Exhibit 10.4

CARPENTER TECHNOLOGY CORPORATION

STOCK-BASED INCENTIVE COMPENSATION PLAN
FOR OFFICERS AND KEY EMPLOYEES

ONE-YEAR PERFORMANCE
STOCK UNIT AWARD AGREEMENT

AGREEMENT, effective as of [DATE] (the “Award Date”) by and between CARPENTER
TECHNOLOGY CORPORATION (the “Company”) and [PARTICIPANT] (the “Participant”).
Capitalized terms that are not defined in this Agreement have the same meaning
as defined in the CARPENTER TECHNOLOGY CORPORATION STOCK-BASED INCENTIVE
COMPENSATION PLAN FOR OFFICERS AND KEY EMPLOYEES (the “Plan”), a copy of which
is attached. The terms, conditions and provisions of the Plan are applicable to
this Award Agreement and are incorporated by reference.

1. Grant of Award. Participant has been granted an Award of Performance Stock
Units under the Plan comprised of an aggregate of the number of Performance
Stock Units set forth below (collectively, the “Units”).

2. Performance Goal. Performance Stock Units awarded hereunder shall become
Earned Units based on the attainment of the Performance Goals during the
Performance Period, both as set forth on Schedule A, provided that the
Participant remains continuously employed by the Company or a Subsidiary
throughout the Performance Period, except as otherwise provided in Section 5
hereof. Any Performance Stock Units which do not become Earned Units shall be
forfeited.

3. Duration of Restriction Period. Earned Units are subject to forfeiture if the
Participant does not remain continuously employed by the Company or a Subsidiary
throughout the Restriction Period, except as provided in Section 5 hereof. The
Restriction Period with respect to the Earned Units will commence on the first
day of the Performance Period and shall lapse on ____________, 20 for 50% of the
Earned Units and __________, 20____ for the remainder of the Earned Units.
    
4. Conditions of Forfeiture. Subject to the provisions of Section 5 hereof, the
Units are subject to forfeiture by Participant at any time during the applicable
Restriction Period immediately upon termination of Participant’s employment with
the Company or a Subsidiary. Upon any such forfeiture, all rights of Participant
with respect to the forfeited Units shall terminate and Participant shall have
no further interest of any kind therein.

5. Lapse of Restrictions on Death, Disability or Retirement.

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Exhibit 10.4

(a). During the Performance Period. Notwithstanding any provision hereof to the
contrary, in the event of termination of Participant’s employment prior to the
end of the Performance Period by reason of (i) death, (ii) Disability or (iii)
unless otherwise determined by the Committee, Retirement, the Units shall not be
forfeited and the Participant shall be vested in not less than a pro rata
portion of the Units that become Earned Units at the expiration of the
Performance Period, based on the number of days during the applicable
Restriction Period during which the Participant was employed. Upon a
Participant’s Retirement all unvested Earned Units shall be forfeited; provided
however, that the Committee reserves the right to vest unvested Earned Units.

(b). Following the Performance Period. Notwithstanding any provision hereof to
the contrary, in the event of termination of Participant’s employment after the
expiration of the Performance Period but prior to the end of the Restriction
Period by reason of (i) death, or (ii) Disability the Earned Units will not be
forfeited and the Participant shall become vested with respect to the Earned
Units on the same date as such death or Disability. Unless otherwise determined
by the Committee, in the event of a Participant’s Retirement after the
expiration of the Performance Period but prior to the end of the Restriction
Period, the Participant shall be vested in not less than a pro rata portion of
the Earned Units subject to such Restriction Period based on the number of days
during the applicable Restriction Period during which the Participant was
employed. Upon a Participant’s Retirement all unvested Earned Units shall be
forfeited; provided however, that the Committee reserves the right to vest
unvested Earned Units.

6. Time and Form of Payment. Payment of vested Earned Units shall be made as
soon as practicable (but not later than 30 days) following the close of a
Restriction Period or, if earlier, within 30 days following the earlier of the
Participant’s death, Disability or Retirement that constitutes a “Separation
from Service” within the meaning of Code Section 409A; provided that if such
death, Disability or Retirement occurs during the Performance Period, payment of
the vested Earned Units shall be made within ninety (90) days following the end
of the Performance Period. Notwithstanding the foregoing, a Participant may, on
or before the date which is at least six (6) months prior to the expiration of
the Performance Period, make an election to defer receipt of any payment with
respect to the Earned Units in accordance with the provisions of Section 6.4 of
the Plan. Unless otherwise elected by a Participant in accordance with the
immediately following sentence, payment shall be in the form of a number of
shares of Common Stock equal to the number of Earned Units subject hereto. A
Participant may elect, in the form and manner specified by the Company and on or
before the earlier of the last day of the fiscal year of the Company in which
this Award is granted to the Participant and the date which is at least six (6)
months prior to the expiration of the Performance Period, to receive payment in
the form of cash in an amount equal to the Fair Market Value of a share of
Common Stock as of the date of payment, multiplied by the number of Earned Units
subject hereto. To be eligible to make a cash election, the Participant must at
the time of the election meet the minimum applicable holding requirement under
the Company's equity ownership guidelines. Any such elections will be made in
the form and manner specified by the Company and consistent with the Plan.

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Exhibit 10.4

Notwithstanding anything herein to the contrary, if the Participant’s Award is
subject to the application of Code Section 409A and if the Participant is a
“Specified Employee” within the meaning of Code Section 409A and the Treasury
regulations and other guidance thereunder, the Participant may not receive
payment with respect to any Earned Units that are payable as a result of the
Participant’s Separation from Service, earlier than six (6) months following the
Participant’s Separation from Service, except that in the event of the
Participant’s earlier death, such Earned Units shall be paid within 30 days
after the Company receives notice of the Participant’s death.

7. Voting Rights. The Participant will not have the right to vote with respect
to the Units prior to payment of Common Stock in satisfaction of the Earned
Units.

8. Dividend Equivalencies. Upon the payment of dividends on Common Stock prior
to payment of Common Stock in satisfaction of the Earned Units, the Company
will, within 30 days following the date the dividend was paid to the holders of
the Company’s Common Stock, pay to the Participant a dividend equivalent
provided that the Participant was employed by the Company on the date the
dividend was paid to holders of the Company’s Common Stock.

9. Change in Control. Upon the occurrence of a Change in Control, any remaining
conditions on forfeiture with respect to the Units shall immediately lapse and
the Performance Goals will be deemed satisfied at the target level of
performance pursuant to Section 8 of the Plan.

10. Tax Withholding. Participant authorizes the Company to deduct, to the extent
required by statute or regulation, from payments of any kind due to Participant
or anyone claiming through Participant, the aggregate amount of any federal,
state, local or other taxes required to be withheld in respect of any present or
future Award under the Plan.

11. Non-competition and Non-Solicitation. Participant agrees to comply fully
with any written agreement between the Company and the Participant which
provides for post-termination of employment restrictions against solicitation or
competition (the “Restrictive Covenant Agreement”); provided, however, that if
no such Restrictive Covenant Agreement exists, the Participant shall not for a
period of [six (6)] [twelve (12)] [eighteen (18)] months after termination of
employment by Company, either himself or together with other persons, directly
or indirectly: (i) own, manage, operate, finance, join, control or participate
in the ownership, management, operation, financing, or control of or be
connected as an officer, director, employee, partner, principal, agent,
representative, consultant or otherwise with, or have any financial interest in,
or aid or assist anyone else in the conduct of, or use or permit Participant’s
name to be used in connection with, any business engaged in the research,
development, manufacture, sale, marketing or distribution of stainless steel,
titanium, specialty alloys, metal powders or metal fabricated parts or
components similar to or competitive with those manufactured by the Company (a
“Competing Business”) as of the date the Participant’s employment with Company
ends; provided,

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Exhibit 10.4

however, that nothing herein shall prevent the Participant from investing in the
securities of any company listed on a national securities exchange, provided
that Participant’s involvement with any such company is solely that of a
stockholder of 5% or less of any class of the outstanding securities thereof;
(ii) solicit or divert to any Competing Business any individual or entity that
is a customer or prospective customer of the Company or its subsidiaries or
affiliates, or was such a customer or prospective customer at any time during
the three (3) years prior to the date of Participant’s employment termination
with the Company; (iii) induce, offer, assist, encourage or suggest (A) that
another business or enterprise offer employment to or enter into a business
affiliation with any Company employee, agent or representative, or any
individual who acted as an employee, agent or representative of the Company in
the previous six (6) months; or (B) that any Company employee, agent or
representative (or individual who acted as an employee, agent or representative
of the Company in the previous six (6) months) terminate his or her employment
or business affiliation with the Company; or (iv) hire or participate in the
hiring of any Company employee or any person who was an employee of the Company
in the previous six (6) months, by any business, enterprise or employer. For
this purpose, “prospective customer” shall mean a person or business entity that
the Company has identified as a user or potential user of the Company’s products
and toward which the Company plans to direct sales or marketing activities.

In the event that the Company determines in good faith that the Participant
violated the terms of any Restrictive Covenant Agreement, or, if there is no
Restrictive Covenant Agreement, the provisions of the preceding paragraph: (i)
this Award shall be forfeited and (ii) the Participant shall be obligated to
return to the Company any shares previously issued under this Award or a cash
payment equal to the value of the shares at the time such shares were sold or
transferred, if any or all of the Award has been issued to the Participant or
such recoupment is required by law.

12. Severability. The covenants in this Agreement 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.

13. Notices to Participant. Any notices or deliveries to Participant hereunder
or under the Plan shall be directed to Participant at the address reflected for
Participant on the Company’s payroll records or at such other address as
Participant may designate in writing to the Company.

14. Binding Effect. Subject to the terms of the Plan, this Agreement shall be
binding upon and inure to the benefit of the Company and its assigns, and
Participant, his/her heirs and personal representatives.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date(s)
set forth below.
         
CARPENTER TECHNOLOGY CORPORATION
     

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Exhibit 10.4

By:                            Date:                        
    
President and Chief Executive Officer

PARTICIPANT
          
Date:                        
    
Number of Award Units:    

UP TO A MAXIMUM OF [MAX NUMBER] AS DETERMINED PURSUANT TO SCHEDULE A

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Exhibit 10.4

SCHEDULE A
PERFORMANCE GOALS AND PERFORMANCE PERIOD

Performance Period    Fiscal Year 20__

Performance Goals    The number of Performance Stock Units that become Earned
Units is determined based on the level of achievement during the Performance
Period based on the following metric(s):

Metric

Earned Units
Threshold (50% of Target)
Target

Maximum
(200% of Target)
 
 
 
 
 
 
 
 

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