Exhibit 10.1

 

 

GRAPHIC [g134511kmi001.jpg]

 

 

 

Carpenter Technology Corporation

 

PO Box 14662

 

 

 

Reading, PA 19612-4662

 

 

 

Tel: 610.208.2000

 

 

June 1, 2015

 

Via Hand Delivery

 

Re:      Employment as President and CEO

 

Dear Tony R. Thene:

 

On behalf of Carpenter Technology Corporation (the “Company”), we are pleased to
confirm our offer to continue to employ you in your new role as the Company’s
President and Chief Executive Officer on the terms below stated.

 

Title and Reporting

You will serve as the Company’s President and Chief Executive Officer (CEO),
reporting directly to the Company’s Board of Directors (the “Board”).  You will
be nominated to serve on the Board and, subject to your re-election by
shareholders from time to time, you will serve as a member of the Board during
your employment, although you will not receive separate compensation for your
service as a director.

 

 

Start Date

July 1, 2015, or such other date agreed between you and the Company (the “Start
Date”).

 

 

Annual Base Salary

$700,000

 

 

Annual Bonus

You will be eligible to participate in the Company’s Executive Bonus
Compensation Plan, or such successor arrangement (if any) as the Board may from
time to time establish.  Your target annual bonus for the fiscal year ending
June 30, 2016 will be 100% of your annual base salary.

 

 

Equity Awards

The Company generally makes equity awards to its senior executives annually. 
The terms of those awards are determined by the Human Resources Committee of the
Board.  You will be eligible to receive an annual award at the time these grants
are made to other senior executives of the Company.  Your annual equity
incentive award for the fiscal year ending June 30, 2016 will have a grant date
fair value of $2,200,000.  The performance metrics and vesting criteria of such
award will be similar, but not identical, to those applicable to other
executives.

 

 

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In consideration of your promotion to the role of President and Chief Executive
and the compensation described herein, you agree and acknowledge that the
restricted stock unit award granted to you on April 28, 2015 will be cancelled
and forfeited effective July 1, 2015 and that you will thereafter have no
further rights or entitlements with respect to such award.

 

 

Employee Benefits

You will be eligible to participate in the employee benefit programs applicable
to our salaried employees generally, including the Company’s health and welfare
plans, as well as the defined contribution plan.  In addition, you will be
eligible to participate in the Deferred Compensation Plan for Officers and Key
Employees of Carpenter Technology Corporation.  Your annual vacation entitlement
will be 5 weeks.  Except as herein provided, or as may be hereafter approved by
the Board or its Human Resources Committee, you will not be entitled to further
compensation or benefits.

 

 

Relocation Benefits

You are expected to relocate your primary residence to the general vicinity of
the Company’s principal executive offices.  To facilitate this, you will be
entitled to the relocation benefits described in the Company’s Executive
Relocation Policy (the “Relocation Policy”) attached hereto as Exhibit A,
provided that you complete your relocation within twenty-four (24) months of the
Start Date.  For avoidance of doubt, you will be entitled to relocation benefits
under the Executive Relocation Policy notwithstanding the “Eligibility”
provision of such policy to the contrary.

 

If the Board approves a relocation of the Company’s principal executive offices
while you remain employed as the President and CEO of the Company, you will be
entitled to relocation benefits in connection with your relocation in accordance
with the terms of the Relocation Policy. 

 

 

Severance Rights

Your employment by the Company is “at will” and may be terminated by the Company
or by you at any time.  However, if your employment terminates due to a
termination by the Company without “cause” or a resignation by you with “good
reason” in the absence of a change in control, you will be entitled to receive
the severance benefits included in the Severance Pay Plan for Executives of
Carpenter Technology Corporation (the “Severance Plan”) attached hereto as
Exhibit B.

 

You will also be entitled to severance benefits in the event of a termination by
the Company without “cause” or a resignation by you with “good reason” in
connection with a change in control, as described in the Company’s Change in
Control Severance Plan attached hereto as Exhibit C.

 

For avoidance of doubt, benefits under the Change in Control Severance Plan will
be in lieu of, not in addition to, the severance benefits described in the
Severance Plan.  Your rights to severance benefits under both the Severance Plan
and the Change in Control Severance Plan are expressly conditioned on your
execution (and non-revocation) of a general release of

 

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claims in favor of the Company in a form reasonably prescribed by the Company.

 

If you become eligible to receive severance benefits under either the Severance
Plan or the Change in Control Severance Plan, you will also be entitled to, in
addition to the severance benefits provided pursuant to such plans, twelve (12)
months of vesting service credit with respect to all equity incentive awards
that vest solely on your continued service.

 

If the Board or its Human Resources Committee terminates the Severance Plan, or
amends the Severance Plan to diminish benefits thereunder, then your severance
benefits will continue to be determined exclusively under the terms of the
current Severance Plan for a period of twenty-four (24) months following such
amendment or termination.

 

For purposes of both the Severance Plan and the Change in Control Severance
Plan, the terms “cause” and “good reason” shall have the meanings set forth in
the applicable plan document.  If you resign your employment with “good reason”
pursuant to Section 1.07(c) of the Severance Plan (a relocation of at least
fifty (50) miles from your current principal place of work) or
Section 2(o)(ii) of the Change in Control Severance Plan (a relocation of at
least thirty-five (35) miles from your current principal place of work) prior to
the two-year anniversary of the Start Date, your severance benefits will be
determined with reference to your position and compensation (including base
salary and annual bonus) as in effect on the date hereof.

 

 

Resignation as Director Upon Termination

Unless otherwise agreed between you and the Board, upon any cessation of your
service as an employee of the Company, you agree to resign from service on the
Board.

 

 

Restrictive Covenants

In your capacity as President and CEO, you will continue to be exposed to the
Company’s most sensitive and proprietary information and technology, and will
continue be provided with access to the Company’s most valuable and carefully
cultivated business relationships.  Accordingly, you agree that your
Intellectual Property, Confidentiality and Restrictive Covenant Agreement
remains in full force and effect and will survive your termination of any
employment for any reason in accordance with its terms.

 

 

Indemnification

Both you and the Company agree and acknowledge that your Indemnification
Agreement remains in full force and effect.

 

 

Miscellaneous

Your ownership of or transactions in securities of the Company will be subject
to the Company’s insider trading policies and stock ownership guidelines from
time to time in effect.

 

Reimbursement by the Company of any expense will be subject to Company policies
and practices in effect from time to time and will be further subject

 

-3-

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to the requirements of Treas. Reg. §§ 1.409A-3(i)(1)(iv)(A)(3), (4) and (5).

 

Any payment or transfer of property to you will be subject to tax withholding to
the extent required by applicable law.

 

The letter constitutes our entire agreement and understanding regarding the
matters addressed herein, and merges and supersedes all prior or contemporaneous
discussions, agreements and understandings of every nature (including, without
limitation, the employment letter agreement by and between you and the Company
dated December 10, 2012) between us regarding these matters.

 

This letter will be governed by, and enforced in accordance with, the laws of
the State of Delaware, without regard to the application of the principles of
conflicts of laws.

 

 

[Signature page follows]

 

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To acknowledge your consent to and agreement with the foregoing, please execute
and date this letter in the space provided below and return the executed copies
to me.  This letter may be signed in multiple counterparts, each of which will
be deemed an original, and all of which together will constitute a single
instrument.

 

 

Sincerely,

 

 

 

CARPENTER TECHNOLOGY CORPORATION

 

 

 

 

 

By:

/s/ Gregory A. Pratt

 

 

 

Gregory A. Pratt

 

 

Chairman and Interim President and Chief Executive Officer

 

 

 

 

Acknowledged and agreed on this

 

1st day of June, 2015:

 

 

 

 

 

/s/ Tony R. Thene

 

 

 

Tony R. Thene

 

 

-5-

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Exhibit A

 

[Relocation Policy]

 

B-1

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GRAPHIC [g134511km01i001.jpg]

 

EXECUTIVE / Homeowner

RELOCATION POLICY

Effective April 1, 2011

 

Carpenter Technology Corporation Executive Homeowner Relocation Policy

Last update: October 4, 2012

 

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Table of Contents

 

ELIGIBILITY

3

REPAYMENT AGREEMENT / TERMINATION OF EMPLOYMENT

4

POLICY ADMINISTRATION

4

RELOCATION EXPENSE REIMBURSEMENT PROCEDURE

5

MARKETING ASSISTANCE FOR HOMEOWNERS

6

HOW THE PROGRAM WORKS

6

BUYER VALUE OPTION HOME SALE PROGRAM

7

HOME SALE PROGRAM ELIGIBILITY

7

HOME SALE CLOSING COSTS

8

HOME FINDING SERVICES

8

EQUITY ADVANCE

10

 

 

MORTGAGE ASSISTANCE

10

 

 

HOME PURCHASE CLOSING COSTS

10

 

 

HOUSEHUNTING TRIP TO THE NEW LOCATION

11

 

 

TEMPORARY LIVING ARRANGEMENTS

11

 

 

RETURN TRIPS

12

 

 

MOVING SERVICES

12

 

 

A. TRANSPORTATION OF HOUSEHOLD GOODS AUTHORIZED FOR SHIPMENT

12

 

 

B. ADDITIONAL AUTHORIZED MOVING SERVICES

13

 

 

C. COVERAGE FOR HOUSEHOLD GOODS LOSS OR DAMAGE

13

 

 

D. LOSS AND/OR DAMAGE CLAIMS

14

 

 

E. TRANSPORTATION OF PERSONAL AUTOMOBILES

14

 

 

F. APPLIANCE SERVICE

14

 

 

G. PETS

14

 

 

FINAL TRAVEL EXPENSES

15

 

 

MISCELLANEOUS EXPENSE ALLOWANCE

15

 

 

GROSS-UP PROVISION

15

 

 

SOURCES OF FEDERAL TAX INFORMATION

16

 

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INTRODUCTION AND PURPOSE

 

Carpenter Technology Corporation’s (Carpenter) relocation policy is designed to
assist a relocating employee in completing the transfer in an expeditious and
comfortable manner. Accepting a new job assignment that requires a move to a new
location provides both challenges and opportunities for career development and
personal growth. This package provides you with specific information on
Carpenter’s policy and general information on moving. The information is
intended to make your move go as smoothly as possible.

 

ELIGIBILITY

 

This policy applies to current and new hire Senior Executives with a Job Profile
ID of E1 – E4 who are homeowners at the time that Carpenter requests that they
transfer to a new location.

 

Full time employees are eligible for relocation assistance if all of the
following conditions are met:

 

·

The move must satisfy the IRS “distance test” to be eligible for tax assistance
for relocation expenses. The move will meet the distance test if your new job
location is at least fifty (50) miles farther from your former home than your
old job location was from your former home.

 

 

·

The move must take place within twelve (12) months of your hire date (new hire)
or the effective date of your transfer (current employee).

 

 

·

The relocation must be managed by Xonex Relocation, Inc. (Xonex) from the start
of the relocation process, prior to listing the home for sale. This allows for
maximum value from this program and provides for better management of the
relocation expenses.

 

 

·

Benefits apply to your eligible dependents (spouse, domestic partners, fiancé,
and dependent children) that permanently reside with you at the time you were
authorized to relocate and who will reside with you in the new location. In the
event that an additional member of your household is asked to relocate by
Carpenter, only one individual is eligible to receive relocation benefits.

 

3

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REPAYMENT AGREEMENT / TERMINATION OF EMPLOYMENT

 

Should you voluntarily terminate employment with Carpenter or be terminated for
cause (as defined in Employee Reimbursement Agreement form attached) during the
24-month period immediately following your hire date (new hire) or the effective
date of your transfer (current employee), you will be expected to repay to
Carpenter a pro-rated portion of any relocation expenses paid to you or on your
behalf. The reimbursement schedule is set forth below and in the Employee
Reimbursement Agreement attached as an exhibit to your employment offer letter.
A signed copy of the Agreement must be returned to Carpenter’s Employment
Department in order to receive relocation benefits.

 

Length of Service from Effective Date of Hire

 

Amount of
Reimbursement

 

6 months or less

 

100

%

7 to 12 months

 

75

%

13 to 18 months

 

50

%

19 to 24 months

 

25

%

 

POLICY ADMINISTRATION

 

This is a comprehensive relocation policy, but Carpenter realizes that the
information may not answer all of your questions. For further information or
clarification of the policy and benefit entitlements, please contact the
following:

 

General Questions:

Lori Gensemer

 

Benefits Analyst III

 

Carpenter Technology Corporation

 

Phone: 610.208.3928

 

E-mail: lgensemer@cartech.com

 

Carpenter will be utilizing the services of Xonex to administer the relocation
policy and program. You will be contacted by Xonex directly after Carpenter
initiates the relocation process. You will be assigned to work with a Relocation
Services Manager (RSM) from Xonex for purposes of policy application and
delivery of services. Accordingly, an initial counseling session between you and
the assigned RSM must occur prior to the parameters of the appropriate policy
being implemented. Counseling regarding the policy should be an ongoing event
until the relocation is completed.

 

4

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Xonex Contacts:

Megan McGonigal, Relocation Services Manager (RSM)

 

Phone: 877.661.9048

 

E-mail: mmcgonigal@xonex.com

 

 

 

Lynda Lane, Move Coordinator

 

Phone: 877.609.1587

 

E-mail: llane@xonex.com

 

Xonex will provide services to you in accordance with the policy terms and
procedures detailed herein, and have no authority to deviate from the written
parameters of Carpenter’s Relocation Policy.

 

In order to manage relocation costs, some services and reimbursements are
contingent on the use of vendors or brokers specified by Xonex.

 

Carpenter retains the right to revise, amend, suspend or terminate any or all
provisions covered under this policy. In the event that relocation terms
inconsistent with those contained herein are communicated to the transferee, the
terms contained in the policy will control.

 

RELOCATION EXPENSE REIMBURSEMENT PROCEDURE

 

All relocation expenses should be submitted on-line via a password protected
web-based portal. Your RSM will provide you with a user ID and password, and an
overview of the site and the online expense submission procedure. This site will
allow you to begin and save expense reports in draft, submit final expense
reports, and track payments.

 

·

A relocation expense report and supportive documentation, which includes all
original receipts, must be submitted to Xonex within sixty (60) days of
occurrence.

 

Upon on-line submission, please print the relocation expense form, sign it, and
submit it with receipts to

 

 

Xonex Relocation

Attn: Carpenter Team Analyst

P.O. Box 3496

Wilmington, DE 19804

 

You should contact your RSM for an expense form if you are unable to access the
site.

 

5

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MARKETING ASSISTANCE FOR HOMEOWNERS

 

The Xonex Relocation Marketing Assistance Program is a comprehensive program
designed to offer you professional advice in marketing your home. This program
has proven results in sales within a short time period at a more than
satisfactory price.

 

·

Marketing Assistance will be provided through Xonex. Employees must utilize the
program and are not to list their current residence with any Realtor prior to
initiation of the Marketing Assistance counseling.

 

 

·

The listing agreement must contain an exclusion clause.

 

HOW THE PROGRAM WORKS

 

The Marketing Assistance Program is designed to help you sell your home at the
old location for the best possible price within the relocation time frame. Your
RSM will assist you in the selection of two qualified, experienced real estate
professionals, who will be asked to complete a thorough market analysis of your
home. If you have a real estate agent that you would like to use, who is
experienced, knowledgeable of the local market, familiar with relocation
procedures, and willing to agree to the terms and conditions of the Xonex
Relocation Broker Management Agreement, Xonex will include that agent as one of
the two selected brokers.

 

The two selected agents will meet with you to inspect your home and discuss
their qualifications and strategy to market your home effectively.

 

After viewing your home, the agents will research comparable sales and
competitive listings, current market conditions, and other data. They will then
prepare a report reflecting their opinions of a suggested list price and the
probable sale price of the property within a 120-day marketing period.

 

Xonex will review the reports with you, and you will then select one of the
agents to list your home. Xonex will monitor the performance of the selected
agent throughout the marketing period and keep you advised of changes in the
market and prospect comments, and will help you to assess your options if a
change in strategy seems necessary.

 

6

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BUYER VALUE OPTION HOME SALE PROGRAM

 

Carpenter realizes that the disposal of your home has a financial impact on you
and your family. Therefore, we have designed a program benefit that will assist
you with covering closing costs in a manner that provides favorable tax
treatment to you and to Carpenter, providing certain IRS guidelines are
followed. It is mandatory that you utilize Xonex to coordinate the home selling
in order to take advantage of this relocation benefit option.

 

Your RSM is available to assist you in your negotiations, which will be done
verbally. When you and the purchaser agree on the price and terms of the sale,
you should contact your RSM so that the transaction can be closed under the
Buyer Value Option (BVO) Program.

 

·

Do not sign the contract! When an offer to purchase is received, you should not
sign the contract or accept any earnest money. If you do, the real estate
commission and all closing costs become taxable income to you, and you will then
be responsible for all federal, state, local and FICA taxes.

 

 

·

Do not sign the offer. Xonex will prepare a contract of sale for you with the
same price and terms.

 

 

·

If you receive an offer while eligible for the Marketing Assistance Program,
Xonex will review it and, if the offer is determined to be bona-fide, you will
be relieved of handling closing arrangements and paying related costs.

 

 

·

You will sign a separate Contract of Sale as “Seller” and return it to the Xonex
closing services provider as “Buyer”.

 

 

·

Xonex, through its closing services provider, will then, as the “Seller,” enter
into a separate Contract of Sale with the outside buyer.

 

HOME SALE PROGRAM ELIGIBILITY

 

The property must be your primary place of residence. In addition, the property
must:

 

·

Have operational electrical, plumbing, and heating systems

 

 

·

Be structurally sound and completely constructed

 

 

·

Have a marketable title recorded in your name

 

 

·

Meet all code requirements with necessary permits

 

 

·

Be able to be mortgaged under customary lending practices

 

7

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Home sale program eligibility applies only to private residences and
specifically excludes farms, co-ops, houseboats, homes without a permanent
foundation, undeveloped building lots, homes with a value less than $50,000 or
greater than $1,000,000 or with prior approval, second homes, historic
properties, contiguous land parcels, excessive acreage (> 5 acres), unfulfilled
contractual obligations to purchase a residence and income-producing property.

 

If a home is determined, through professional inspections, to have toxic
materials and/or potential structural defects that will affect the sale of the
property or place Carpenter in a position of legal consequences, the property
may not be eligible for home sale assistance through Carpenter. Such items might
include LP siding, synthetic stucco, asbestos, radon, or other toxic materials.
All other benefits of the program (i.e. Marketing Assistance, Home Finding
Assistance) will remain in place.

 

If your home is deemed not eligible for the home sale program, you will be
reimbursed for the home selling expenses described above and tax assistance
(gross-up) will be provided.

 

HOME SALE CLOSING COSTS

 

If the home is deemed ineligible under the BVO program, Carpenter will reimburse
you for the following costs related to the sale of your current home, which are
considered normal and customary. If the home sale is closed through Xonex under
the BVO program, these costs will be billed directly to Carpenter and there will
be no tax impact to you.

 

·

Real estate commission, normal and customary for the area

 

 

·

Pre-payment penalties (subject to approval)

 

 

·

Title examination

 

 

·

Transfer and recording fees

 

 

·

Required municipal fees and transfer documentation (Certificate of
Occupancy, etc.)

 

The above selling costs will be reimbursed to you if your home is eligible and
you do not close the home sale through Xonex utilizing the BVO program. However,
no tax assistance will be provided and taxes will be withheld from your
reimbursement. This payment is considered taxable income and subject to the
appropriate tax withholding. An itemized list of expenses (HUD-1 settlement
statement) must be submitted to Xonex for audit and reimbursement.

 

HOME FINDING SERVICES

 

Xonex will provide you with a real estate agent who is knowledgeable about the
local marketplace to assist you in finding a new home and community. This agent
will provide step-by-step assistance throughout the home finding process.

 

8

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Employees are not to take a home finding trip, or contact any Realtors, prior to
counseling by their RSM.

 

SERVICES PROVIDED:

 

·                       You will be provided with community and housing
information through an experienced and knowledgeable real estate agent through
the Professional Destination Services Program.

 

·                       You will receive assistance in negotiating an offer on
the home you wish to purchase or lease, as applicable.

 

Before you begin house hunting, your agent can provide you with a packet of
information about the new area, tailored to your needs and interests, including
school, shopping, church, and recreation information. You will be given a tour
of the area to narrow down the communities to consider. You will then view
houses within the selected communities that meet your criteria until you find
the house that you wish to purchase.

 

Before you make an offer to purchase or lease, you may request that the agent
provide a Pre-Purchase Market Analysis of the home, showing the listing and sale
prices of homes that are similar to this one, noting any features that make
those homes more or less valuable than the one you’ve chosen. This Pre-Purchase
Market Analysis will indicate the Fair Market Value Range for the home, so that
you will be prepared to begin negotiations. You will receive assistance in
negotiating strategies, information on local market conditions, and appropriate
clauses to add to the contract for protection.

 

Follow-up on all details of the transaction, such as mortgage loan commitment
progress, adherence to time constraints, inspection results and negotiations
will ensure that the purchase closes in a timely manner.

 

9

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EQUITY ADVANCE

 

An advance of equity is available through Carpenter to assist with associated
costs of purchasing a home in the new location. The equity advance amount will
be based on the “established value” of your home in the old location. The
established value will be based on the agreed upon sales price, less any
property debt (e.g. liens, required repairs, taxes). An equity advance may be
processed only when the home that is being sold is under contract with
inspection results negotiated, AND you have received an acceptance from the
seller of your offer to purchase a home in the new location. The amount of the
loan shall be based on the lender’s Good Faith Estimate of Buyer’s Closing
Costs, not to exceed 80% of the established equity in the home being sold. You
will be required to sign an Equity Advance Agreement and Promissory Note for the
amount to be advanced. Equity advanced will be withheld from the final proceeds
payment.

 

Note: Certain Executives/Officers may not be eligible for equity loans due to
SOX / SEC regulations. Confirm eligibility with the Corporate Secretary.

 

MORTGAGE ASSISTANCE

 

Carpenter has established relationships with several national lenders to assist
with the loan approval process for the purchase of a new home. These are
optional programs, and you are free to shop for a mortgage with any lender you
choose. The national lenders can provide a wide variety of mortgage programs
with competitive rates, quick approval times, and direct billing of authorized
closing costs to Carpenter. You will not be required to cover these expenses in
advance or submit them for reimbursement.

 

Should you elect to use mortgage services from a lender other than one of the
participating national lenders, you should plan to pay all closing costs at the
time of closing, and then submit a signed copy of the final settlement statement
(HUD-1) to Xonex as soon as possible after closing for audit and reimbursement.

 

HOME PURCHASE CLOSING COSTS

 

If you are purchasing a home in the new location, Carpenter will reimburse you
for a loan origination fee or one discount point not to exceed 1% of the loan
amount, and normal and customary Borrower’s closing costs.

Expenses related to the following items are typical Borrower’s closing costs:

 

·                            Underwriting

 

·                            Document Processing

 

·                            Title insurance or fees for examination of title as
required by lender

 

10

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·                            Appraisal of the new home if required by lender

 

·                            Escrow or closing fees charged by the title company
to close the sale

 

·                            Attorney fees

 

·                            Recording fees

 

·                            Assumption or transfer fees

 

·                            Credit report charges

 

·                            Inspection fees (usually paid prior to and outside
of closing)

 

You are responsible for prepaid taxes, insurance, additional discount points and
mortgage interest. A copy of the final settlement statement (HUD-1) is required
and should be submitted to Xonex for audit and reimbursement.

 

HOUSEHUNTING TRIP TO THE NEW LOCATION

 

You and your spouse/partner are eligible for two (2) trips totaling no more than
7 nights/8 days for the purpose of locating a new residence to purchase. If air
travel is involved, please make every effort to book flights at least two
(2) weeks in advance, but at a minimum of seven (7) days in advance.

 

Carpenter will reimburse for reasonable and customary expenses for meals,
lodging, rental car, and coach airfare. Reimbursement will be made at the
prevailing IRS mileage and per diem rates, where applicable.

 

TEMPORARY LIVING ARRANGEMENTS

 

A.

Temporary Housing. Carpenter will pay for the cost of temporary housing up to
sixty (60) days if you are unable to move into your new residence immediately
upon arrival in the new location. Additional days up to a maximum of thirty (30)
may be approved by Human Resources under certain circumstances. A request for
additional days should be submitted to Human Resources prior to the end of the
initial sixty (60) day period.

 

 

B.

Temporary Storage. Carpenter will pay for the temporary storage of household
goods, when necessary, for up to sixty (60) days. This may be extended, if
necessary, by the number of days approved for additional temporary housing.

 

 

C.

Meal Allowance. In the event you are unable to find temporary housing with
kitchen facilities, you will receive a meal allowance. Carpenter will reimburse
for reasonable and customary expenses for daily meal allowance. Reimbursements
will be made at the prevailing IRS per diem rates, where applicable. The daily
allowance is intended to help with the cost of meals. Receipts are required and
must be submitted with the relocation expense report.

 

11

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D.

Car Rental. Carpenter will pay for the cost of a rental car for a period not to
exceed two (2) weeks. This will allow sufficient time for Xonex to arrange for
shipment of your personal automobile, if necessary

 

 

E.

Reasonable Phone Calls. Carpenter will pay for reasonable phone calls home while
you are in temporary housing and your family has not yet relocated.

 

 

F.

Internet Access. If not provided as part of the lease agreement, Carpenter will
cover the cost for basic Internet access while you are in the temporary housing
facility.

 

RETURN TRIPS

 

In the case where you have moved into temporary housing, but your family is
still in the former location, Carpenter will pay for reasonable travel expenses
(coach airfare or mileage reimbursement) for you to return home to visit your
family. Return visits may be made every other weekend during the sixty (60) day
period, not to exceed four (4) round trips in total. In the event that an
additional period of at least fourteen (14) days of temporary housing has been
approved, Carpenter will pay for reasonable travel expenses of one
(1) additional round trip made by you.

 

In the event of a delayed relocation (up to six (6) months from employee’s
transfer date) of your family members to the destination location, Carpenter
will pay for reasonable travel expenses (coach airfare or mileage reimbursement)
for you to return home to visit your family. The frequency and maximum period
(up to maximum of six (6) months) of return trips for which Carpenter will
reimburse you for reasonable travel expenses must be approved by Corporate Human
Resources and included in your Offer letter or Letter of Assignment.

 

MOVING SERVICES

 

Only Carpenter’s Xonex Relocation assigned and authorized carriers may be used.

 

A. TRANSPORTATION OF HOUSEHOLD GOODS AUTHORIZED FOR SHIPMENT

 

Carpenter will provide for the packing, transporting, and unpacking of all
normal household goods in moves arranged by Xonex. Carpenter will also reimburse
the cost of one (1) trash removal (items being disposed of as a result of the
relocation) OR debris pick-up (disposal of packing boxes).

 

You are expected to use discretion concerning the moving of those possessions
that are of little value in relation to the cost of moving.

 

12

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Various items that will not be shipped at Carpenter’s expense include, but are
not limited to, the following:

 

·                           Food and perishables, combustible items, and items
which may cause contamination or damage to other goods

 

·                           Recreational motor vehicles, boats over 14 feet, or
airplanes

 

·                           Patio slate/bricks/cement/sand

 

·                           Indoor/outdoor plants/fertilizer

 

·                           Disassembled vehicles and motors

 

·                           Animals

 

·                           Firewood/lumber/ building materials

 

·                           Large machinery/workshop equipment

 

·                           Swimming pools

 

·                           Jewelry, precious stones, legal documents, stamp and
coin collections, or money (cash, securities, bonds, notes)

 

·                           Outbuildings, storage sheds, greenhouses, or farm
equipment

 

·                           Satellite dishes exceeding 24” in diameter

 

·                           Illegal items - as per Federal regulations

 

In addition, gratuities and expense of food and beverages provided to the moving
crews are not eligible for reimbursement. However, they are IRS tax-deductible
moving expenses.

 

Carpenter and Xonex recognize that you may have certain items to move that need
disassembly/reassembly or special packing/crating that are not typically covered
in a move. Xonex will contact Human Resources to seek approval in those
instances.

 

The employee, spouse, or other adult authorized by the employee must be present
during the packing, loading, unloading, and unpacking of household goods and
must carefully review the inventory list prior to signing. Carpenter and Xonex
will not be held responsible for damage or loss if these procedures are not
followed.

 

B. ADDITIONAL AUTHORIZED MOVING SERVICES

 

·                                Normal and customary third party services such
as service of a waterbed, pool table, crating, etc.

 

·                                Unpacking services when requested

 

·                                Loading and unloading on a weekday or weekend

 

C. COVERAGE FOR HOUSEHOLD GOODS LOSS OR DAMAGE

 

Carpenter provides full-replacement valuation coverage on a $6.00 per-pound
basis for the transportation of household goods, up to a maximum of $100,000.00.
The expense for any additional coverage available through the carrier will be
the responsibility of the employee.

 

13

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Antiques, fine arts and unique items may require specific itemization and a
pre-move appraisal, at the employee’s expense, to determine whether they would
qualify for coverage or be excluded.

 

It is your responsibility to identify and discuss such items with the
RSM/carrier in advance of the move. In the event that additional coverage is
required, you will be charged for such coverage by the van line. You must
present in advance to your RSM at the Service Provider written requests for
exceptions.

 

Jewelry, precious stones, legal documents, stamp and coin collections, and money
(cash, securities, bonds, and notes) are not covered by this insurance and
should be personally transported by the employee.

 

D. LOSS AND/OR DAMAGE CLAIMS

 

In the event of loss or damages resulting from the transportation of household
goods, it is your responsibility to promptly file a claim with the van line as
soon as possible after such an occurrence. Any noticeable damage at the time of
delivery should be brought to the attention of the driver and followed up by you
with a claim in writing to the carrier. Claims must be submitted within ninety
(90) days of the delivery date. The best proof of claim is a notation on the
bill of lading, inventory listing, or delivery report. These reports may be
obtained from the carrier.

 

E. TRANSPORTATION OF PERSONAL AUTOMOBILES

 

You may ship through Xonex two (2) personal automobiles (only fully operational
vehicles may be shipped). The shipment of additional vehicles will be at the
employee’s expense.

 

There will be no reimbursement for loss on sale if you sell a car in lieu of
shipping or driving.

 

F. APPLIANCE SERVICE

 

Major appliances (refrigerator, washer, dryer and range) will be installed at
the new residence, if necessary. Reimbursable expenses include the customary
cost of plumbing, electrical, labor, and materials required to disconnect major
appliances at the old location and to reconnect them to available facilities at
the new residence. Installation of 220-volt wiring is considered a home
improvement and is not reimbursable. Any special plumbing or other wiring
necessary at the new location is not reimbursable.

 

G. PETS

 

Carpenter does not pay for the relocation of pets, horses or other livestock.
Carpenter will give special consideration to employees or their family members
in need of a Service dog. Any employee wishing to transport a pet or pets will
assume all responsibility, expense and liability for such pet(s). This includes,
but is not limited to, inoculations and health certificates; the expense for air
transport, kenneling, related housing deposits and rent differential; and total
liability for injury or damage associated with the pet(s)

 

14

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FINAL TRAVEL EXPENSES

 

Carpenter will reimburse for reasonable and customary expenses for meals,
lodging, and transportation (coach or economy fare, if by air) for all eligible
household members. You will be reimbursed for mileage and tolls if you elect to
drive to the new location. Reimbursement will be made at the prevailing IRS
mileage and per diem rates, where applicable.

 

MISCELLANEOUS EXPENSE ALLOWANCE

 

Carpenter recognizes that you may incur expenses when relocating that may not be
directly provided for in this policy. You will receive a Miscellaneous Expense
Allowance equal to one month’s salary, up to a maximum of $10,000.00, to address
these incidental expenses. You need not provide receipts or give an accounting
of how this allowance is spent. This Allowance is considered taxable income and
this payment will be grossed-up to assist with the tax burden. Although you will
receive assistance in the tax burden associated with the Miscellaneous Allowance
and other taxable benefits, Carpenter strongly advises that you consult an
income tax professional prior to your relocation for proper financial planning
of this event.

 

Xonex will disburse payment of the Allowance upon receipt of your signed
Reimbursement Agreement and after your hire date (new hire) or effective start
date (current EE) in the new location.

 

Some of the expenses that the Allowance is intended to cover are:

 

·                           Driver’s license and automobile tags

 

·                           Miscellaneous personal expenses during temporary
living, such as dry cleaning, parking and tolls, entertainment, etc.

 

·                           Pet shipment/care/boarding

 

·                           Utilities removal and installation

 

·                           Cleaning

 

·                           Purchase, installation and maintenance of appliances

 

·                           Cost of additional luggage

 

·                           Duplication of records, such as medical or school
records

 

·                           Tips to movers

 

GROSS-UP PROVISION

 

Carpenter will gross-up certain reimbursable expenses that have no off-setting
deduction and therefore may cause a tax liability for the employee:

 

·                           Miscellaneous Allowance

 

15

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·                           Temporary living expenses

 

·                           Trips home during temporary living

 

·                           Final move trip meals

 

·                           Storage beyond 30 days

 

Reimbursements of deductible expenses are included in W-2 wage earnings. These
reimbursements, however, will not be grossed-up for federal taxes. You will be
responsible for proper reporting on your tax filing to receive the deduction.
These payments will be grossed-up for Social Security, Medicare, and state
taxes, where applicable.

 

Reimbursements included in the non-taxable category include:

 

·                           En route travel and lodging for members of the
employee’s household from the old location to the new location. Mileage
reimbursements in excess of federal rates are taxable

 

·                           Transportation and 30 days of storage (per IRS
regulations) of household goods.

 

Employees who voluntarily terminate employment before the terms of the
relocation reimbursement agreement have expired will be required to pay back to
Carpenter any gross-up benefits they have received.

 

SOURCES OF FEDERAL TAX INFORMATION

 

The IRS allows the general public to download and print all of the tax forms and
publications available on their website which may be accessed at:

www.irs.gov

 

The following publications contain information relative to the tax effects of a
corporate relocation:

 

·                           IRS Publication 521, Moving Expenses 

 

·                           IRS Publication 523, Selling Your Home 

 

Employees may wish to review and/or consider increasing their W-4 payroll tax
withholding amount. Helpful resources include:

 

·                           IRS Publication 919, How Do I Adjust My Withholding 

 

·                           Use the, IRS Withholding Calculator, on the IRS
website at:

 

www.irs.gov/individuals

 

You can also find many of these forms and an informative tax booklet on the
Xonex Transferee Gateway.

 

16

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ADDENDUM TO HOMEOWNER RELOCATON POLICIES

(Effective April 1, 2008

Restated March 18,2009

Amended December 6, 2010)

 

In an effort to provide relief to transferees affected by the depressed housing
market, the following benefit may be available to eligible homeowner transferees
with active relocations on or after April 1, 2008. Carpenter reserves the right
to amend or rescind this Addendum at any time.

 

Duplicate Housing

 

Generally, transferees sell their present home or have an agreement to sell
before they take on the financial obligations of a new home. However, if the
transferee purchases and occupies a home in the new location while still
financially responsible for the home in the old location, Carpenter will
reimburse interest on the mortgage (not principle), property taxes, homeowner
insurance, and homeowner association fees on the lower of the two properties
based on the total expense to Carpenter (factoring in applicable tax gross-up
amount resulting from payments of these expenses). The duplicate housing benefit
is subject to approval by Human Resources.

 

If the transferee rents in the new location while trying to sell the home in the
old location, Carpenter will reimburse the lesser of the rent in the new
location or mortgage interest, property tax, insurance, and homeowner
association fees on the old home . Based on the total expense to Carpenter
(factoring in applicable tax gross-up amount resulting from payments of these
expenses).

 

Duplicate housing expenses will be reimbursed upon receipt of a Relocation
Expense Report accompanied by an account statement showing the payment breakdown
for the period submitted for reimbursement. The accuracy of the statement is
necessary for accurate tax reporting. In order to be reimbursed for this
benefit, the transferee must submit a copy of their mortgage statement on the
old and new properties itemizing the interest, taxes, insurance and homeowner
association fees. In the event that any of the reimbursable expenses listed are
not included in the transferee’s mortgage payment, documentation for the annual
expense must be submitted. The expense will be prorated and reimbursed on a
monthly basis. If the transferee rents in the new location, a signed copy of the
lease must be submitted for review. Security deposits are not eligible for
reimbursement.

 

Note: Reimbursements will be reported as additional income on the transferee’s
W-2. Reimbursement for interest and real estate taxes will be grossed-up for
FICA and Medicare since these expenses are generally deductible on Schedule A of
the transferee’s 1040 tax return. Eligibility for duplicate housing applies only
to your primary residence, and your current home must be listed on the market at
a price no higher than 105% of the established market value, as determined
through averaging two comparable Broker Market Analyses. The BMA’s should be
within 5% of each other.

 

The transferee agrees to aggressively market the home and make adjustments
accordingly. Unless otherwise amended or rescinded, Carpenter will reimburse for
temporary living, and/or duplicate housing for a period not to exceed eighteen
(18) months.

 

If this benefit is being utilized in conjunction with a Loss on Sale benefit,
the combined benefit coverage shall not exceed $25,000.

 

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ADDENDUM TO HOMEOWNER RELOCATON POLICIES

(Effective October 1, 2010

Amended December 6, 2010)

 

The Loss on Sale Addendum is an exception to the Carpenter relocation policy.
Unless this benefit is specifically authorized for an individual transferee,
this program shall not be considered as approved. Carpenter reserves the right
to amend or rescind this Addendum at any time.

 

Loss on Sale Coverage

 

When you sell your home in the departure location, the selling price may fall
short of the original purchase price creating a loss situation. If approved, and
your property qualifies for this benefit, Carpenter will reimburse up to $25,000
of recognized loss.

 

Qualifications:

 

You must have owned and occupied your home as your primary place of residence on
the date you were first notified of your transfer.

 

You will need to fully participate in the home sale assistance program,
following the established guidelines, to be eligible for loss on sale
assistance.

 

If Carpenter is providing a Duplicate Housing Benefit, the Loss on Sale benefit
coverage will be reduced by the total amount of Duplicate Housing coverage.

 

Following are the guidelines:

 

·                           Use an approved network broker

 

·                           List your home at 103% of the average most likely
sales price based on two (2) Broker Market Analysis’s and adhere to all
marketing guidelines in the policy

 

·                           Sign all the legal documents for the transfer of
your property within one (1) year of your transfer date

 

·                           The property must sell within 12 months of the
effective start date at the new location

 

Calculation: The loss is considered the difference between the original net
purchase price and the final net sales price (your contract price with XONEX).
Capital improvements and repairs or maintenance expenses are not included in the
calculation, as the value of such items are considered in the purchaser’s
offering.

 

Carpenter expects you to properly maintain the property and fully cooperate in
the marketing process, to ensure the best possible agreement terms. Payments may
be denied if the real estate agent, appraiser/inspector determines that the home
has been neglected and suffers from deferred maintenance.

 

Loss on Sale payments will be made after the property has settled. The loss
payment will be tax assisted, which means that Carpenter will gross up to cover
tax burden on the transferee.

 

Note: Reimbursements will be reported as additional income on the transferee’s
W-2.

 

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Exhibit B

 

[Severance Pay Plan for Executives of Carpenter Technology Corporation]

 

B-1

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Severance Pay Plan for Executives

of Carpenter Technology Corporation

As adopted July 1, 2010

 

Carpenter Technology Corporation, a Delaware corporation (the “Employer”),
hereby adopts the Carpenter Technology Corporation Severance Pay Plan for
Executives (the “Plan”) for the benefit of certain of its executives on the
following terms and conditions:

 

The Plan, as set forth herein, provides consideration that is intended to assist
with the transition period which may be experienced by executives of the
Employer covered by the Plan in the event of a termination of employment under
the enumerated circumstances in return for the executive’s execution of a valid
and binding release (that is not subsequently revoked, rescinded, invalidated or
challenged in any way), that releases the Employer from any and all legal or
equitable claims related to the executive’s employment, or termination of
employment, with the Employer notwithstanding any indemnification agreements
that were in effect indemnifying the executives during their employment with the
Employer.

 

This Plan is a “top-hat” plan within the meaning of Sections 201(2), 301(a)(3),
and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”). As such, this Plan is subject to limited ERISA reporting and
disclosure requirements, and is exempt from all other ERISA requirements.
Distributions required or contemplated by this Plan or actions required to be
taken under this Plan shall not be construed as creating a trust of any kind or
a fiduciary relationship between the Employer and any Employee, any beneficiary,
or any other person.

 

ARTICLE I

 

Definitions

 

In the Plan the singular includes the plural, use of the masculine pronoun
includes the feminine pronoun and initially capitalized words shall have the
following meanings unless the context clearly indicates otherwise. The use of
any definition given to terms within this Plan shall be strictly limited to the
interpretation of this Plan and shall in no way modify definitions of those same
terms established elsewhere under law or contract.

 

Section 1.01. Base Salary. The total annual base salary payable to such Employee
at the rate in effect on the Date of Termination. Base Salary shall not be
reduced for any salary reduction contributions: (a) to cash or deferred
arrangements under Code § 401(k), (b) to a cafeteria plan under Code § 125, or
(c) to a nonqualified deferred compensation plan. Base Salary shall not take
into account any bonuses, reimbursed expenses, credits or benefits (including
benefits under any plan of deferred compensation), or any additional cash
compensation or compensation payable in a form other than cash.

 

Section 1.02. Cause. Any termination of an Employee’s employment with an
Employer which results from:

 

--------------------------------------------------------------------------------

 

(i)

Employee’s conviction of a crime involving moral turpitude;

 

 

(ii)

Employee becoming incapable of performing the duties of his or her employment
with Employer due to loss or suspension of any license or certification required
for the performance of those duties;

 

 

(iii)

conduct by Employee that is found by Employer to constitute fraud, embezzlement,
or theft that occurs during or in the course of Employee’s employment with
Employer;

 

 

(iv)

intentional damage by Employee to Employer’s assets or property or the assets or
property of Employer’s customers, vendors, or employees;

 

 

(v)

intentional disclosure by Employee of Employer’s confidential information
contrary to Employer’s policies or instructions received by Employee during or
in the course of Employee’s employment with Employer;

 

 

(vi)

intentional engagement by Employee in any activity which would constitute a
breach of duty of loyalty to Employer;

 

 

(vii)

conduct by Employee found by Employer to constitute a willful and continued
failure or refusal by Employee to substantially perform Employee’s duties for
Employer (except as a result of incapacity due to physical or mental illness),

 

 

(viii)

Employee’s failure to comply with Employer’s policies or practices despite
having been advised and/or instructed regarding those policies or practices; or

 

 

(ix)

conduct by Employee that is demonstrably and materially injurious to Employer,
monetarily or otherwise, as determined by Employer, including injury to
Employer’s reputation or conduct by Employee otherwise having an adverse affect
upon Employer’s interests, as determined by Employer.

 

Section 1.03. Code. The Internal Revenue Code of 1986, as now in effect or as
hereafter amended. All citations to sections of the Code are to such sections as
they may from time to time be amended or renumbered.

 

Section 1.04. Date of Termination. The Date of Termination shall be the date on
which a Termination occurs.

 

Section 1.05. Employee. A full-time salaried employee of an Employer who is a
United States resident, except a person (1) who has an individual employment or
severance agreement which is then currently effective with an Employer, (2) is
covered by a statutory severance entitlement, or (3) is a member of a bargaining
unit.

 

Section 1.06. Employer. Employer means Carpenter Technology Corporation.

 

2

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Section 1.07. Good Reason. An Employee’s voluntary Termination within the ninety
(90) day period following the initial existence of one or more of the following
conditions arising without the Employee’s consent:

 

(a) a material diminution in the Employee’s Base Salary;

 

(b) a material permanent diminution in the Employee’s authority, duties, or
responsibilities;

 

(c) a material change in the geographic location at which the Employee must
perform services which is at least fifty (50) miles from his or her current
principal place of work; or

 

(d) any other action or inaction that constitutes a material breach by the
Employer of any employment agreement between the Employee and the Employer; and

 

within thirty (30) days following the initial existence of a condition described
in subsections (a) through (d) above, the Employee must provide notice to the
Employer of the existence of the condition, and the Employer must fail to remedy
the condition within thirty (30) days of receipt of such notice.

 

Section 1.08. Severed Employee. An Employee who has experienced a Termination.

 

Section 1.09. Termination. An Employee’s termination of employment with the
Employer, as described in Treas. Reg. § 1.409A-1(h); provided, however, that a
Termination shall include only an involuntary discontinuance of the Employee’s
employment without Cause as a result of the independent exercise of the
unilateral authority of the Employer, as described in Treas. Reg. §
1.409A-1(n)(1), or a voluntary separation from service for Good Reason.

 

ARTICLE II

 

Eligibility and Participation

 

Section 2.01. Eligibility. An Employee shall be eligible to participate in the
Plan if the Employee is:

 

(a) a Chief Executive Officer, Executive/Senior Vice President, Vice President,
or Assistant Vice President of the Employer on the Date of Termination; and

 

(b) a member of the Employer’s “select group of management or highly compensated
employees,” as defined in ERISA Sections 201(2), 301(a)(3), and 401(a)(1).

 

Section 2.02. Participation. An Employee who is eligible under Section 2.01
shall become a participant as of the effective date of the Plan, or, if later,
the date the Employee becomes eligible to participate under Section 2.01.

 

Section 2.03. Duration of Participation. A Severed Employee shall cease to
participate in the Plan on the date the Severed Employee is no longer entitled
to a benefit under this Plan.

 

3

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ARTICLE III

 

Benefits

 

Section 3.01. Amount of Severance Benefit. Each Severed Employee shall be
entitled, upon Termination and the execution of all required waivers, to the
severance benefit provided below:

 

 

 

Chief Executive
Officer

 

Executive/Senior
Vice President

 

Vice President

 

Assistant Vice
President

Continuation of Base Salary

 

18 months

 

12 months

 

12 months

 

6 months

 

Section 3.02. Payment of Severance Benefit. A Severed Employee shall receive his
or her severance benefit following the Severed Employee’s execution of all
required and appropriate releases and waivers, to be paid, at the Employer’s
discretion, either in a lump sum payment or in equal monthly installment
payments beginning as soon as practicable but no later than sixty (60) days
following his or her Date of Termination. To the maximum extent permitted under
Code § 409A, the severance benefits payable under this Plan are intended to
comply with the “separation pay exception” under Treas. Reg. §
1.409A-1(b)(9)(iii); provided, however, that any portion of the severance
benefits that exceeds the dollar limitation under Treas. Reg.
§1.409A-1(b)(9)(iii) in effect on the Date of Termination shall be paid in a
single lump sum payment no later than two and one half (2  1/2) months following
the Date of Termination in a manner that is intended to comply with the
“short-term deferral exception” under Treas. Reg. §1.409A-1(b)(4).

 

Section 3.03. Mitigation and Offset. An Employee shall not be required to
mitigate the amount of any payment provided for in this Article by seeking other
employment or otherwise, nor shall the amount of any payment or benefit provided
for in this Article be reduced by any compensation earned by the Employee as the
result of employment by another employer.

 

Section 3.04. Medical and Prescription Coverage. If the Severed Employee elects
continuing group coverage pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”), the Employer shall provide
reimbursement of the Employer and Employee portion of the cost of such
continuation coverage until the earlier of (a) the end of the period the Severed
Employee is receiving Base Salary continuation payments under Section 3.01
above, or (b) such earlier date that the Severed Employee is covered under
another group health plan, subject to the terms of such plan and applicable law.

 

Section 3.05. Cash-Incentive Plan Benefits. All benefits under the
Cash-Incentive Plan for the fiscal year of the Date of Termination shall become
nonforfeitable, subject to the satisfaction of the performance criteria set
forth in such plan. The Severed Employee shall be entitled to payment of an
amount equal to the Severed Employee’s actual base salary multiplied by the
Severed Employee’s bonus target multiplied by the attainment of the performance
criteria as of the end of the fiscal year of the Date of termination Such
benefits shall be paid no later than two and one half (2  1/2) months following
the later of the end of the calendar year that includes the Date of Termination
or the end of the Cash-Incentive Plan fiscal year that includes the Date of
Termination.

 

4

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Section 3.06. Outstanding Equity RSUs. The Severed Employee shall forfeit all
unvested shares or units (“Equity Awards”) outstanding under the Stock-Based
Incentive Compensation Plan for Officers and Key Employees (“Equity Incentive
Plan”) as of the Date of Termination. Notwithstanding the preceding, the
Employer’s Board of Directors may, in its sole discretion, provide that the
Severed Employee’s right to the outstanding Equity Awards shall become 100%
fully vested, and nonforfeitable as of the Date of Termination provided:

 

(i) such accelerated vesting does not accelerate or alter the time and form of
payment of any Equity Award that is subject to the application of Code § 409A,
or

 

(ii) the payment of any Equity Award that is not subject to the application of
Code § 409A shall be made no later than two and one half (2  1/2) months
following the later of the end of the calendar year that includes the Date of
Termination or the end of the Equity Incentive Plan fiscal year that includes
the Date of Termination.

 

Section 3.07. Options. All vested options granted to the Severed Employee that
remain outstanding as of the Date of Termination shall become nonforfeitable.
The Severed Employee may exercise such options for a period of three (3) months
after the Date of Termination (but in no event later than the expiration date of
the option under the terms of the option’s grant). To the extent that the
Severed Employee does not exercise the options within the time specified herein,
the options shall terminate.

 

Section 3.08. Outplacement Services. If requested by Severed Employee, Employer
shall provide Severed Employee with reasonable outplacement counseling and
services through an outplacement specialty firm designated by Employer at the
Employer’s expense. Severed Employee may utilize the outplacement services until
either (i) Severed Employee obtains other employment (full-time or part-time),
or (ii) the expiration of twelve (12) months (six (6) months with respect to an
Assistant Vice President) after Severed Employee begins utilizing the
outplacement services, whichever occurs first.

 

Section 3.09. Reimbursements or In-Kind Benefits. Any reimbursements or in-kind
benefits provided under this Plan that are subject to Code § 409A shall be made
or provided in accordance with the requirements of Code § 409A, including, where
applicable, the requirement that (i) any reimbursement is for expenses incurred
during the period of time specified in the Plan, (ii) the amount of expenses
eligible for reimbursement, or in-kind benefits provided, during a calendar year
may not affect the expenses eligible for reimbursement, or in-kind benefits to
be provided, in any other calendar year, (iii) the reimbursement of an eligible
expense will be made no later than the last day of the calendar year following
the year in which the expense is incurred, and (iv) the right to reimbursement
or in-kind benefits is not subject to liquidation or exchange for another
benefit.

 

5

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ARTICLE IV

 

Amendment and Termination

 

Section 4.01. Amendment and Termination. The Human Resources Committee of the
Employer’s Board of Directors may amend or terminate this Plan at any time.

 

ARTICLE V

 

Non-competition Covenant

 

Section 5.01. Employee’s Promises. Employee shall not for a period of eighteen
(18) months after termination of employment by Employer, either himself or
herself or together with other persons, directly or indirectly, (i) own, manage,
operate, join, control or participate in the ownership, management, operation or
control of or become the employee, consultant or independent contractor of any
business engaged in the research, development, manufacture, sale, marketing or
distribution of stainless steel, titanium, specialty alloys, or metal fabricated
parts or components similar to or competitive with those manufactured by the
Employer as of the date the Employee’s employment with Employer ends; (ii) offer
services to any business that is or has been at any time during a period of
three (3) years prior to the Employee’s termination of employment with Employer
a customer, vendor or contractor of the Employer; or (iii) solicit any employee
of the Employer to terminate his or her employment with the Employer for
purposes of hiring such employee or hire any person who is an employee of the
Employer.

 

Section 5.02. Remedies. Employee acknowledges and agrees that in the event that
Employee breaches any of the covenants in this Article V, the Employer will
suffer immediate and irreparable harm and injury for which the Employer will
have no adequate remedy at law. Accordingly, in the event that Employee breaches
any of the covenants in Article V, the Employer shall be absolutely entitled to
obtain equitable relief, including without limitation temporary restraining
orders, preliminary injunctions, permanent injunctions, and specific
performance. 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 Article to which the Employer may be entitled, the
Employer shall receive attorneys’ fees and any other expenses incident to its
maintenance of any action to enforce its rights under this Agreement.

 

Section 5.03 Severability. The covenants in this Article are severable, and if
any covenant or portion thereof is held to be invalid or unenforceable for any
reason, such covenant or portion thereof shall be modified to the extent
necessary to cure such invalidity or unenforceability and all other covenants
and provisions shall remain valid and enforceable.

 

ARTICLE VI

 

Miscellaneous

 

Section 6.01. Administration. The general administration of the Plan, and the
responsibility for carrying out the provisions hereof, shall be placed in the
Human Resources Committee designated by the Employer.

 

The Human Resources Committee shall have complete discretionary authority to
interpret this Plan and to determine all questions arising in the
administration, construction and application of the Plan. The Human Resources
Committee’s discretionary authority includes, but is not limited to,
determinations of all questions of fact relating to the eligibility of Employees
for benefits under this

 

6

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Plan and the amount of such benefits to which an Employee may become entitled
hereunder. It shall have complete discretion to correct any defect, supply any
omission, reconcile any inconsistency or resolve any ambiguity in such manner
and to such extent as it shall deem necessary to carry out the purpose of this
Plan. The decision of the Human Resources Committee upon all matters within the
scope of its authority shall be final, conclusive and binding on all parties.

 

The Human Resources Committee may appoint such agents, who need not be members
of the Human Resources Committee, as it deems necessary for the effective
exercise of its duties and may delegate to such agents any powers and duties,
both ministerial and discretionary, as the Human Resources Committee may deem
expedient and appropriate.

 

The members of the Human Resources Committee, including any Human Resources
Committee appointee or designee, shall use that degree of care, skill, prudence
and diligence that a prudent person acting in a like capacity and familiar with
such matters would use in the Human Resources Committee member’s conduct of a
similar situation.

 

With respect to the exercise of authority hereunder, and to the extent not
insured by an insurance company pursuant to the provisions of any applicable
insurance policy and to the extent permitted by law and Employer policy, the
Employer may indemnify and hold harmless each member of the Human Resources
Committee against any personal liability or expense incurred as a result of any
act or omission in the capacity as a member of the Human Resources Committee.

 

Section 6.02. Claims. An Employee, who has not begun to receive benefits under
this Plan and who believes he or she is entitled to benefits hereunder, or the
Employee’s representative must submit a claim to the Human Resources Committee
or its designee (the “Administrator”). A claim must be submitted in writing and
in a manner acceptable to the Administrator. A claim will not be considered
complete until the Administrator has received all documentation it has requested
to verify the validity of the claim. If the claim is wholly or partially denied,
the Administrator shall, within 90 days (or in special cases, and upon prior
written notice to the claimant, 180 days) of receipt of the completed claim
inform the claimant of the reason(s) for the denial, the specific reference to
the Plan provisions on which the denial was based, any additional information
that may be necessary to perfect the claim and the procedure for appealing the
denial of the claim.

 

Section 6.03. Appeals. The denial of any claim or application of the provisions
of this Plan must be appealed to the Human Resources Committee by the claimant
within 60 days of notification of such denial. The claimant shall have a right
to review all pertinent documents and submit comments in writing. Any appeal
must include a written statement of the claimant’s position. Upon its receipt of
the appeal the Human Resources Committee shall schedule an opportunity for a
full hearing of the issue and shall review and decide such appeal within 60 days
(or in special cases, and upon prior written notice to the claimant, 120 days)
of receipt of such appeal. Its decision shall be promptly communicated in
writing to the claimant.

 

Section 6.04. Legal Action. An Employee or any person claiming rights through
the Employee must complete the above claims and appeal procedures as a mandatory
precondition to any legal or equitable action in connection with this Plan, and
such legal or equitable action must be filed within 120 days of the receipt of a
final decision regarding the appeal or, if later, within one year of the
Termination (or alleged Termination) of the Employee, or benefits under this
Plan will be irrevocably barred.

 

7

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Section 6.05. Nonalienation of Benefits. None of the payments, benefits or
rights of any Employee shall be subject to any claim of any creditor of such
Employee, and, in particular, to the full extent permitted by law, all such
payments, benefits and rights shall be free from attachment, garnishment,
trustee’s process, or any other legal or equitable process available to any
creditor of such Employee. No Employee shall have the right to alienate,
anticipate, commute, pledge, encumber or assign any of the benefits or payments
which such Employee may expect to receive, contingently or otherwise, under this
Plan.

 

Section 6.06. No Contract of Employment. Neither the establishment of the Plan,
nor any modification thereof, nor the creation of any fund, trust or account,
nor the payment of any benefits shall be construed as giving an Employee, or any
person whomsoever, the right to be retained in the service of any Employer, and
all Employees shall remain subject to discharge to the same extent as if the
Plan had never been adopted.

 

Section 6.07. Severability of Provisions. The invalidity or unenforceability of
any provision of this Plan shall not affect the validity or enforceability of
any other provision of this Plan, which shall remain in full force and effect.

 

Section 6.08. Headings and Captions. The headings and captions herein are
provided for reference and convenience only, shall not be considered part of the
Plan, and shall not be employed in the construction of the Plan.

 

Section 6.09. Unfunded Plan. All payments of monetary benefits provided under
the Plan shall be paid from the general assets of the Employer and no separate
fund shall be established to secure payment of vested amounts. Notwithstanding
the foregoing, the Employer may establish a grantor trust to assist it in
funding Plan obligations; provided, however, that such trust shall at all times
remain located within the United States. Any payments of vested amounts made to
an Employee or other person from any such trust shall relieve the Employer from
any further obligations under the Plan only to the extent of such payment.
Nothing herein shall constitute the creation of a trust or other fiduciary
relationship between the Employer and any other person. No Employee shall have
any right to, or interest in, any particular assets of any Employer which may be
applied by such Employer to the payment of benefits or other rights under this
Plan.

 

Section 6.10. Payments to Incompetent Persons, Etc. Any benefit payable to or
for the benefit of a minor, an incompetent person or other person incapable of
giving a receipt therefor shall be deemed paid when paid to such person’s
guardian or to the party providing or reasonably appearing to provide for the
care of such person, and such payment shall fully discharge the Employer, the
Human Resources Committee and all other parties with respect thereto.

 

Section 6.11. Controlling Law. This Plan shall be construed and enforced
according to the internal laws of the Commonwealth of Pennsylvania to the extent
not preempted by federal law, which shall otherwise control.

 

8

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Section 6.12. Binding Effect. Obligations incurred by the Employer pursuant to
this Plan shall be binding upon and inure to the benefit of the Employer, its
successors and assigns, and the Employee and any beneficiary or other successor
in interest of the Employee.

 

Section 6.13. Code § 409A. The Plan is intended to be exempt from the
application of Code § 409A. To the extent this Plan is determined to be subject
to Code § 409A and a provision of the Plan is contrary to or fails to address
the requirements of Code § 409A and related Treasury Regulations, the Plan shall
be construed and administered as necessary to comply with such requirements to
the extent allowed under applicable Treasury Regulations until the Plan is
appropriately amended to comply with such requirements. Furthermore, to the
extent this Plan is determined to be subject to Code § 409A, any payment made on
account of the Termination of a “specified employee” (as determined under Treas.
Reg. § 1.409A-1(i)) shall be made on the date that is six (6) months after the
date of the Employee’s Termination to the extent necessary to comply with the
requirements of Code § 409A and related Treasury Regulations; provided, however,
that the payments of vested amounts to which the Employee would have been
entitled during such 6-month period, but for this Section, shall be accumulated
and paid to the Employee on the first (1st) day of the seventh (7th) month
following the Employee’s Termination.

 

9

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Exhibit C

 

[Change in Control Severance Plan]

 

C-1

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AMENDED AND RESTATED

CARPENTER TECHNOLOGY CORPORATION

CHANGE IN CONTROL SEVERANCE PLAN

 

INTRODUCTION

 

As is the case with many publicly held corporations, there exists the
possibility of a Change in Control of the Company. This possibility and the
uncertainty it creates may result in the loss or distraction of employees of the
Company and its Subsidiaries to the detriment of the Company and its
stockholders. The avoidance of such loss and distraction is essential to
protecting and enhancing the best interests of the Company and its stockholders.

 

When a Change in Control is perceived as imminent, or is occurring, the Company
should be able to receive and rely on disinterested service from employees
regarding the best interests of the Company and its stockholders without concern
that employees might be distracted or concerned by the personal uncertainties
and risks created by the perception of an imminent or occurring Change in
Control.

 

It is consistent with the employment practices and policies of the Company and
its Subsidiaries and in the best interests of the Company and its stockholders
to treat fairly its employees whose employment terminates in connection with or
following a Change in Control. Accordingly, it has been determined that
appropriate steps should be taken to assure the Company and its Subsidiaries of
the continued employment and attention and dedication to duty of their employees
and to seek to ensure the availability of their continued service,
notwithstanding the possibility, threat or occurrence of a Change in Control.

 

Therefore, in order to fulfill the above purposes, the Carpenter Technology
Corporation Change in Control Severance Plan was developed and adopted.

 

The Company now desires to make certain amendments to the Carpenter Technology
Corporation Change in Control Severance to provide benefits that are more
comparable to other companies in the Company’s industry.

 

Therefore, in order to fulfill the immediately preceding purpose, the Carpenter
Technology Corporation Change in Control Severance Plan has been amended and
restated in its entirety effective September 1, 2010, with the exception of
certain prospective amendments which are effective on such other dates as set
forth herein.

 

ARTICLE I

ESTABLISHMENT OF PLAN

 

As of the Effective Date, the Company hereby establishes a separation
compensation plan known as the Carpenter Technology Corporation Change in
Control Severance Plan, as set forth in this document.

 

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ARTICLE II

DEFINITIONS

 

As used herein the following words and phrases shall have the following meanings
unless the context clearly indicates otherwise:

 

(a) Affiliated Company. Any company controlled by, controlling or under common
control with the Company.

 

(b) Annual Salary. The Participant’s regular annual base salary immediately
prior to his or her termination of employment, including compensation converted
to other benefits under a flexible pay arrangement maintained by the Company or
any Subsidiary or deferred pursuant to a written plan or agreement with the
Company or any Subsidiary, but excluding overtime pay, allowances, premium pay,
compensation paid or payable under any Company bonus or incentive plan of the
Company or any Subsidiary or any similar payment.

 

(c) Board. The Board of Directors of Carpenter Technology Corporation.

 

(d) Cause. With respect to any Participant: (i) the willful and continued
failure of the Participant to perform substantially the Participant’s duties
with the Company or any Subsidiary (other than any such failure resulting from
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to the Participant by an executive officer
of the Company which specifically identifies the manner in which the executive
officer believes that the Participant has not substantially performed the
Participant’s duties, or (ii) the willful engaging by the Participant in illegal
conduct or gross misconduct which is materially and demonstrably injurious to
the Company or any Subsidiary. For purposes of this definition, no act or
failure to act on the part of the Participant shall be considered “willful”
unless it is done, or omitted to be done, by the Participant in bad faith or
without reasonable belief that the Participant’s action or omission was in the
best interests of the Company or any Subsidiary. Any act or failure to act based
upon authority (A) given pursuant to a resolution duly adopted by the Board, or
if the Company is not the ultimate parent corporation of the Affiliated
Companies and is not publicly-traded, the board of directors of the ultimate
parent of the Company, (B) upon the instructions of the Chief Executive Officer
or another executive officer of the Company or any Subsidiary or (C) based upon
the advice of counsel for the Company shall be conclusively presumed to be done,
or omitted to be done, by the Participant in good faith and in the best
interests of the Company. Effective on the later of September 1, 2013 or the
third anniversary of the date on which notice of the amendment of this section
of the Plan is provided to Participants, “Cause” shall mean any termination of a
Participant’s employment with the Company or a Subsidiary which results from:

 

(i) Participant’s conviction of a crime involving moral turpitude;

 

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(ii) Participant becoming incapable of performing the duties of his or her
employment with Company or Subsidiary due to loss or suspension of any license
or certification required for the performance of those duties;

 

(iii) conduct by Participant that is found by Company or Subsidiary to
constitute fraud, embezzlement, or theft that occurs during or in the course of
Participant’s employment with Company or Subsidiary;

 

(iv) intentional damage by Participant to Company’s or Subsidiary’s assets or
property or the assets or property of Company’s or Subsidiary’s customers,
vendors, or employees;

 

(v) intentional disclosure by Participant of Company’s or Subsidiary’s
confidential information contrary to Company’s or Subsidiary’s policies or
instructions received by Participant during or in the course of Participant’s
employment with Company or Subsidiary;

 

(vi) intentional engagement by Participant in any activity which would
constitute a breach of duty of loyalty to Company or Subsidiary;

 

(vii) conduct by Participant found by Company or Subsidiary to constitute a
willful and continued failure or refusal by Participant to substantially perform
Participant’s duties for Company or Subsidiary (except as a result of incapacity
due to physical or mental illness);

 

(viii) Participant’s failure to comply with Company’s or Subsidiary’s policies
or practices despite having been advised and/or instructed regarding those
policies or practices; or

 

(ix) conduct by Participant that is demonstrably and materially injurious to
Company or Subsidiary, monetarily or otherwise, as determined by Company or
Subsidiary, including injury to Company’s or Subsidiary’s reputation or conduct
by Participant otherwise having an adverse affect upon Company’s or Subsidiary’s
interests, as determined by Company or Subsidiary.

 

(e) Change in Control. The occurrence of any of the following events:

 

(i) Any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a “Person”) becomes the beneficial owner (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of more than 50% of either
(x) the then-outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”) or (y) the combined voting power of the then-outstanding
voting securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however,
that,

 

3

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for purposes of this subsection (i), the following acquisitions shall not
constitute a Change in Control: (A) any acquisition directly from the Company,
(B) any acquisition by the Company, (C) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any Affiliated
Company, or (D) any acquisition pursuant to a transaction that complies with
clauses (A), (B), and (C) of paragraph (iii) of this definition of Change in
Control;

 

(ii) Individuals who, as of the date hereof, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board during any 12 month period; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or nomination
for election by the Company’s stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board;

 

(iii) Consummation of a reorganization, merger, statutory share exchange or
consolidation or similar transaction involving the Company or any of its
subsidiaries, a sale or other disposition of all or substantially all of the
assets of the Company or the acquisition of the assets or stock of another
entity by the Company or any of its subsidiaries (each, a “Business
Combination”), in each case, unless, following such Business Combination,
(A) all or substantially all of the individuals and entities that were the
beneficial owners of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the then-outstanding
shares of common stock (or, for a non-corporate entity, equivalent securities)
and the combined voting power of the then-outstanding voting securities entitled
to vote generally in the election of directors (or, for a non-corporate entity,
equivalent governing body), as the case may be, of the entity resulting from
such Business Combination (including, without limitation, an entity that, as a
result of such transaction, owns the Company or all or substantially all of the
Company’s assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership immediately prior to such
Business Combination of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities, as the case may be, (B) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit
plan (or related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then-outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then-outstanding voting securities of such corporation, except to the extent
that such ownership existed prior to the Business Combination, and (C) at least
a majority of the members of the board of directors (or, for a non-corporate
entity, equivalent governing body) of the entity resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement or of the action of the Board providing for such Business
Combination; or

 

4

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(iv) Approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.

 

(f) Code. The Internal Revenue Code of 1986, as amended from time to time.

 

(g) Committee. The Human Resources Committee of the Board.

 

(h) Company. Carpenter Technology Corporation and any successor or assignee to
the business or assets which becomes bound by this Plan by reason of Article V.

 

(i) Date of Termination. The date on which a Participant ceases to be an
Employee of an Employer within the meaning of Treasury Regulation
Section 1.409A-1(h) and which constitutes a “separation from service.”

 

(j) Disability. A qualified physician designated by the Company or a Subsidiary
has reviewed and approved the determination that a Participant is either:

 

(i) unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, or

 

(ii) by reason of any medically determinable physical or mental impairment which
can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, receiving income replacement benefits for a
period of not less than 3 months under an accident and health plan covering
employees of the Company or a Subsidiary.

 

(k) Effective Date. August 20, 2007.

 

(l) Employee. A full-time employee of an Employer and a member of the Employer’s
“select group of management or highly compensated employees,” as defined in
ERISA Sections 201(2), 301(a)(3), and 401(a)(1).

 

(m) Employer. The Company or any Subsidiary (or any parent corporation of the
Company or any of such parent corporation’s subsidiaries) by which a Participant
is employed.

 

(n) ERISA. The Employee Retirement Income Security Act of 1974, as amended from
time to time.

 

(o) Good Reason. With respect to any Participant, without such Participant’s
written consent, actions taken by the Company resulting in a material negative
change in the employment relationship. For these purposes, a “material negative
change in the employment relationship” includes: (i) any reduction in the
Participant’s Annual Salary or Target Annual

 

5

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Bonus opportunity, as in effect during the 120-day period immediately preceding
the Change in Control (or as such amounts may be increased from time to time),
other than as a result of an isolated and inadvertent action not taken in bad
faith; (ii) the Employer requiring the Participant to relocate his or her
principal place of business to a location which is more than 35 miles from his
or her previous principal place of business; (iii) the assignment to the
Participant of any duties inconsistent in any material and adverse respect with
the duties assigned to the Participant during the 120-day period immediately
prior to a Change in Control, other than an isolated, insubstantial and
inadvertent action that is not taken in bad faith; or (iv) any material
reduction in benefits of the Participant, as in effect during the 120-day period
immediately preceding the Change in Control, other than as a result of an
isolated and inadvertent action not taken in bad faith; provided, however, that
no material reduction shall be deemed to have occurred following a Change in
Control if the benefits provided to the Participant are (A) reasonably
equivalent to the benefits provided to similarly situated employees of the
company resulting from a Business Combination and its subsidiaries, and
(B) comparable to the benefits provided to the Participant immediately prior to
the Change in Control; (v) any purported termination of the Plan otherwise than
as expressly permitted by the Plan; or (vi) any failure by the Employer to
comply with and satisfy Article VI of the Plan. Notwithstanding the foregoing, a
Participant’s mental or physical incapacity following the occurrence of a
material negative change in the employment relationship shall not affect a
Participant’s ability to terminate employment for Good Reason. In order to
invoke a termination for Good Reason, the Participant shall provide written
notice to the Company of the existence of one or more of the conditions
described in clauses (i) through (iv) within 90 days after the Participant has
knowledge of such condition or conditions, and the Company shall have 30 days
following receipt of such written notice (the “Cure Period”) during which it may
remedy the condition. In the event that the Company fails to remedy the
condition constituting Good Reason during the Cure Period, the Participant must
terminate employment, if at all, within 90 days following the Cure Period in
order to terminate employment for Good Reason. Effective on the later of
September 1, 2013 or the third anniversary of the date on which notice of the
amendment of this section of the Plan is provided to Participants, “Good Reason”
shall mean a Participant’s voluntary termination of employment within the ninety
(90) day period following the initial existence of one or more of the following
conditions arising without the Participant’s consent:

 

(i) a material diminution in the Participant’s Annual Salary;

 

(ii) a material permanent diminution in the Participant’s authority, duties, or
responsibilities;

 

(iii) a material change in the geographic location at which the Participant must
perform services which is at least fifty (50) miles from his or her current
principal place of work;

 

(iv) change in title from Chief Executive Officer or Chief Financial Officer to
a non-Chief Executive Officer or non-Chief Financial Officer title; or

 

6

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(v) any other action or inaction that constitutes a material breach by the
Company or a Subsidiary of any employment agreement between the Participant and
the Company or Subsidiary; and

 

within thirty (30) days following the initial existence of a condition described
in subsections (i) through (iv) above, the Participant must provide notice to
the Company or Subsidiary of the existence of the condition, and the Company or
Subsidiary must fail to remedy the condition within thirty (30) days of receipt
of such notice.

 

(p) Participant. Any Employee whose employment is classified as job class 9 or
above and any other Employee employed by the Company or any of its Affiliated
Companies in an equivalent position who is designated as a Participant by the
Chief Executive Officer of the Company; provided, however, that no individual
who is a party to a separately executed change in control or similar agreement
with the Company or any of its Affiliated Companies entered into prior to a
Change in Control shall be a Participant so long as such agreement remains in
force. Each individual who is a Participant immediately prior to a Change in
Control shall remain a Participant at least until the second anniversary of the
Change in Control. Notwithstanding the foregoing, individuals employed primarily
outside of the United States are not eligible to be Participants. Effective on
the later of September 1, 2013 or the third anniversary of the date on which
notice of the amendment of this section of the Plan is provided to Participants,
this subsection shall be applied by substituting “Job Profile E1 or above” for “
job class 9 or above.”

 

(q) Plan. Amended and Restated Carpenter Technology Corporation Change in
Control Severance Plan.

 

(r) Separation Benefits. The benefits described in Section 4.2 and Appendices A,
B and C that are provided to qualifying Participants under the Plan.

 

(s) Subsidiary. Any corporation in which the Company, directly or indirectly,
holds a majority of the voting power of such corporation’s outstanding shares of
capital stock.

 

(t) Target Annual Bonus. The Participant’s target bonus under the Company’s
annual incentive plans for the fiscal year in which such Participant’s Date of
Termination occurs (or, if no target bonus has been set for such fiscal year,
the Participant’s target bonus for the immediately preceding fiscal year).

 

ARTICLE III

ELIGIBILITY

 

A Participant shall cease to be a Participant in the Plan only as a result of an
amendment or termination of the Plan complying with Article VI of the Plan, or
when the Participant ceases to be an Employee of any Employer, unless, at the
time the Participant ceases to be an Employee, such Participant is entitled to
payment of a Separation Benefit as provided in the Plan. A Participant entitled
to payment of a Separation Benefit or any other amounts under the Plan shall
remain a Participant in the Plan until the full amount of the Separation Benefit
and any other amounts payable under the Plan have been paid to the Participant.

 

7

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ARTICLE IV

SEPARATION BENEFITS

 

3.1 Terminations of Employment Which Give Rise to Separation Benefits Under This
Plan. A Participant shall be entitled to Separation Benefits as set forth in
Section 4.2 below if, at any time during the two-year period immediately
following a Change in Control, the Participant’s employment is terminated (i) by
the Employer for any reason other than Cause, death, or Disability or (ii) by
the Participant for Good Reason.

 

3.2 Separation Benefits. If a Participant’s employment is terminated in
circumstances entitling such participant to Separation Benefits pursuant to
Section 4.1, the Company shall provide to such Participant, within ten days
following the Date of Termination, a lump sum cash payment and the continued
benefits and outplacement as set forth in Appendix A, B or C, as applicable, For
purposes of determining the benefits set forth in Appendix A, B or C, if the
termination of the Participant’s employment is for Good Reason based upon a
reduction of the Participant’s Annual Salary, opportunity to earn Target Annual
Bonuses, or other compensation or employee benefits, such reduction shall be
ignored.

 

3.3 Other Benefits Payable. To the extent not theretofore paid or provided, the
Company shall timely pay or provide (or cause to be paid or provided) to a
Participant entitled to the Separation Benefits, any amounts or benefits
required to be paid or provided to the Participant, or which the Participant is
eligible to receive, under the General Retirement Plan for Employees of
Carpenter Technology Corporation (the “GRP”), and the Separation Benefits shall
be reduced, dollar for dollar (but not below zero), by any amounts received by
the Participant pursuant to the GRP. Any other severance pay or pay in lieu of
notice required to be paid to such Participant under applicable law or under any
other severance pay plan or policy of the Company or any Employer, including,
without limitation, under the Severance Pay Plan for Salaried Employees of
Carpenter Technology Corporation (but excluding the GRP) shall be reduced,
dollar for dollar (but not below zero), by the Separation Benefits. The
Separation Benefits shall in no event affect a Participant’s eligibility for or
entitlement to benefits under the GRP or any other qualified or nonqualifed
retirement or pension benefit or welfare or fringe benefit plan, program,
policy, practice, contract or agreement of the Company and its Affiliated
Companies. Without limiting the generality of the foregoing, the Participant’s
resignation under this Agreement with or without Good Reason, shall in no way
affect the Participant’s ability to terminate employment by reason of the
Participant’s “retirement” under any compensation and benefits plans, programs
or arrangements of the Affiliated Companies, including without limitation any
retirement or pension plans or arrangements or to be eligible to receive
benefits

 

8

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under any compensation or benefit plans, programs or arrangements of the
Affiliated Companies, including without limitation any retirement or pension
plan or arrangement of the Affiliated Companies or substitute plans adopted by
the Company or its successors, and any termination which otherwise qualifies as
Good Reason shall be treated as such even if it is also a “retirement” for
purposes of any such plan.

 

3.4 Certain Reduction of Payments by the Company.

 

(a) Reduction of Certain Payments. For purposes of this Section 4.4: (i) a
“Payment” shall mean any payment or distribution in the nature of compensation
to or for the benefit of the Participant, whether paid or payable pursuant to
this Plan or otherwise; (ii) “Plan Payment” shall mean a Payment paid or payable
pursuant to this Plan (disregarding this Section 4.4); (iii) “Present Value”
shall mean such value determined in accordance with Sections
280G(b)(2)(A)(ii) and 280G(d)(4) of the Code; and (iv) “Reduced Amount” shall
mean an amount expressed in Present Value that maximizes the aggregate Present
Value of Plan Payments without causing any Payment to be nondeductible by the
Company or Employer because of Section 280G of the Code.

 

(b) Anything in this Plan to the contrary notwithstanding, in the event
PricewaterhouseCoopers LLP or such other accounting firm selected by the Company
prior to the Change in Control (the “Accounting Firm”) shall determine that
receipt of all Payments would subject the Participant to tax under Section 4999
of the Code, the aggregate Plan Payments shall be reduced (but not below zero)
to meet the definition of Reduced Amount.

 

(c) If the Accounting Firm determines that aggregate Plan Payments should be
reduced to the Reduced Amount, the Company shall promptly give the Participant
notice to that effect and a copy of the detailed calculation thereof, and the
Participant may then elect, in his or her sole discretion, which and how much of
the Plan Payments shall be eliminated or reduced (as long as after such election
the Present Value of the aggregate Plan Payments equals the Reduced Amount), and
shall advise the Company in writing of his or her election within 30 days of his
or her receipt of notice. If no such election is made by the Participant within
such 30-day period, the Company may elect which of such Plan Payments shall be
eliminated or reduced (as long as after such election the Present Value of the
aggregate Plan Payments equals the Reduced Amount) and shall notify the
Participant promptly of such election. All determinations made by the Accounting
Firm under this Section shall be binding upon the Company and the Participant
and shall be made within 60 days of a termination of employment of the
Participant. As promptly as practicable following such determination, the
Company shall pay to or distribute for the benefit of the Participant such Plan
Payments as are then due to the Participant under this Plan and shall promptly
pay to or distribute for the benefit of the Participant in the future such Plan
Payments as become due to the Participant under this Plan.

 

(d) As a result of the uncertainty in the application of Section 4999 of the
Code at the time of the initial determination by the Accounting Firm hereunder,
it is possible that amounts will have been paid or distributed by the Company to
or for the benefit of the

 

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Participant pursuant to this Plan which should not have been so paid or
distributed (“Overpayment”) or that additional amounts which will have not been
paid or distributed by the Company to or for the benefit of the Participant
pursuant to this Plan could have been so paid or distributed (“Underpayment”),
in each case, consistent with the calculation of the Reduced Amount hereunder.
In the event that the Accounting Firm, based upon the assertion of a deficiency
by the Internal Revenue Service against either the Company or the Participant
which the Accounting Firm believes has a high probability of success determines
that an Overpayment has been made, any such Overpayment paid or distributed by
the Company to or for the benefit of the Participant shall be treated for all
purposes as a loan to the Participant which the Participant shall repay to the
Company together with interest at the applicable federal rate provided for in
Section 7872(f)(2) of the Code; provided, however, that no such loan shall be
deemed to have been made and no amount shall be payable by the Participant to
the Company if and to the extent such deemed loan and payment would not either
reduce the amount on which the Participant is subject to tax under Section 1 and
Section 4999 of the Code or generate a refund of such taxes. In the event that
the Accounting Firm, based upon controlling precedent or substantial authority,
determines that an Underpayment has occurred, any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Participant together
with interest at the applicable federal rate provided for in
Section 7872(f)(2) of the Code.

 

(e) All fees and expenses of the Accounting Firm in implementing the provisions
of this Section 4.4 shall be borne by the Company.

 

ARTICLE V

SUCCESSOR TO COMPANY

 

4.1 This Plan shall bind any successor of the Company or to all or substantially
all of its assets or its businesses (whether direct or indirect, by purchase,
merger, consolidation or otherwise), in the same manner and to the same extent
that the Company would be obligated under this Plan if no succession had taken
place.

 

4.2 In the case of any transaction in which a successor would not by the
foregoing provision or by operation of law be bound by this Plan, the Company
shall require such successor expressly and unconditionally to assume and agree
to perform the Company’s obligations under this Plan, in the same manner and to
the same extent that the Company would be required to perform if no such
succession had taken place.

 

ARTICLE VI

DURATION, AMENDMENT AND TERMINATION

 

5.1 Duration of Plan. If a Change in Control has not occurred and the Board does
not have knowledge of an event that could reasonably be expected to constitute a
Change in Control, this Plan may be terminated by resolution adopted by the
Board; provided that the

 

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Participants are given written notice of such termination three years in advance
of such termination. If a Change in Control occurs while this Plan is in effect,
this Plan shall continue in full force and effect for at least two years
following such Change in Control, and shall not terminate or expire until after
all Participants who become entitled to any payments hereunder shall have
received such payments in full.

 

5.2 Amendment or Termination. The Board may amend or terminate this Plan;
provided, that this Plan may not be terminated or amended in a manner adverse to
Participants prior to the third anniversary of the date on which notice of such
amendment or termination is provided to the Participants or during the two-year
period following a Change in Control.

 

5.3 Procedure for Extension, Amendment or Termination. Any extension, amendment
or termination of this Plan by the Board in accordance with the foregoing shall
be made by action of the Board in accordance with the Company’s charter and
by-laws and applicable law.

 

5.4 Delegation of Power to Amend or Termination. The powers of the Board under
this Section 6 may be delegated to the Human Resources Committee of the Board.

 

ARTICLE VII

MISCELLANEOUS

 

6.1 Full Settlement. The Company’s obligation to make the payments provided for
under this Plan and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against a Participant or others. In no
event shall a Participant be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Participant
under any of the provisions of this Plan and such amounts shall not be reduced
whether or not the Participant obtains other employment. The Company agrees to
pay as incurred, to the full extent permitted by law, all legal fees and
expenses which a Participant may reasonably incur as a result of any contest by
the Company, the Participant or others of the validity or enforceability of, or
liability under, any provision of this Plan or any guarantee of performance
thereof (including as a result of any contest by the Participant about the
amount of any payment pursuant to this Plan), provided, that the Participant
shall be required to reimburse the Company for such payments if the Participant
does not prevail on substantially all of the issues in connection with such
dispute.

 

6.2 Employment Status. This Plan does not constitute a contract of employment or
impose on the Participant or the Participant’s Employer any obligation for the
Participant to remain an Employee or change the status of the Participant’s
employment or the policies of the Company and its Subsidiaries regarding
termination of employment. For purposes of this Plan, employment with any of the
Company’s Subsidiaries or any parent corporation of the Company or any of its
subsidiaries shall be treated as continued employment with the Company.

 

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6.3 Confidential Information. Each Participant shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its Affiliated Companies,
and their respective businesses, which shall have been obtained by the
Participant during the Participant’s employment by the Company or any of its
Affiliated Companies and which shall not be or become public knowledge (other
than by acts by the Participant or representatives of the Participant in
violation of this Plan). After termination of a Participant’s employment with
the Company, the Participant shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted violation of the
provisions of this Section 7.3 constitute a basis for deferring or withholding
any amounts otherwise payable under this Plan.

 

6.4 Named Fiduciary; Administration. The Company is the named fiduciary of the
Plan, and shall administer the Plan, acting through the Plan Committee of the
GRP (the “Administrative Committee”).

 

6.5 Claim Procedure. If an Employee or former Employee makes a written request
alleging a right to receive benefits under this Plan or alleging a right to
receive an adjustment in benefits being paid under the Plan, the Company shall
treat it as a claim for benefit. All claims for benefit under the Plan shall be
sent to the Administrative Committee and must be received within 30 days after
termination of employment. If the Company determines that any individual who has
claimed a right to receive benefits, or different benefits, under the Plan is
not entitled to receive all or any part of the benefits claimed, it will inform
the claimant in writing of its determination and the reasons therefor in a
manner calculated to be understood by the claimant. The notice will be sent
within 60 days of the claim. The notice shall make specific reference to the
reasons for denial and pertinent Plan provisions on which the denial is based,
and describe any additional material or information necessary for the claim to
succeed and a description of why it is necessary. Such notice shall, in
addition, inform the claimant what procedure the claimant should follow to take
advantage of the review procedures set forth below in the event the claimant
desires to contest the denial of the claim. The claimant may within 90 days
thereafter submit in writing to the Company a notice that the claimant contests
the denial of his or her claim by the Company and desires a further review. The
Administrative Committee shall within 60 days thereafter review the claim and
authorize the claimant to appear personally and review pertinent documents and
submit issues and comments relating to the claim to the persons responsible for
making the determination on behalf of the Company. The Company will render its
final decision with specific reasons therefor and in a manner calculated to be
understood by the claimant, and will transmit it to the claimant within 60 days
of the written request for review. If the Company fails to respond to a claim
filed in accordance with the foregoing within 60 days, the Company shall be
deemed to have denied the claim. This Section 7.5 shall not serve to prohibit
any Participant from bringing an action in a court of competent

 

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jurisdiction to enforce his or her rights under the Plan after satisfaction of
the foregoing procedures. Notwithstanding the foregoing, the claims and appeals
procedure provided for in this Section 7.5 will be provided for the use and
benefit of Participants who may choose to use such procedures, but compliance
with the provisions of these claims and appeals procedures will not be mandatory
for any Participant claiming benefits after a Change in Control. It will not be
necessary for any Participant to exhaust these procedures and remedies after a
Change in Control prior to bringing any legal claim or action, or asserting any
other demand, for payments or other benefits to which such participant claims
entitlement.

 

6.6 Unfunded Plan Status. All payments pursuant to the Plan shall be made from
the general funds of the Company and no special or separate fund shall be
established or other segregation of assets made to assure payment. No
Participant or other person shall have under any circumstances any interest in
any particular property or assets of the Company as a result of participating in
the Plan. Notwithstanding the foregoing, the Company may (but shall not be
obligated to) create one or more grantor trusts, the assets of which are subject
to the claims of the Company’s creditors, to assist it in accumulating funds to
pay its obligations under the Plan.

 

6.7 Validity and Severability. The invalidity or unenforceability of any
provision of the Plan shall not affect the validity or enforceability of any
other provision of the Plan, which shall remain in full force and effect, and
any prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

 

6.8 Governing Law. The validity, interpretation, construction and performance of
the Plan shall in all respects be governed by the laws of the State of Delaware
without reference to principles of conflict of law, except to the extent
pre-empted by Federal law.

 

6.9 Top-Hat Plan. For purposes of ERISA, the Plan is intended to constitute a
“top-hat” plan, as described in Sections 201(2), 301(a)(3), and 401(a)(1) of
ERISA and the regulations promulgated thereunder.

 

6.10 Section 409A. Notwithstanding any provision of this Agreement to the
contrary, to the extent that the benefits provided under subsections (b) and
(c) of Appendices A, B and C, Section 4.4, and Section 7.1 are not “disability
pay” or “death benefit” plans within the meaning of Treasury Regulation
Section 1.409A-1(a)(5), then (i) the amount of such benefits provided during one
calendar year shall not affect the amount of such benefits provided in any other
taxable year, except to the extent such benefits consist of the reimbursement of
expenses referred to in Section 105(b) of the Code in which case a limitation
may be imposed on the amount of such reimbursements as described in Treasury
Regulation Section 1.409A-3(i)(1)(iv)(B); (ii) any benefits that are
reimbursements must be made on or before the last day of the calendar year
following the calendar year in which the fee or expense was incurred (provided,
that the Participant shall have submitted an invoice for such fee or expense at
least 10 days before the end of the calendar year next following the calendar
year in which such fee or expense was incurred) or, in the case of the benefits
under Section 4.4, the tax was due to the

 

13

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applicable taxing authority; and (iii) to the extent any such benefit is an
in-kind benefit, such benefit may not be liquidated or exchanged for another
benefit. In addition, within the time period permitted by the applicable
Treasury Regulations, the Company may, in consultation with the Participant,
modify the Agreement, in the least restrictive manner necessary and without any
diminution in the value of the payments to the Participant, in order to cause
the provisions of the Agreement to comply with the requirements of Section 409A
of the Code, so as to avoid the imposition of taxes and penalties on the
Participant pursuant to Section 409A of the Code. The Plan is intended to be
exempt from the application of Code Section 409A. To the extent this Plan is
determined to be subject to Code Section 409A and a provision of the Plan is
contrary to or fails to address the requirements of Code Section 409A and
related Treasury Regulations, the Plan shall be construed and administered as
necessary to comply with such requirements to the extent allowed under
applicable Treasury Regulations until the Plan is appropriately amended to
comply with such requirements. Furthermore, to the extent this Plan is
determined to be subject to Code Section 409A, any payment made on account of
the termination of a “specified employee” (as determined under Treas. Reg.
§1.409A-1(i)) shall be made on the date that is six (6) months after the
Employee’s Date of Termination to the extent necessary to comply with the
requirements of Code Section 409A and related Treasury Regulations; provided,
however, that the payments of vested amounts to which the Employee would have
been entitled during such 6-month period, but for this Section, shall be
accumulated and paid to the Employee on the first (1st) day of the seventh (7th)
month following the Employee’s Date of Termination.

 

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APPENDIX A

 

(E4 PROFILE)

 

If the Participant is a Chief Executive Officer of the Employer on the Date of
Termination, he or she shall receive the following Separation Benefits in
accordance with Section 4.2.

 

(a) A cash lump sum which shall be the aggregate of the amounts set forth in
clauses (i), (ii), (iii) and (iv):

 

(i) the sum of (A) any portion of the Participant’s Annual Salary earned through
the Date of Termination that was not previously paid and (B) any accrued
vacation pay, in each case to the extent not theretofore paid and in full
satisfaction of the rights of the Participant thereto;

 

(ii) an amount equal to three (3) times the Participant’s Annual Salary;

 

(iii) an amount equal to one (1) times the Participant’s Target Annual Bonus;
and

 

(iv) an amount equal to eighteen (18) months of the Employer and Employee
portion of the cost at the Date of Termination of continuing group medical,
prescription and dental coverage pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”), with interest on the amount at
the applicable federal rate provided for in Section 7872(f)(2) of the Code.

 

(b) The Company shall at its sole expense provide the Participant with
reasonable outplacement services during the one-year period following the
Participant’s Date of Termination. The Participant shall not, however, be
entitled to any payment in lieu of accepting outplacement assistance services.

 

(c) If the Participant (and eligible family members) elect COBRA, the Employer
shall continue coverage until the earlier of (a) the end of the COBRA period, or
(b) such earlier date that the Participant is covered under another group health
plan, subject to the terms of such plan and applicable law.

 

(d) Any reimbursements or in-kind benefits provided under this Plan that are
subject to Code Section 409A shall be made or provided in accordance with the
requirements of Code Section 409A, including, where applicable, the requirement
that (i) any reimbursement is for expenses incurred during the period of time
specified in the Plan, (ii) the amount of expenses eligible for reimbursement,
or in-kind benefits provided, during a calendar year may not affect the expenses
eligible for reimbursement, or in-kind benefits to be provided, in any other
calendar year, (iii) the

 

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reimbursement of an eligible expense will be made no later than the last day of
the calendar year following the year in which the expense is incurred, and
(iv) the right to reimbursement or in-kind benefits is not subject to
liquidation or exchange for another benefit.

 

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APPENDIX B

 

(E3 PROFILE)

 

If the Participant is an Executive Vice President or Senior Vice President of
the Employer on the Date of Termination, he or she shall receive the following
Separation Benefits in accordance with Section 4.2.

 

(a) A cash lump sum which shall be the aggregate of the amounts set forth in
clauses (i), (ii), (iii) and (iv):

 

(i)             the sum of (A) any portion of the Participant’s Annual Salary
earned through the Date of Termination that was not previously paid and (B) any
accrued vacation pay, in each case to the extent not theretofore paid and in
full satisfaction of the rights of the Participant thereto;

 

(ii)          an amount equal to two (2) times the Participant’s Annual Salary;

 

(iii)       an amount equal to one (1) times the Participant’s Target Annual
Bonus; and

 

(iv)      an amount of six (6) months of the Employer and Employee portion of
the cost at the Date of Termination of continuing group medical, prescription
and dental coverage pursuant to the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended (“COBRA”), with interest on the amount at the applicable
federal rate provided for in Section 7872(f)(2) of the Code.

 

(b) The Company shall at its sole expense provide the Participant with
reasonable outplacement services during the one-year period following the
Participant’s Date of Termination. The Participant shall not, however, be
entitled to any payment in lieu of accepting outplacement assistance services.

 

(c) If the Participant (and eligible family members) elect COBRA, the Employer
shall continue coverage until the earlier of (a) the end of the COBRA period, or
(b) such earlier date that the Participant is covered under another group health
plan, subject to the terms of such plan and applicable law.

 

(d)         Any reimbursements or in-kind benefits provided under this Plan that
are subject to Code Section 409A shall be made or provided in accordance with
the requirements of Code Section 409A, including, where applicable, the
requirement that (i) any reimbursement is for expenses incurred during the
period of time specified in the Plan, (ii) the amount of expenses eligible for
reimbursement, or in-kind benefits

 

17

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provided, during a calendar year may not affect the expenses eligible for
reimbursement, or in-kind benefits to be provided, in any other calendar year,
(iii) the reimbursement of an eligible expense will be made no later than the
last day of the calendar year following the year in which the expense is
incurred, and (iv) the right to reimbursement or in-kind benefits is not subject
to liquidation or exchange for another benefit.

 

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APPENDIX C

 

(E1/E2 PROFILE)

 

If the Participant is a Vice President or Assistant Vice President of the
Employer on the Date of Termination, he or she shall receive the following
Separation Benefits in accordance with Section 4.2.

 

(a) A cash lump sum which shall be the aggregate of the amounts set forth in
clauses (i), (ii) and (iii):

 

(i) the sum of (A) any portion of the Participant’s Annual Salary earned through
the Date of Termination that was not previously paid and (B) any accrued
vacation pay, in each case to the extent not theretofore paid and in full
satisfaction of the rights of the Participant thereto;

 

(ii) an amount equal to one (1) times the Participant’s Annual Salary; and

 

(iii) an amount equal to one (1) times the Participant’s Target Annual Bonus.

 

(b) The Company shall at its sole expense provide the Participant with
reasonable outplacement services during the one-year period following the
Participant’s Date of Termination. The Participant shall not, however, be
entitled to any payment in lieu of accepting outplacement assistance services.

 

(c) If the Participant (and eligible family members) elect COBRA, the Employer
shall continue coverage until the earlier of (a) six months before the end of
the COBRA period, or (b) such earlier date that the Participant is covered under
another group health plan, subject to the terms of such plan and applicable law.

 

(d) Any reimbursements or in-kind benefits provided under this Plan that are
subject to Code Section 409A shall be made or provided in accordance with the
requirements of Code Section 409A, including, where applicable, the requirement
that (i) any reimbursement is for expenses incurred during the period of time
specified in the Plan, (ii) the amount of expenses eligible for reimbursement,
or in-kind benefits provided, during a calendar year may not affect the expenses
eligible for reimbursement, or in-kind benefits to be provided, in any other
calendar year, (iii) the reimbursement of an eligible expense will be made no
later than the last day of the calendar year following the year in which the
expense is incurred, and (iv) the right to reimbursement or in-kind benefits is
not subject to liquidation or exchange for another benefit.

 

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