereto in accordance with Section 6
           hereof. For purposes of this Agreement, a "Notice of Termination"
           shall mean a notice which shall indicate the specific termination
           provision in this Agreement relied upon and shall set forth in
           reasonable detail the facts and circumstances claimed to provide a
           basis for termination of your employment under the provision so
           indicated. A Notice of Termination given by you indicating
           termination for Good Reason pursuant to Subsection (iii) above must
           be communicated within six (6) months from the date on which the
           facts and circumstances believed by you to constitute such Good
           Reason first became known to you or reasonably ascertainable by you.
           
           
      v.   Date of Termination. "Date of Termination" shall mean (A) if your
           employment is terminated for Disability, thirty (30) days after
           Notice of Termination is given (provided that you shall not have
           returned to the full-time performance of your duties during such
           thirty (30) day period), and (B) if your employment is terminated
           pursuant to Subsection (ii) or (iii) above or for any other reason
           (other than Disability), the date specified in the Notice of
           Termination (which, in the case of a termination pursuant to
           Subsection (ii) above shall not be less than thirty (30) days, and in
           the case of a termination pursuant to Subsection (iii) above shall
           not be less than fifteen (15) nor more than sixty (60) days,
           respectively, from the date such Notice of Termination is given);
           provided that if within fifteen (15) days after any Notice of
           Termination is given, or, if later, prior to the Date of Termination
           (as determined without regard to this proviso), the party receiving
           such Notice of Termination notifies the other party that a dispute
           exists concerning the termination, the Date of Termination shall be
           the date on which the dispute is finally determined, either by mutual
           written agreement of the parties, by a binding arbitration award, or
           by a final judgment, order or decree of a court of competent
           jurisdiction (which is not appealable or with respect to which the
           time for appeal therefrom has expired and no appeal has been
           perfected); provided further that the Date of Termination shall be
           extended by a notice of dispute only if such notice is given in good
           faith and the party giving such notice pursues the resolution of such
           dispute with reasonable diligence. Notwithstanding the pendency of
           any such dispute, the Company will continue to pay you your full
           compensation in effect when the notice giving rise to the dispute was
           given (including, but not limited to, base salary) and continue you
           as a participant in all compensation, benefit and insurance plans in
           which you were participating whether or not specifically referenced
           in this Agreement when the notice giving rise to the dispute was
           given, until the dispute is finally resolved in accordance with this
           Subsection. Amounts paid under this Subsection are in addition to all
           other amounts due under this Agreement and shall not be offset
           against or reduce any other amounts due under this Agreement.
           
           

 4.  Compensation Upon Termination or During Disability. Following a change in
     control of the Company, as defined by Subsection 2(i), upon termination of
     your employment or during a period of Disability you shall be entitled to
     the following benefits:
     
     
      i.   During any period that you fail to perform your full-time duties with
           the Company as a result of incapacity due to physical or mental
           illness, you shall continue to receive the benefits payable to you
           under the Company’s Salary Continuation Program, together with all
           other compensation payable to you during such period, until this
           Agreement is terminated pursuant to Section 3(i) hereof. Thereafter,
           or in the event your employment shall be terminated by the Company or
           by you for Retirement, or by reason of your death, your benefits
           shall be determined under the Company’s retirement, insurance and
           other compensation plans and programs then in effect in accordance
           with the terms of such programs.
           
           
      ii.  If your employment shall be terminated by the Company for Cause or by
           you other than for Good Reason, Disability, death or Retirement, the
           Company shall pay you your full base salary through the Date of
           Termination at the rate in effect at the time Notice of Termination
           is given, plus all other amounts to which you are entitled under any
           compensation plan of the Company at the time such payments are due,
           and the Company shall have no further obligations to you under this
           Agreement.
           
           
      iii. If your employment by the Company shall be terminated (a) by the
           Company other than for Cause, Retirement or Disability or (b) by you
           for Good Reason, then you shall be entitled to the benefits provided
           below:
           
           
            A. the Company shall pay you your full base salary through the Date
               of Termination at the rate in effect at the time Notice of
               Termination is given, plus all other amounts to which you are
               entitled under any compensation plan of the Company, at the time
               such payments are due, except as otherwise provided below;
               
               
            B. in lieu of any further (i) salary payments to you for periods
               subsequent to the Date of Termination or (ii) payments to you
               under the Company’s Salary Continuation Program, the Company
               shall pay as severance pay to you a lump sum severance payment
               equal to two (2) times the sum of (x) your annual base salary in
               effect immediately prior to the occurrence of the circumstance
               giving rise to the Notice of Termination given in respect
               thereof, and (y) a full annual bonus payment (without regard to
               actual attainment of all relevant performance goals) calculated
               by using the Executive Annual Compensation Plan Target
               Percentages found in section "J" of such plan, as amended on June
               22, 2000, times your base salary referenced in (x), above ;
               
               
            C. in lieu of shares of common stock of the Company ("Company
               Shares") issuable upon exercise of outstanding options
               ("Options") or any related stock appreciation rights ("Rights"),
               if any, granted to you under the Long-Term Incentive Program
               (which Options and Rights shall be canceled upon the making of
               the payment referred to below), you shall receive an amount in
               cash equal to the product of (i) the excess of the higher of the
               closing price of the Company’s Shares as reported on the New York
               Stock Exchange-Composite Tape on or nearest the Date of
               Termination (or, if not listed on such exchange, on the
               nationally recognized exchange or Quotation System on which
               trading volume in Company Shares is highest) or the highest per
               share price for Company Shares actually paid in connection with
               any change in control of the Company, over the per share exercise
               price of each Option or Right held by you (whether or not then
               fully exercisable), times (ii) the number of Company Shares
               covered by each such Option or Right; and
               
               
            D. an amount in cash equal to the sum of (i) the present value of
               your accrued benefit (determined by using the ongoing actuarial
               assumptions in effect immediately prior to your Date of
               Termination under the Company’s defined benefit plan in which you
               are a participant) under any Pension Plans or other defined
               benefit plan sponsored by the Company and (ii) your account
               balance under any defined contribution plan sponsored by the
               Company, in either case to the extent that such accrued benefit
               or account balance, as the case may be, shall not be fully vested
               at the time of your Date of Termination.
               
               
            E. In addition to the retirement benefits to which you are entitled
               under the Pension Plan or any successor plans thereto, the
               Company shall pay to you a lump sum amount, in cash, equal to the
               actuarial equivalent of the excess of (x) the retirement pension
               (determined as a straight life annuity commencing at Normal
               Retirement Age or, if later, two years after the Date of
               Termination) which you would have accrued under the terms of the
               Pension Plan (without regard to any amendment to the Pension Plan
               made subsequent to a change in control and on or prior to the
               Date of Termination, which amendment adversely affects in any
               manner the computation of retirement benefits thereunder),
               determined as if you were fully vested thereunder and had
               accumulated (after the Date of Termination) twenty-four (24)
               additional months of service credit thereunder at your highest
               annual rate of compensation during the twelve (12) months
               immediately preceding the Date of Termination, over (y) the
               retirement pension (determined as a straight life annuity
               commencing at Normal Retirement Age which you had then accrued
               pursuant to the provisions of the Pension Plan). For the purposes
               of this Section 4(iii)(E), the actuarial value of the retirement
               benefits shall be calculated as the present value of a single
               life annuity using the UP 1984 mortality table adjusted one year
               forward. The interest rate used in the calculation shall be the
               rate specified for purposes of determining the present value of
               lump sum distributions under section 417(e)(3) of the Code
               established for the second month preceding the date of your
               termination.
               
               
            F. The payments provided for in paragraphs (B), (C) and (D), above,
               shall be made not later than the fifth day following the Date of
               Termination, and the payment described in (E) not later than the
               fifth day following the date of your election, under Section
               4(iii)(G)(1) to receive such payment, provided, however, that if
               the amounts of such payments cannot be finally determined on or
               before such day, the Company shall pay to you on such day an
               estimate, as determined in good faith by the Company, of the
               minimum amount of such payments and shall pay the remainder of
               such payments (together with interest at the rate provided in
               Section 1274(b)(2)(B) of the Code) as soon as the amount thereof
               can be determined but in no event later then the thirtieth day
               after the Date of Termination. In the event that the amount of
               the estimated payments exceeds the amount subsequently determined
               to have been due, such excess shall constitute a loan by the
               Company to you, payable on the fifth day after demand by the
               Company (together with interest at the rate provided in Section
               1274(b)(2)(B) of the Code).
               
               
           
               (G) Notwithstanding any contrary provision of any other agreement
               between you and the Company, or of the Supplemental Retirement
               Plan for Executives of Carpenter Technology Corporation (the
               "SERP"), at the time of your termination of service under Section
               4(i) or 4(iii) hereof, provided that you have then attained at
               least age 50 and have completed, or within 24 months after the
               date of the change in control would have completed, five years of
               service, you will be considered to have attained the greater of
               age 62 or your actual age, and to have completed the greater of
               five years of service, or your actual number of years of service,
               and therefore entitled to retire with an immediate pension under
               Section 7(A) of the SERP, and will be entitled to:
               
               
           
               (1) the Normal Retirement Benefit payable to you under Section 5
               of the SERP, reduced in accordance with Section 6(C) of the SERP,
               based on the sum of your actual years of service, plus, at your
               election, an additional 24 months, and the greater of your
               attained age or age 62. You may elect to receive the additional
               24 months of service credit described in the preceding sentence,
               by agreeing, within 60 days following your termination of service
               under conditions entitling you to the benefits of the Agreement
               and this amendment, by agreeing to waive your right to receive
               the lump sum pension benefit described in Section 4(iii)(E) of
               the Agreement. Notwithstanding the provisions of Section 6(C) of
               the SERP, the reduction provided therein shall be based on the
               benefits actually payable to you under the GRP, the Benefit
               Equalization Plan, the Earnings Adjustment Plan, the Officers’
               Supplemental Retirement Plan, and your Primary Social Security
               Retirement Benefit, beginning when you actually commence receipt
               of those benefits.
               
               
           
               (2) a special supplemental benefit payable to you under the SERP
               for life equal to the benefits that would have been payable to
               you under the Company’s General Retirement Plan (the "GRP") had
               you attained age 62 and completed the greater of ten years of
               service or your actual number of completed years of service,
               calculated using your actual number of completed years of
               service, plus, if you agree to waive your right to receive the
               lump sum pension benefit described in Section 4(iii)(E), an
               additional 24 months of service. This benefit shall be reduced,
               beginning when you actually commence receipt of the benefits to
               which you are entitled under the GRP by the benefit actually
               payable to you under the GRP at that time. The benefit payable
               under this Section 4(iii)(G)(2) will be paid in the same form,
               and the necessary adjustments computed using the same actuarial
               methods and assumptions, as you have elected with respect to your
               benefit under the GRP, or if you have failed to make any such
               election, in the form of an annuity for your life and, if you are
               married at the time of your termination of employment hereunder,
               50% of that amount payable to your surviving spouse for her life;
               
               
           
               (3) participate in, and receive coverage under, any
               post-retirement medical and life insurance benefits sponsored by
               the Company for executive level employees who retire from active
               service, in accordance with the terms of any such plan as in
               effect during the 90 days preceding the change in control, or as
               such plans may be subsequently improved. If the Company
               determines to amend any such plan in any way that could
               reasonably be expected to be adverse to you, or to discontinue
               any such plan, the Company will pay you an amount in cash,
               payable annually in advance, sufficient to enable you, after the
               payment of any income or payroll taxes imposed on such amount, to
               pay the premiums necessary to maintain in effect, on an
               individual basis, insurance at least equal to that provided to
               you by the Company immediately before any such amendment or
               termination. Any such insurance shall be provided by the
               insurer(s) selected by you, provided that if the Company is able
               to procure such coverage at a lower cost from another insurer
               rated by Moody’s rating service at least equal to the rating of
               the insurer selected by you, and requiring no more proof of
               insurability than the insurer selected by you, you agree you will
               accept coverage from that insurer.
               
               
           
            G. The Company also shall pay to you all legal fees and expenses
               incurred by you as a result of such termination (including all
               such legal fees and legal expenses, if any, incurred in
               contesting or disputing any such termination or in seeking to
               obtain or enforce any right or benefit provided by this Agreement
               or in connection with any tax audit or proceeding to the extent
               attributable to the application of Section 4999 of the Code to
               any payment or benefit provided hereunder). Such payments shall
               be made at the later of the times specified in paragraph (F)
               above, or within five (5) days after your request for payment
               accompanied with such evidence of fees and expenses incurred as
               the Company reasonably may require.
               
               
     
      iv.  Certain Additional Payments.
           
           
     
           (A) If all, or any portion, of the payments or other benefits
           provided under any section of this Agreement, either alone or
           together with other payments and benefits which you receive or are
           entitled to receive from the Company or its affiliates, (whether or
           not under an existing plan, arrangement or other agreement)
           (collectively the "Payments") would constitute an excess "parachute
           payment" within the meaning of section 280G of the Internal Revenue
           Code of 1986, as amended (the "Code") and would result in the
           imposition on you of an excise tax under section 4999 of the Code,
           (such excise tax, together with any interest and penalties related
           thereto, is hereinafter collectively referred to as the "Excise Tax")
           then, in addition to any other benefits to which you are entitled
           under this Agreement, you shall be entitled to receive an additional
           payment (a "Gross-Up Payment") in cash, in an amount such that after
           payment by you of all taxes (and any interest and penalties imposed
           with respect thereto) imposed upon the Gross-Up Payment, including,
           without limitation, (1) any income taxes, (2) any payroll taxes,
           including FICA and FUTA, and any state or local payroll taxes and (3)
           any Excise Tax, you retain an amount of the Gross-Up Payment equal to
           the Excise Tax imposed upon the Payments.
           
           
     
           (B) Unless you and the Company otherwise agree in writing, any
           determination required under this Section 4(iv), including without
           limitation, the amount of the Gross-Up Payment, shall be computed and
           made in writing by the independent public accountants engaged by the
           Company as its auditors, (the "Accountants"), whose determination
           shall be, subject to your reasonable approval of the calculations
           required under this Section 4(iv), conclusive and binding upon you
           and the Company for all purposes. For purposes of making the
           calculations required by this Section 4(iv), the Accountants may rely
           on reasonable, good faith interpretations concerning the application
           of section 280G and section 4999 of the Code. You and the Company
           shall furnish to the Accountants such information and documents as
           the Accountants may reasonably request in order to make a
           determination under this Section 4(iv). The Company shall bear all
           costs the Accountants may reasonably incur in connection with any
           calculations contemplated by this Section 4(iv).
           
           
     
           (C) As a result of the uncertainty in the application of section 280G
           and section 4999 of the Code at the time of the initial determination
           by the Accountants hereunder, it is possible that, as a result of
           Internal Revenue Service examination of your tax returns or
           otherwise, (i) an amount of Gross-Up Payment will not have been made
           by the Company that should have been made (an "Underpayment") or that
           (ii) an amount of Gross-Up Payment that has been made will be
           determined to have been in excess of the Gross-Up Payment actually
           required (an "Overpayment"). In the event that you are required to
           make an additional payment of any Excise Tax beyond that originally
           calculated by the Accountants, the Accountants shall determine the
           amount of the Underpayment that has occurred, taking into account all
           taxes described in (A) above, and any such Underpayment shall be
           promptly paid by the Company to you or to the Internal Revenue
           Service for your benefit. In the event that it is finally determined
           that an Overpayment has occurred, you agree that you shall promptly,
           and in any event within 30 days of such determination, refund the
           amount of the Overpayment, plus any interest actually paid to you
           with respect to the Overpayment, to the Company.
           
           
     
           (D) The Company shall have the right with respect to the
           determination of either an Underpayment or an Overpayment to require
           you to appeal the assertion of any Underpayment or to claim, and sue
           for, a refund of any Excise Tax paid by you upon any Payment or
           Gross-Up Payment, provided that the Company shall promptly following
           your request, advance you all expenses, including counsel and
           accounting fees, that based on advice of your counsel or accountants,
           you may reasonably expect to incur in connection with any such
           proceeding. You agree that if the total of such advances exceeds the
           expenses incurred by you, you will refund the excess to the Company.
           Alternatively, the Company may undertake any such proceeding, in
           which case you agree that you shall cooperate with the Company, as
           the Company may reasonably request, in any such proceeding.
           
           
     
      v.   If your employment shall be terminated (A) by the Company other than
           for Cause, Retirement or Disability or (B) by you for Good Reason,
           then for a twenty-four (24) month period after such termination, the
           Company shall arrange to provide you at the Company’s expense with
           life, disability, accident, and health insurance benefits, as well as
           tax and financial planning services, substantially similar to those
           which you are receiving immediately prior to the Notice of
           Termination. Benefits otherwise receivable by you pursuant to this
           Subsection 4(v) shall be reduced to the extent comparable benefits
           are actually received by you during the twenty-four (24) month period
           following your termination, and any such benefits actually received
           by you shall be reported to the Company.
           
           
      vi.  You shall not be required to mitigate the amount of any payment
           provided for in this Section 4 by seeking other employment or
           otherwise, nor shall the amount of any payment or benefit provided
           for in this Section 4 be reduced by any compensation earned by you as
           the result of employment by another employer, by retirement benefits,
           by offset against any amount claimed to be owed by you to the
           Company, or otherwise except as specifically provided in this Section
           4.
           
           
      vii. In addition to all other amounts payable to you under this Section 4,
           you shall be entitled to receive all benefits payable to you, at the
           respective time or times such payments are due, under the Pension
           Plans, the Flexible Savings Plan of Carpenter Technology Corporation
           and any other plan or agreement relating to retirement benefits.
           
           

 5.  Successors; Binding Agreement. (i) The Company will require any successor
     (whether direct or indirect, by purchase, merger, consolidation or
     otherwise) to all or substantially all of the business and/or assets of the
     Company to expressly assume and agree to perform this Agreement in the same
     manner and to the same extent that the Company would be required to perform
     it if no such succession had taken place. Failure of the Company to obtain
     such assumption and agreement prior to the effectiveness of any such
     succession shall be a breach of this Agreement and shall entitle you to
     compensation from the Company in the same amount and on the same terms as
     you would be entitled to hereunder if you terminate your employment for
     Good Reason following a change in control of the company, except that for
     purposes of implementing the foregoing, the date on which any such
     succession becomes effective shall be deemed the Date of Termination. As
     used in this Agreement, "Company" shall mean the Company as hereinbefore
     defined and any successor to its business and/or assets as aforesaid which
     assumes and agrees to perform this Agreement by operation of law, or
     otherwise.
     
     
      i.  Hidden text do not remove
          
          
      ii. This Agreement shall inure to the benefit of and be enforceable by
          your personal or legal representatives, executors, administrators,
          successors, heirs, distributees, devisees and legatees. If you should
          die while any amount would still be payable to you hereunder if you
          had continued to live, all such amounts, unless otherwise provided
          herein, shall be paid in accordance with terms of this Agreement to
          your devisee, legatee or other designee or, if there is no such
          designee, to your estate.
          
          

 6.  Notice. For the purpose of this Agreement, notices and all other
     communications provided for in the Agreement shall be in writing and shall
     be deemed to have been duly given when delivered or mailed by United States
     registered mail, return receipt requested, postage pre-paid, addressed to
     the respective addresses set forth on the first page of this Agreement,
     provided that all notice to the Company shall be directed to the attention
     of the Board with a copy to the Secretary of the Company, or to such other
     address as either party may have furnished to the other in writing in
     accordance herewith, except that notice of change of address shall be
     effective only upon receipt.
     
     
 7.  Miscellaneous. No provision of this Agreement may be modified, waived or
     discharged unless. such waiver, modification or discharge is agreed to in
     writing and signed by you and such officer as may be specifically
     designated by the Board. 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 similar or dissimilar provisions or conditions at the
     same or at any prior or subsequent time. No agreements or representations,
     oral or otherwise, express or implied, with respect to the subject matter
     hereof have been made by either party which are not expressly set forth in
     this Agreement. The validity, interpretation, construction and performance
     of this Agreement shall be governed by the laws of the State of Delaware.
     All references to sections of the Exchange Act or the Code shall be deemed
     also to refer to any successor provisions to such sections. Any payments
     provided for hereunder shall be paid net of any applicable withholding
     required under federal, state or local law. The obligations of the Company
     under Section 4 shall survive the expiration of the term of this Agreement.
     
     
 8.  Validity. The invalidity or unenforceability of any provision of this
     Agreement shall not affect the validity or enforceability of any other
     provision of this Agreement, which shall remain in full force and effect.
     
     
 9.  Counterparts. This Agreement may be executed in several counterparts, each
     of which shall be deemed to be an original but all of which together will
     constitute one and the same instrument.
     
     
 10. Arbitration. Any dispute or controversy arising under or in connection with
     this Agreement shall be settled, at the Company’s expense, exclusively by
     arbitration in Berks County, Pennsylvania, in accordance with the rules of
     the American Arbitration Association then in effect. Judgment may be
     entered on the arbitrator’s award in any court having jurisdiction;
     provided, however, that you shall be entitled to seek specific performance
     of your right to be paid until the Date of Termination during the pendency
     of any dispute or controversy arising under or in connection with this
     Agreement.
     
     

If this letter sets forth our agreement on the subject matter hereof, kindly
sign and return to the Company the enclosed copy of this letter which will then
constitute our agreement on this subject.

Sincerely,

 

 

By:

Robert W. Cardy Chairman and Chief Executive Officer

 

Agreed to this ____

of June, 2000.

 

 

_____________________________

Recipient Name