EX-99.HOTHMATCONT

SUPPLEMENTAL RETIREMENT PLAN
FOR EXECUTIVES OF
CARPENTER TECHNOLOGY CORPORATION
Effective December 13, 1979
As Amended January 1, 2001

1.       Purpose

The purpose of this Plan is to attract, retain and motivate designated employees of Carpenter Technology Corporation (the "Corporation") who are Participants in the Plan by providing supplemental pension and death benefits to enhance their economic security during their active careers with the Corporation and in Retirement.

2.       Definitions

(A) "Annual Base Formula Retirement Benefit" shall mean the annual benefit computed to
        measure total annual retirement income after normal Retirement age, as provided in Section
        6.

(B) "Annual Supplemental Retirement Benefit" shall mean the annual benefit to be paid from
        the Plan, as provided in Section 7, and shall be paid in accordance with the provisions of
        Section 5.

(C) "Board" shall mean the Board of Directors of Carpenter Technology Corporation.

(D) "Disabled" shall mean totally disabled as described in, and which results in, the Participant's
        eligibility to receive benefits under the Corporation's Long Term Disability Plan.

(E) "Five-Year Calculation Period" shall mean the five calculation periods created under the
        definition of "average monthly earnings" found in the General Retirement Plan used to
        determine such average.

(F) "Former Participant" shall mean any person who has previously been a Participant in this
        Plan and was either (i) a Participant for at least three years or (ii) an employee
        of the Company for at least ten years.

(G) "General Retirement Plan" shall mean the Corporation's "General Retirement Plan for
        Employees of Carpenter Technology Corporation" as in effect on the last date of a
        Participant's employment with the Corporation as a participant under the General Retirement
        Plan.

(H) "Participant" shall mean any person included in the Plan, as provided in Section 3 and shall
        also mean a Former Participant except as otherwise provided in Section 6.

(I)   "Plan" shall mean the Supplemental Retirement Plan for Executives of Carpenter Technology
        Corporation.

(J) "Retirement" shall mean the date of retirement as defined in the General Retirement Plan.

(K) "Spouse" shall mean the Participant's spouse as defined in section 4.5(a)(1) of the General
        Retirement Plan.

3.       Participants

Participants in the Plan will consist of such employees of the Corporation as the Board in its sole discretion may from time to time designate. Participation in the Plan will terminate only

(A)   upon termination of employment of a Participant for any reason other than Retirement under
        conditions where benefits are payable under Section 7 (except that a Former Participant shall
        be eligible to receive any previously accrued benefit under this Plan), or

(B)   when further participation is canceled by the Board (except that a Former Participant shall be
        eligible to receive any previously accrued benefit under this Plan), or

(C)  when a Participant performs services for the Corporation solely as an independent contractor
        or consultant (except that such Participant shall continue to receive any previously accrued
        benefit under this Plan), or

(D)  notwithstanding anything to the contrary contained in (A), (B) or (C) above, when a Participant
        competes with the Corporation as provided in the Supplemental Retirement Agreement
        referenced in Section 4 hereof, (in which case no further payments will be made under the
        Plan).

4.      Supplemental Retirement Agreement

Each Participant, as a condition precedent to becoming a Participant, will enter into an agreement with the Corporation, in a form supplied by and satisfactory to the Corporation, which will, inter alia,

(A)   set forth the provisions of the benefits of this Plan,

(B)   permit the Corporation, in its sole discretion, to insure the Participant's life under an individual
        life insurance policy in which the Corporation is the owner and beneficiary at no cost to the
        Participant, and

(C)  contain a noncompetition provision.

5. Benefits

(A)    Each Participant who shall retire under the conditions set forth in Section 7 will receive an
         Annual Supplemental Retirement Benefit paid from the general assets of the Corporation for a
         period of fifteen years commencing as provided herein. Such benefit will be paid in
         consecutive quarter yearly payments on the first business day of January, April, July and
         October (hereinafter individually referred to as the "Quarterly Payment Date") for the
         immediately preceding calendar quarters ended, December 31, March 31, June 30 and
         September 30, respectively.

The initial payment shall be made on the first Quarterly Payment Date following the Participant's Retirement, or, at the election of a Disabled Participant, commencing upon any subsequent Quarterly Payment Date which occurs while the Participant remains Disabled, but in no event later than the Quarterly Payment Date following the earlier of the Participant's cessation of disability or the attainment of age 65.

Proration shall be made for a short calendar quarter and calculated on a 90 day per quarter basis.

(B)    In the event of the death of a Participant after Retirement and before the entire number of said
         quarterly payments have been paid, such remaining unpaid quarterly payments will be paid to
         the last beneficiary designated in writing by the Participant to, and received by, the Pension
         Board or, in the absence or failure of any such designation or the designated beneficiary fails
         to survive for the said fifteen year period, to the surviving Spouse of the Participant, or in the
         absence of such Spouse, to the Participant's estate.

In the event the designated beneficiary fails to survive and the Participant's Spouse does not survive for the said fifteen years, the Pension Board may elect to make a lump sum payment of the unpaid amount to the Participant's estate, or the Spouse's estate, or the beneficiary's estate, as the Pension Board may determine in its sole discretion to be fair and equitable, said lump sum payment being the present value of the remaining payments, determined in accordance with the average rate of interest published by the Pension Benefit Guaranty Corporation for immediate annuities for the 36 months immediately preceding the date of such payment.

(C)    In the event of the death of a Participant before Retirement when the Participant would have
         been eligible to receive retirement benefits under either Section 7(A) or 7(B), the Normal or
         Early Supplemental Retirement Benefit to which the Participant would have been entitled had
         he retired on the date of his death will be paid to the last beneficiary designated in writing by
         the Participant to, and received by, the Pension Board or, in the absence or failure of any such
         designation or the designated beneficiary fails to survive for the said fifteen year period, to the
         surviving Spouse of the Participant, or, in the absence of such Spouse, to the Participant's
         estate.

Such benefit will be determined as of the date of death of the Participant and will be paid in accordance with the payment procedures in Section 5(A).

In the event the designated beneficiary fails to survive and the Participant's Spouse does not survive for the said fifteen years, the Pension Board may elect to make a lump sum payment of the unpaid amount to the Participant's estate, or the Spouse's estate, or the beneficiary's estate, as the Pension Board may determine in its sole discretion to be fair and equitable, said lump sum payment being the present value of the remaining payments, determined in accordance with the average rate of interest published by the Pension Benefit Guaranty Corporation for immediate annuities for the 36 months immediately preceding the date of such payment.

(D)    No benefit payable under this Plan shall be subject in any way to alienation, sale, transfer,
         assignment, pledge, attachment, garnishment, execution, or encumbrance of any kind, and
         any attempt to accomplish the same shall be void and of no effect.

6.       Annual Base Formula Retirement Benefit

The Annual Base Formula Retirement Benefit shall be calculated at the date of Retirement or in the case of a Former Participant at the termination of participation and will be equal to

(A)    the Participant's or Former Participant's average annual earnings calculated by multiplying the
         "average monthly earnings" (as determined for pension purposes under the General
         Retirement Plan) by 12 (or in the event the Participant or Former Participant has insufficient
         service to create a Five-Year Calculation Period, the average annual earnings calculated from
         such years of service and fractions thereof, rounded to the nearest month) [in either event, if
         the Participant had eligible compensation reduced under the General Retirement Plan to
         comply with section 401(a)(17) of the Internal Revenue Code of 1986, and the regulations
         thereunder, as amended, or has deferred compensation under any deferred compensation
         plan of the Corporation, other than any deferred compensation previously included in the
         definition of "earnings" contained in the General Retirement Plan, such deferred and/or
         reduced compensation shall be added, for the sole purpose of determining the benefit under
         this Section, to the Participant's earnings in the year the Participant would have been credited
         with such earnings under the General Retirement Plan but for such deferral and/or reduction],

(B)    multiplied by a percentage which is

(l)      five percent for each year of service, or fraction thereof, with the Corporation up to
         a maximum of ten years, that an individual has been designated a Participant in
         this Plan subsequent to December 13, 1979, plus

(2)    (with respect to Participants and Former Participants who became Participants
         before October 1, 1988) two percent for each other year of service or fraction
         thereof with the Corporation, or its subsidiaries; or

(3)    (with respect to Participants and Former Participants who became Participants on
         or after October 1, 1988 and retire prior to January 1, 1997) 1.26 percent for each
         other year of service or fraction thereof with the Corporation, or its subsidiaries; or

(4)    (with respect to Participants and Former Participants who became Participants on
         or after October 1, 1988 and retire after December 31, 1996) 1.3 percent for each
         year of service up to 20 years and 1.4 percent for each additional year of service
         or fraction thereof with the Corporation, or its subsidiaries;

provided, however, that the aggregate of the percentages of this Subparagraph 6(B) shall not exceed the sum of 60% plus one-quarter percent per year for each year or fraction thereof for such service exceeding 30 years,

(C)    reduced by the sum of the following (such reduction to commence and be fixed as of the
         respective calculation dates hereinafter stated):

(l)    the Participant's accrued pension benefits calculated to be payable from any other
       defined benefit pension plans (including but not limited to the General Retirement
       Plan, the Benefit Equalization Plan, the Earnings Adjustment Plan, the Officers'
      Supplemental Retirement Plan, and any pension plans from other prior employment)
       as of the respective date or dates of earliest entitlement or, if later, the date of
       retirement under such pension plans, before any actuarial reduction for option
       election; provided, however, that any such reduction shall not include the portion of
       any other pension benefit resulting from the Participant's express contribution or
       any Increased Benefit calculated under paragraph 3.7 of the General Retirement
       Plan, nor any benefits attributable to a defined contribution entitlement and

(2)   the amount of the Primary Social Security Retirement Benefit calculated to be
        payable as of the date of earliest entitlement or, if later, the date of Retirement
        hereunder.

7.   Annual Supplemental Retirement Benefits

(A)    Normal Retirement.

(1)    A Participant shall receive upon Retirement a Normal Supplemental Retirement
         Benefit if he has attained (a) age 62 or older with five or more years of service
         with the Corporation or its subsidiaries, or (b) thirty years of service with the
         Corporation or its subsidiaries.

(2)    The amount of such benefit will be the Annual Base Formula Retirement Benefit,
         as set forth in Section 6.

(B)   Early Retirement.

(1)    In the event of Retirement before attainment of eligibility for Normal Retirement, a
         Participant shall receive an Early Supplemental Retirement benefit if he is then
         vested under the General Retirement Plan.

(2)    The amount of such benefit will be equal to the Annual Base Formula Retirement
         Benefit, as set forth in Section 6(A) and 6(B), reduced to its equivalent actuarial
         value from age 62 to the date of initial payment to the Participant based on the
         average rate of interest published by the Pension Benefit Guaranty Corporation
         for immediate annuities for the immediately preceding 36 months, and
         subsequently adjusted for any further reduction required under Section 6(C).

(C)    Mutual Consent Retirement.

(1)    A Participant shall receive upon Retirement hereunder with ten or more years'
         service with the Corporation or its subsidiaries, a Mutual Consent Retirement if:
         (a) he is entitled to retire with monthly payments under the General Retirement
         Plan that are concurrent with benefits under this Plan, and (b) both the Participant          and the Corporation agree that his Retirement under this Plan would be mutually
         beneficial.

(2)    The amount of such benefit will be the Annual Base Formula Retirement Benefit,
         as set forth in Section 6.

(D)    Notwithstanding anything to the contrary contained in this Plan, no Participant, Spouse or
         other beneficiary may become entitled to benefits under this Plan without the Participant or
         Former Participant first completing five consecutive years of service with the Corporation or
         its subsidiaries, unless otherwise provided in writing and expressly authorized by Board
         approval.

8.     General Provisions

(A)   The administration of this Plan shall be by the Pension Board appointed by the Board under
         the provisions of the General Retirement Plan. Any interpretation of this Plan shall be by the
         Human Resources Committee of the Board.

(B)   The benefits provided by this Plan will be paid from the general assets of the Corporation or
         otherwise as the Board may from time to time determine.    

(C)   The Board or, when so designated by the Board, the Human Resources Committee reserves
         the right at any time to modify or amend in whole or in part any or all of the provisions of the
         Plan, subject to the provisions of the Supplemental Retirement Agreement between the
         Corporation and each Participant.

01.01.01

EX-99.HOTHMATCONT

CARPENTER TECHNOLOGY CORPORATION

STOCK-BASED INCENTIVE COMPENSATION PLAN FOR
OFFICERS AND KEY EMPLOYEES

Adopted June 22, 1993, Restated June 27, 1996,
And as last Amended April 26, 2001

1. Background and Purpose.

                The Plan was previously adopted on June 22, 1993 and its purposes were to attract, retain and motivate key employees of Carpenter Technology Corporation and its wholly owned subsidiaries, to encourage stock ownership by such employees by providing them with a means to acquire a proprietary interest or to increase their proprietary interest in the success of Carpenter Technology Corporation and its subsidiaries and to provide a greater community of interest between such employees and the stockholders of Carpenter Technology Corporation. For purposes of this Plan, Carpenter Technology Corporation and each subsidiary described in Section 424(f) of the Internal Revenue Code of 1986, as amended (the "Code") shall be referred to collectively as the "Corporation". The Plan has been amended and restated [in 1996] to create a new category of awards, which are referred to as Performance Units and Performance Shares, with the intention that these awards will be directly related to the Corporation's performance.

2. Administration.

                The Board of Directors of Carpenter Technology Corporation (the "Board") shall be responsible for the operation of the Plan. The Board is authorized, subject to the provisions of the Plan, from time to time to (i) select employees to receive awards under the Plan, (ii) determine the type and amount of awards to be granted to participants, (iii) determine the terms and conditions of such awards and the terms of agreements entered into with participants, (iv) establish such rules and regulations and to appoint such agents as it deems appropriate for the proper administration of the Plan, and (v) make such determinations under, and such interpretations of, and to take such steps in connection with, the Plan or the awards granted hereunder as it deems necessary or advisable. Any questions of interpretation determined by the Board shall be final and binding upon all persons. The Board may delegate any or all of these powers to the Human Resources Committee ("Committee") of the Board, consisting of at least two directors, each of whom shall be "non-employee directors" as defined in Rule 16b-3 promulgated by the U.S. Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and each of whom shall also be "outside directors" as defined in Treas. Reg. ? 1.162-27(e)(3). In particular, the Board shall delegate to the Committee all powers with respect to the granting of awards that are intended to comply with the requirements of Rule 16b-3 of the Exchange Act and section 162(m) of the Code that would exempt such awards from being subject to short-swing liability and being subject to the annual limit on the deduction of compensation.

3. Participants.

                The class of employees eligible to receive awards under the Plan shall be limited to officers and key employees of the Corporation. Participants in the Plan will consist of such officers or key employees as the Board in its sole discretion may from time to time designate. The Board's designation of a Participant at any time to receive benefits under the Plan shall not obligate it to designate such person to receive benefits at any other time. The Board shall consider such factors as it deems pertinent in selecting Participants and in determining the type and amount of awards granted hereunder. As used herein, "Participant" shall refer to an employee designated by the Board who has received an award under the Plan. Only the Committee may designate which Participants shall receive awards of Performance Units and Performance Shares under Section 10 of the Plan.

4. Types of Awards.

                Awards under the Plan will consist of (i) incentive stock options ("ISOs" or individually an "ISO") intended to be options qualifying under Section 422 of the Code; (ii) non-qualified stock options ("NQSOs" or individually a "NQSO") intended to be non-statutory options not qualifying under Section 422 or any other section of the Code; (iii) stock appreciation rights ("SARs" or individually a "SAR") intended to provide a participant with the right to receive the increase in the fair market value of a specified number of Shares, as defined in Section 5; (iv) shares of restricted stock ("Restricted Stock") intended to give a participant the right to receive a specified number of Shares without payment upon the occurrence of certain events; and (v) Performance Shares or Performance Units intended to give a participant the right to receive a specified number of Shares or unit equivalencies of Shares without payment when the Corporation attains certain pre-established Performance Goals. The Board may permit or require a participant to defer such participant's receipt of the payment of cash or the delivery of Shares that would otherwise be due such participant resulting from awards granted under the Plan. If any such deferral is required or permitted, the Board shall, in its sole discretion, establish rules and procedures for such deferrals.

5. Shares Reserved Under the Plan.

                Subject to the provisions of Section12, the number of shares of Common Stock of Carpenter Technology Corporation ("Stock") available for awards under this Plan, which may consist of authorized but unissued shares or issued shares reacquired by Carpenter Technology Corporation or a combination thereof, is 1,800,000 (such shares being referred to herein as "Shares") plus previously ungranted shares and lapsed grants that remain from previous shareholder authorizations; provided, however, that in no event shall the cumulative number of Shares to be issued as ISOs granted under Section 6 exceed 500,000, nor shall the cumulative number of Shares to be issued as Restricted Stock and Performance Units/Shares granted under Sections 7 and 9 respectively exceed 750,000. If any award granted under this Plan is canceled, terminates, expires, or lapses for any reason (with the exception of the termination of a Tandem SAR upon exercise of the related Option, or the termination of a related Option upon exercise of the corresponding Tandem SAR), any Shares subject to such award shall be available for award under the Plan.

6. Options.

                ISOs and NQSOs (collectively "Options") may be granted by the Board from time to time, subject to the following provisions:

                (a)         Except as otherwise determined by the Board, each Option granted under this Plan shall become exercisable by a participant only after completion of one year of employment immediately following the date the Option is granted (the "Date of Grant"). Exercise of any or all prior existing Options shall not be required. Each agreement entered into between the participant and the Corporation shall specify (i) when an Option may be exercised, (ii) the terms and conditions applicable thereto, and (iii) whether the Option is an ISO or an NQSO. In no event, however, shall an Option granted under this Plan expire more than ten years from the Date of Grant.

                (b)         Each Option shall specify the amount per share a participant must pay to the Corporation to exercise the Option (the "option price"). The option price of an Option shall be determined by the Board but shall not be less than the fair market value of a share of Stock on the Date of Grant. For purposes of this Plan, the term "fair market value" shall mean the closing price of the Stock on the New York Stock Exchange on the date in question, or, in the absence of a closing price on such date, the closing price on the last trading day preceding the Date of Grant, as reflected on the consolidated tape of New York Stock Exchange-Composite Transactions.

                (c)         Except as permitted in the immediately following sentence, no Option granted under this Plan may be transferable by the participant except by will or the laws of descent and distribution and no Option may be exercised during the lifetime of a participant except by that participant. Notwithstanding the aforementioned, a NQSO Optionee may transfer a NQSO to his or her spouse, parents, siblings, children or grandchildren (in each case, natural or adopted), any trust for his or her benefit or the benefit of his or her spouse, parents, siblings, children or grandchildren (in each case, natural or adopted) (collectively, a "Permitted Transferee"), or any corporation or partnership in which the direct and beneficial owner of all of the equity interest in such corporation or partnership is such NQSO Optionee or any Permitted Transferee (or any trust for the benefit of such persons).

Unless otherwise provided in the participant's agreement, the following exercise periods will apply in the case of a separation from employment. In the event of the death of the participant more than one year after the Date of Grant and not more than three months after the termination of the participant's employment by the Corporation, an Option may be transferred to the participant's personal representative, heirs or legatees ("transferee") and may be exercised by the transferee before the earlier to occur of the expiration of (i) one year from the date of the death of the participant or (ii) the term of the Option as specified in the agreement with the participant. In the event of a participant's separation from service with the Corporation as a result of Retirement [as defined in Section 9(f) of this Plan] or due to "disability" [within the meaning of Section 422(c)(6) of the Code], any outstanding Option will continue to be exercisable during the original term of the grant. If the participant dies within such period (following Retirement or "disability"), a transferee may exercise any unexpired Option before the expiration of the earlier to occur of (i) or (ii) of this Section 6(c). In the event of a participant's separation from service with the Corporation other than by death, disability or Retirement, an Option must be exercised prior to its expiration during the three month period beginning on the last day of employment.

The agreement under which an Option is granted shall set forth the extent to which the participant shall have the right to exercise the Option following termination of the participant's employment. Such provisions shall be determined at the sole discretion of the Board and need not be uniform among all Options issued pursuant to this Section 6, and may reflect distinctions based on the reasons for termination of employment. In any case where the terms governing an Option that is an ISO grant a longer exercise period than that permitted under Section 422 of the Code, the Option will continue to be exercisable during the remainder of the period as a NQSO.

                (d)         Each Option shall be exercisable for the full amount or any part thereof, including a partial exercise from time to time; provided, however, that in no event shall ISOs granted to a participant be first exercisable in any one calendar year with respect to Shares having an aggregate fair market value, determined as of the Date of Grant, of more than $100,000. The option price for each exercised Option shall be paid in full at the time of such exercise. The option price may be paid in cash or shares of Stock, the value of which shall be the fair market value on the date of the exercise of the Option, as determined in Section 6(b) of this Plan; provided, however, that any such shares must have been held by a participant for a period of at least six months. An Option may also be exercised by delivery of the Option to a registered broker/dealer with instructions to exercise the Option and sell a sufficient number of the shares of Stock acquired on exercise to pay the option price and, if not previously paid, any required tax withholdings. In any event, the participant may elect to deliver shares of Stock to the Company to allow any minimum tax withholding requirements to be paid on behalf of the participant.

                (e)         The Committee may grant Options pursuant to the achievement of Performance Goals, as described in Section 11 of this Plan, and it may impose restrictions upon the vesting and exercise of Options based on the attainment of Performance Goals.

7. Restricted Stock.

                Restricted Stock may be granted by the Board from time to time, subject to the following provisions:

                (a)         The Board shall determine the number of shares of Restricted Stock to be granted to a participant and direct the transfer agent for the Stock that a certificate or certificates representing such number of shares be issued and registered in the participant's name. The certificate(s) representing such shares shall be legended as to sale, transfer, assignment, pledge or other encumbrance during the period the Restricted Stock is subject to forfeiture (such period being referred to herein as the "restriction period") and deposited, together with a stock power with respect to the transfer thereof executed by the participant and endorsed in blank, with the Treasurer of Carpenter Technology Corporation, to be held in escrow during the restriction period.

                (b)         At the Board's discretion, during the restriction period the Board may give participants the right to receive cash payments in amounts equivalent to the dividends from time to time declared and paid in respect of the shares of Restricted Stock. All shares of Restricted Stock will include voting rights during the restriction period.

                (c)         The Restricted Stock agreement shall specify the duration of the restriction period and the performance, employment or other conditions under which the Restricted Stock may be forfeited by the participant. At the end of the restriction period, the restrictions imposed hereunder shall lapse with respect to the number of shares of Restricted Stock as determined by the Board, and the legend shall be removed and the certificates for such number of shares delivered from escrow to the participant. The Board may, in its sole discretion, modify or accelerate the vesting of shares of Restricted Stock. The participant's required tax withholding on newly vested shares of Restricted Stock may be paid in cash or the participant may elect to have the Company withhold a sufficient number of the vesting shares of Stock to pay any required tax withholdings on behalf of the participant.

                (d)         The Restricted Stock agreement shall set forth the extent to which the participant shall have the right to vest in shares of Restricted Stock following termination of the participant's employment. Such provisions shall be determined at the sole discretion of the Board and need not be uniform among all Restricted Stock issued pursuant to this Section 7, and may reflect distinctions based on the reasons for termination of employment.

                (e)         The Committee may grant Restricted Stock pursuant to the achievement of Performance Goals, as described in Section 11 of this Plan, and it may impose restrictions upon the vesting of Restricted Stock based on the attainment of Performance Goals.

8. Limited Authority to Grant Certain Awards.

                The Human Resources Committee may delegate, to Carpenter Technology Corporation's Chief Executive Officer ("C.E.O."), authority to grant awards covering a pre-determined number of shares. Such delegation is limited to the authority to grant NQSOs and Restricted Stock to participants who are not subject to the requirements of Rule 16b-3 of the Exchange Act. The option price of any NQSO shall not be less than the fair market value of a share of Stock on the date such grant is awarded by the C.E.O. The C.E.O. shall report at least annually on the disposition of these shares to the Committee in a form and manner determined by the Committee.

9. Stock Appreciation Rights.

                SARs may be granted by the Board from time to time, subject to the following provisions:

                (a)         The Board may grant a SAR either in connection with the grant of an Option ("Tandem SAR") or independent of the grant of an Option ("Freestanding SAR"). Each Tandem SAR shall be exercisable only with the exercise and surrender of the related Option or portion thereof and shall entitle the participant to receive the excess of the fair market value of the shares of Stock on the date the Tandem SAR is exercised over the option price under the related Option. The excess is hereafter called the "spread" for both Tandem SARs and Freestanding SARs. If the participant elects instead to exercise the related Option, the Tandem SAR shall be cancelled automatically.

                (b)         A Tandem SAR shall be exercisable only to the extent and at the same time that the related Option is exercisable.

                (c)         A Freestanding SAR shall be exercisable pursuant to the terms and conditions that are specified in the agreement in which the Freestanding SAR is granted.

                (d)         Upon the exercise of a SAR, the Corporation shall pay to the participant an amount equivalent to the spread (less any applicable withholding taxes) in cash, or in Shares, or a combination of both, as the Board shall determine. Such determination may be made at the time of the granting of the SAR. No fractional shares of Stock shall be issued and the Board shall determine whether cash shall be given in lieu of such fractional share or whether such fractional share shall be eliminated.

                (e)         A Tandem SAR shall terminate and may no longer be exercised upon the termination or expiration of the related Option.

                (f)           Income attributable to the exercise of a SAR shall not be included in the calculation of pension or other benefits payable at any time by reason of the participant's employment by the Corporation.

                (g)         No SAR shall be transferable by the participant except as provided in Section 6(c) of the Plan.

                (h)         The agreement under which a SAR is granted shall set forth the extent to which the participant shall have the right to exercise the SAR following termination of the participant's employment. Such provisions shall be determined at the sole discretion of the Board and need not be uniform among all SARs issued pursuant to this Section 9, and may reflect distinctions based on the reasons for termination of employment.

                (i)          The Committee may grant SARs pursuant to the achievement of Performance Goals, as described in Section 11 of this Plan, and it may impose restrictions upon the vesting and exercise of SARs based on the attainment of Performance Goals.

10.   Performance Units and Performance Shares.

        Performance Units or Performance Shares may be granted to participants in such amounts or combinations and upon such terms, and at any time and from time to time, as shall be determined by the Committee. Each Performance Unit shall be that fraction of a Performance Share that is determined by the Committee at the time of grant and shall have an initial value equal to that same fraction of the value of a Share on the date of grant. Each Performance Share shall have an initial value equal to the fair market value of a Share on the Date of Grant. The Committee shall set one or more Performance Goals as described in Section 11 of this Plan. The extent to which those Performance Goals are met will determine the number and value of Performance Units or Performance Shares that will be paid out to the participant.

                (a)         Amount of Performance Units or Performance Shares. A participant may not receive grants totaling more than 500,000 Performance Shares during any calendar year.

                (b)         Earning of Performance Units or Performance Shares. After the applicable Performance Period, as defined in Section 11, has ended, the holder of Performance Units or Performance Shares shall be entitled to receive payout on the number and value of Performance Units or Performance Shares earned by the participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Goals have been achieved.

                (c)         Form and Timing of Payment of Performance Units or Performance Shares. Payment of earned Performance Units or Performance Shares shall be made as soon as practicable following the close of the applicable Performance Period in a manner designated by the Committee, in its sole discretion. The Committee, in its sole discretion, may pay earned Performance Units or Performance Shares in the form of cash or in Shares (or in a combination thereof) which have an aggregate fair market value equal to the value of the earned Performance Units or Performance Shares at the close of the applicable Performance Period. Such Shares may be granted subject to any restrictions deemed appropriate by the Committee. The participant's required tax withholding on newly awarded Performance Shares may be paid in cash or the participant may elect to have the Company withhold a sufficient number of the awarded Performance Shares to pay any required tax withholdings on behalf of the participant.

                (d)         Dividend and Voting Rights. At the discretion of the Committee, participants may be entitled to receive any dividends declared with respect to Shares which have been earned in connection with grants of Performance Units or Performance Shares, but not yet distributed to participants. Participants may exercise voting rights with respect to such Shares. Participants will not have any voting rights with respect to Performance Units.

                (e)         Dividend Equivalents. The Committee may grant dividend equivalents in connection with Performance Units or Performance Shares granted under this Plan. Such dividend equivalents may be payable in cash or in Shares, upon such terms as the Committee, in its sole discretion, deems appropriate.

                (f)           Termination of Employment due to Death, Disability or Retirement. Unless determined otherwise by the Committee and set forth in the participant's award agreement, in the event the employment of a participant is terminated by reason of death, Disability or Retirement during a Performance Period, the participant shall receive a payout of the Performance Units or Performance Shares which is prorated, as specified by the Committee in its discretion. Payment of earned Performance Units or Performance Shares shall be made at a time specified by the Committee in its sole discretion and set forth in the participant's award agreement. Notwithstanding the foregoing, with respect to participants who retire during a Performance Period, payments shall be made at the same time as payments are made to participants who did not terminate employment during the applicable Performance Period. For this purpose, "Disability" shall be defined in a manner consistent with the definition of that term in the Corporation's long-term disability plan under which the participant participates, or at the discretion of the Committee using standards comparable to those under the Corporation's long-term disability plans, if the participant does not participate in any such plan. In addition, for this purpose, "Retirement" shall be defined as the termination of employment with the Corporation after the participant has attained age 55 while being credited with at least ten Years of Service, or has attained age 60 while being credited with at least five Years of Service, or at least thirty Years of Service regardless of age. For purposes of this Plan, a participant shall be credited with one Year of Service for each 12-month period following the participant's commencement of service with the Corporation that the participant has worked at least one hour for the Corporation.

                (g)         Termination of Employment for Other Reasons. If a participant's employment terminates for any reason other than those reasons set forth in Section 10(f), all Performance Units or Performance Shares shall be forfeited by the participant to Carpenter Technology Corporation unless determined otherwise by the Committee, as set forth in the participant's award agreement.

                (h)         Nontransferability. Except as otherwise provided in a participant's award agreement, Performance Units or Performance Shares may not be sold, transferred, pledged, assigned or otherwise alienated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a participant's award agreement, a participant's rights under the Plan shall be exercisable during the participant's lifetime only by the participant or the participant's legal representative.

                (i)         Payment for Performance Units and Shares upon a Change in Control. Within 30 days following a Change in Control Event, as defined in Section 13(b) of the Plan, there shall be paid in cash to participants holding Performance Units and Performance Shares a pro rata amount based upon the assumed achievement of all relevant Performance Goals at target levels, and upon the length of time within the Performance Period that has elapsed before the Change in Control Event; provided, however, that if the Committee determines that actual performance to the date of the Change in Control Event exceeds targeted levels, the prorated payouts shall be made using the actual performance data; and provided further, that there shall not be an accelerated payout with respect to Performance Shares or Performance Units that qualify as "derivative securities" under Section 16 of the Exchange Act that were granted less than six months before the Change in Control Event.

11. Performance Goals.

                For all purposes under this Plan, "Performance Goals" means goals that must be met by the end of a period specified by the Committee based upon one or more of the following criteria: (i) price of the Stock, (ii) market share of the Corporation, (iii) sales by the Corporation, (iv) earnings per share of the Stock, (v) return on shareholder equity of the Corporation, or (vi) costs of the Corporation. The time period during which the Performance Goals must be met shall be called a "Performance Period." The Performance Goals shall be interpreted in a manner that complies with the exceptions for performance-based compensation set forth in Code ? 162(m) and Treas. Reg. ? 1.162-27, as in effect during any relevant period, and must be set (a) before 25% of the Performance Period has elapsed and (b) at a time when it is substantially uncertain that the Performance Goals will be met.

12. Adjustment Provisions.

                If Carpenter Technology Corporation shall at any time change the number of issued shares of Stock without new consideration to Carpenter Technology Corporation (such as by stock dividends, stock splits, stock combinations, stock exchanges or recapitalization), the total number of Shares reserved for issuance under this Plan, limits on types of awards that may be issued, the number of Shares covered by, the option price for, and any other relevant terms of, each outstanding award shall be adjusted so that the aggregate consideration payable to Carpenter Technology Corporation and the value of each award under this Plan shall not be changed. In the event of a merger, reorganization, acquisition, consolidation, divestiture, sale or exchange of assets of Carpenter Technology Corporation, or similar event, the Board shall make such adjustments with respect to awards under this Plan or take such other action as it determines to be appropriate and such determination shall be conclusive.

13.   Change in Control.

                (a)         Notwithstanding any provision in this Plan to the contrary, upon the occurrence of a Change in Control Event, (i) each Option then outstanding shall become immediately exercisable to the full extent of the Shares subject thereto, (ii) any remaining restrictions on shares of Restricted Stock shall immediately lapse, (iii) each SAR then outstanding shall be fully exercisable immediately following the occurrence of the Change in Control Event using the Change in Control Price [as defined in subsection (c)] to determine the spread, and (iv) any Performance Units or Performance Shares shall become fully vested and payment shall be made pursuant to the terms of Section 10(i). In addition, notwithstanding anything in this Plan to the contrary, if the employment of an optionee or holder of a SAR is terminated by the Corporation without "cause" [as defined in Section 15(a)], or, in the case of an employee who is covered by an employment arrangement or agreement that enables such employee to terminate for Good Reason (as defined in such arrangement or agreement), for Good Reason, in either case during the two-year period commencing on the date of the occurrence of a Change in Control Event, then such employee shall be able to exercise his or her Options and SARs until the earlier of (x) the second anniversary of such employment termination or (y) the expiration of their original term.

                (b)         For purposes of this Plan, a "Change in Control Event" means:

                            (1) The acquisition by any individual, entity or group [within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act] (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then-outstanding shares of common stock of Carpenter Technology Corporation (the "Outstanding Company Common Stock") or (B) the combined voting power of the then-outstanding voting securities of Carpenter Technology Corporation entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that, for purposes of this Section 13(b), the following acquisitions shall not constitute a Change in Control Event: (i) any acquisition directly from Carpenter Technology Corporation, (ii) any acquisition by Carpenter Technology Corporation, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Carpenter Technology Corporation or any affiliated company or (iv) any acquisition by any corporation pursuant to a transaction that complies with Sections 13(b)(3)(A), 13(b)(3)(B) and 13(b)(3)(C);

                            (2) 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; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by Carpenter Technology Corporation'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;

                            (3) consummation of a reorganization, merger, consolidation or sale or other disposition of all or substantially all of the assets of Carpenter Technology Corporation or the acquisition of the assets or stock of another entity (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 and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that, as a result of such transaction, owns Carpenter Technology Corporation or all or substantially all of Carpenter Technology Corporation'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 Carpenter Technology Corporation 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 of the corporation 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) approval by the stockholders of Carpenter Technology Corporation of a complete liquidation or dissolution of Carpenter Technology Corporation.

                (c) For purposes of SARs granted under this Plan, "Change in Control Price" shall mean the higher of (i) the highest price paid per share of Stock in any transaction constituting a Change in Control Event, or (ii) the highest fair market value of the Stock at any time during the sixty-day period preceding the occurrence of the Change in Control Event.

14. Amendment, Modification and Termination of the Plan.

                The Board at any time may terminate, and at any time and from time to time and in any respect, may amend or modify, the Plan; provided, however, that no such action by the Board, without approval of the stockholders, may: (i) increase the Shares available for award pursuant to the Plan or the maximum number of Shares for which Options may be granted under the Plan to any one individual, except as contemplated in Section 12, (ii) permit Options to be granted at less than fair market value, (iii) permit any person who is not both a "non-employee director" and an "outside director" from serving as a member of the Committee contemplated in Section 2, (iv) change the provisions of this Section 14, or (v) effect other changes for which stockholder approval would be required under Rule 16b-3 of the Exchange Act or any successor rule promulgated by the SEC. No amendment or modification of the Plan shall be made that would adversely affect any award previously granted under the Plan without the prior written consent of such holder, except such an amendment necessary to comply with applicable law, stock exchange rules or accounting rules. The ability to award ISOs under the Plan shall automatically terminate ten years after the earlier of (a) the date the Plan is adopted, or (b) the date the Plan is approved by stockholders. Termination of the Plan pursuant to this Section 14 shall not affect awards outstanding under the Plan at the time of termination.

15. General Provisions.

                (a)         Notwithstanding anything in the Plan to the contrary, in the event a participant's employment with the Corporation is terminated for "cause," the Board may, in its sole discretion, cancel each unexercised or unvested award granted to such participant effective upon the termination. For purposes of this subsection, a termination for "cause" shall mean termination of a participant's employment with the Corporation which results from either (i) the participant's commitment of an Intolerable Offense (as defined in the Corporation's Personnel Practices and Policies as in effect on the date of termination) or (ii) the operation of the Corporation's Corrective Performance System (as set forth in the Corporation's Personnel Practices and Policies as in effect on the date of termination).

                (b)         Nothing contained in the Plan, or an award granted under the Plan, shall confer upon a participant any right with respect to continuance of employment with the Corporation, nor interfere in any way with the right of the Corporation to terminate such employment at any time.

                (c)         For purposes of this Plan, transfer of employment between any members of the Corporation shall not be deemed termination of employment.

                (d)         Participants shall be responsible to make appropriate provisions for all taxes in connection with any award, the exercise thereof and the transfer of Shares pursuant to this Plan. However, in the absence of an alternative provision the Corporation shall withhold the number of Shares whose aggregate fair market value on the date of such withholding equals the amount to be withheld in satisfaction of the Corporation's obligation under all applicable withholding taxes. A participant may acquire such Shares by paying to the Corporation an amount equal to the Corporation's withholding obligation. Agreements evidencing such awards shall contain appropriate provisions to effect withholding in this manner.

                (e)         Without amending the Plan, awards may be granted to employees who are foreign nationals or employed outside the United States or both, on such terms and conditions different from those specified in the Plan as may, in the judgment of the Board, be necessary or desirable to further the purpose of the Plan.

                (f)           To the extent that Federal laws (such as the Exchange Act or the Code) do not otherwise control, the Plan and all determinations made and actions taken pursuant hereto shall be governed by the law of the State of Delaware and construed accordingly.

                (g)         The Committee shall have the authority to improve the terms of any granted Option, Restricted Stock agreement, SAR agreement or established Performance Goals, subject to the limitation that the price of an Option may not be reduced to less than fair market value.

16.   Effective Date of the Last Restated Plan Document.

                The amendment and last restatement of the Plan became effective upon approval by the Board on June 27, 1996 and was ratified by the stockholders at the Annual Meeting held on October 21, 1996.

EX-99.HOTHMATCONT

CARPENTER TECHNOLOGY CORPORATION
STOCK-BASED COMPENSATION PLAN FOR
NON-EMPLOYEE DIRECTORS
Effective October 20, 1997
As last amended April 26, 2001

1. Purpose:

        The purposes of the Plan are to attract and retain the services of experienced and knowledgeable non-employee Directors, to encourage Eligible Directors of Carpenter Technology Corporation (the "Company") to acquire a proprietary and vested interest in the growth and performance of the Company, and to generate an increased incentive for Directors to contribute to the Company's future success and prosperity, thus enhancing the value of the Company for the benefit of its stockholders.

    This Plan is an amendment and restatement of the Carpenter Technology Corporation Non-Qualified Stock Option Plan for Non-Employee Directors as adopted effective August 1, 1990 and last amended October 23, 1995. The rights of any Director whose service as a Director ended on or before April 25, 2001 shall be governed by the terms of the Plan as in effect when that Director's service ended.

2. Definitions:

        As used in the Plan, the following terms shall have the meanings set forth below:

        a)    "Annual Retainer" shall mean base compensation for services as a Director. Annual Retainer shall not include meeting fees, committee service fees, if any, expense allowances or reimbursements or any other additional compensation for services as a Director.

        b)    "Beneficiary" means the person that the Eligible Director designates to receive any unpaid portion of the Eligible Director's Account should the Eligible Director's death occur before the Eligible Director receives the entire balance to the credit of such Eligible Director's Account. If the Eligible Director does not designate a Beneficiary, the Beneficiary shall be the person's spouse if the person is married at the time of death, or the Eligible Director's estate if unmarried at the time of the person's death.

        c)    "Board" shall mean the Board of Directors of the Company.

        d)    "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.

        e)    "Common Stock" shall mean the Common Stock, $5.00 par value, of the Company.

         f)    "Company" shall mean Carpenter Technology Corporation.

        g)    "Election Date" shall mean with respect to an Option hereunder the date of the appointment, election, or re-election of the Eligible Director that prompted the grant of such Option.

        h)    "Eligible Director" shall mean each Director of the Company who is not an employee of the Company or any of the Company's subsidiaries (as defined in Section 425 (f) of the Code), or who is not otherwise excluded from participation by agreement.

        I)     "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

        j)    "Fair Market Value" shall mean with respect to the Common Stock (I) the last sale price of the Common Stock on the date on which such value is determined, as reported on the consolidated tape of New York Stock Exchange issues or, if there shall be no trades on such date, on the date nearest preceding such date; (ii) if the Common Stock is not then listed for trading on the New York Stock Exchange, the last sale price of the Common Stock on the date of which such value is determined, as reported on another recognized securities exchange or on the NASDAQ National Market System if the Common Stock shall then be listed and traded upon such exchange or system or, if there shall be no trades on such date, on the date nearest preceding such date; or (iii) the mean between the bid and asked quotations for such stock on such date (as reported by a recognized stock quotation services) or, in the event that there shall be no bid or asked quotations on such date, then upon the basis of the mean between the bid and asked quotations on the date nearest preceding such date.

        k)    "Grant Date" shall mean with respect to an Option hereunder the date upon which such Option is granted.

         l)    "Option" shall mean any right granted to an Eligible Director allowing such Eligible Director to purchase Shares at such price or prices and during such period or periods as set forth under the Plan. All Options shall be non-qualified options not entitled to special tax treatment under Section 422A of the Code.

        m)    "Option Letter" shall mean a written instrument evidencing an Option granted hereunder and signed by an authorized representative of the Company.

        n)    "Performance Unit" shall mean the right to receive, following termination of service as an Eligible Director, one share of Common Stock. Performance Units will be awarded, if at all, based upon the attainment of a specified goal ("Performance Goal") by the end of a period specified by the Board based upon one or more of the following criteria: (I) price of the Common Stock, (ii) market share of the Company, (iii) sales by the Company, (iv) earnings per share of the Common Stock, (v) return on shareholder equity of the Company, or (vi) costs of the Company. Such goal shall be pre-determined by the Board at a time when it is substantially uncertain that the Performance Goals will be met and subject to verification by the Company's independent auditors using generally accepted accounting principles, consistently applied. For purposes of this Plan, fractional Performance Units, measured to the nearest four decimal places, may be credited.

        o)    "Release Date" shall mean the fifth business day occurring after the Company's earnings release for the preceding fiscal period. In calculating the Release Date, the day of an earnings release shall be counted, if the earnings release is made before the opening of trading on the New York Stock Exchange and shall not be counted if such release is made after the opening of trading.

        p)    "Retirement" shall mean Retirement from the Board with a minimum of three years service as an Eligible Director.

        q)    "SAR" or "Stock Appreciation Right" shall mean the right granted to an Eligible Director to receive the increase in the Fair Market Value of a specified number of Shares.

        r)    "Shares" shall mean Shares of Common Stock.

        s)    "Stock Unit" shall mean the right to receive, following both service as an Eligible Director for one year following the grant of the Stock Unit and termination of service as an Eligible Director, one share of Common Stock. For purposes of this Plan, fractional Stock Units, measured to the nearest four decimal places, may be credited.

        t)    "Unit" shall mean a Performance Unit, a Stock Unit, or both, as required by context.

        u)    "Window" shall mean a 30 calendar-day period of time beginning on a Release Date.

3.     Administration:

       The Plan shall be administered by the Company. Subject to the terms of the Plan, the Board shall have the power to interpret the provisions and supervise the administration of the Plan.

4.     Shares Subject to the Plan:

        a)    Total Number. Subject to adjustment as provided in this Section, the total number of Shares as to which Options may be granted, or Performance Units, Stock Units and SARs awarded shall be 329,000. Any Shares issued hereunder may consist, in whole or in part, of authorized and unissued Shares or treasury Shares.

        b)    Reduction of Shares Available.

                (I)      The grant of an Option will reduce the Shares as to which Options may be granted by the number of Shares subject to such Option.

                (ii)      Any shares issued by the Company through the assumption or substitution of outstanding grants from an acquired company shall not reduce the Shares available for grants under the Plan.

                (iii)     The grant of Performance Units or Stock Units will reduce the number of Shares available for further grants by the number of Units granted.

                (iv)     The exercise of an SAR payable in Shares will reduce the number of Shares that may be issued upon subsequent exercise of SARs.

        c)    Increase of Shares Available. The lapse, cancellation or other termination of an Option, Unit or SAR that has not been fully exercised or paid shall increase the available Shares for such Options, Units or SARs by the number of Shares that have not been issued upon exercise of such Option or SAR or payment of such Unit.

        d)    Other Adjustments. The total number and kind of Shares available for Options, Units or SARs under the Plan or which may be allocated to any one Eligible Director, the number and kind of Shares subject to outstanding Options, Units or SARs, and the exercise price for such Options or SARs or the value of Units shall be appropriately adjusted by the Board for any increase or decrease in the number of outstanding Shares resulting from a stock dividend, subdivision, combination of Shares, reclassification, or other change in corporate structure affecting the Shares or for any conversion of the Shares into or exchange of the Shares for other Shares as a result of any merger or consolidation (including a sale of assets) or other recapitalization as may be necessary to maintain the proportionate interest of the Option, SAR or Unit holder.

5.     Initial Options:

        Initial Options shall be granted to Eligible Directors as follows:

        a)       Initial Grant. Each Eligible Director who has not previously received a grant under this Plan shall be granted an Option to acquire 2,000 Shares as follows: (1) on the Election Date in the event that the Election Date occurs during a Window, or (2) on the next Release Date in the event that the Election Date does not occur during the Window.

        b)       Terms and Conditions. Any Option granted under this Section 5 shall be subject to the following terms and conditions:

                  (I)     Option Price. The purchase price per Share purchasable under an Option granted under Section 5 shall be 100% of the Fair Market Value of a Share on the Grant Date.

                  (ii)    Exercisability. Unless otherwise provided by this Plan, an Option granted under Section 5 shall become exercisable in whole or in part one year from the Grant Date.

6.     Annual Options:

        Annual Options shall be granted to Eligible Directors as follows:

        a)       Eligible Directors. Each Eligible Director on or after the Effective Date of the Plan shall be granted an Option to acquire 2,000 Shares immediately after the annual meeting of the Company's stockholders.

        b)       Terms and Conditions. Any Option granted under this Section 6 shall be subject to the following terms and conditions:

                  (i)     Option Price. The purchase price per Share purchasable under an Option shall be 100% of the Fair Market Value of a Share on the Grant Date.

                  (ii)     Exercisability. Unless otherwise provided by this Plan, an Option granted under this Section 6 shall become exercisable in whole or in part one year from the Grant Date.

7.     General Terms:

        The following provisions shall apply to any Option:

        a)      Option Period. Each Option shall expire ten years from its Grant Date, subject to earlier termination as hereinafter provided.

        b)      Each Option granted under this Plan shall become exercisable by the Eligible Director only after the completion of one year of Board service immediately following the Grant Date; provided, however, that for Annual Options under Section 6, uninterrupted Board service by the Eligible Director until the annual meeting of the Company's stockholders next following the Grant Date shall be deemed completion of one year of Board service. Exercise of any or all prior existing Options shall not be required.

        c)       No Option under this Plan may be transferable by the Eligible Director except by will or the laws of descent and distribution. In the event of the death of the Eligible Director more than one year after the Grant Date and not more than three months after the termination of the Eligible Director's Board service, the Option may be transferred to the Eligible Director's personal representative, heirs or legatees ("Transferee") and may be exercised by the Transferee before the earlier of (i) the expiration of one year from the date of the death of the Eligible Director or (ii) the expiration of ten years from the Grant Date. In the event of the Retirement from Board service of an Eligible Director, an Option may be exercised prior to its expiration during the five year period beginning with the date of Retirement; provided, however, that in the event of a retiree's death during such five year period, unexercised Options may be exercised by the Transferee before the earlier of either items (i) or (ii) of this Section 7(c). In all other cases of termination of Board service of an Eligible Director except for removal for cause, the Option, if otherwise exercisable by the Eligible Director at the time of such termination, may be exercised within three months after such termination. In the event of removal for cause, all existing Options shall be of no force and effect.

        d)      Method of Exercise. Any Option may be exercised by the Eligible Director in whole or in part at such time or times and by such methods as the Board may specify. The applicable Option Letter may provide that the Eligible Director may make payment of the Option price in cash, Shares, held for at least six months, or such other consideration as the Board may specify, or any combination thereof, having a Fair Market Value on the exercise date equal to the total Option price.

8.     Stock Units:

        a)     Grant of Stock Units. On the date of the annual meeting of stockholders, each Eligible Director shall be awarded each year a number of Stock Units determined by dividing 50% of the Director's Annual Retainer by the Fair Market Value on that date.

        b)     Election of Stock Units. By written election filed with the Board before the end of any calendar year, an Eligible Director may elect to increase the percentage in a) above to 100%, and thereby have the entire Director's Annual Retainer payable in each calendar year beginning after the date of the election awarded in Stock Units. An election under this Section 8 b) shall remain in effect until changed, in writing, by the Director. Any such change shall be effective in the first calendar year beginning after the date of the written notice of change.

        c)     Forfeiture of Stock Units. Stock Units awarded at an annual meeting of stockholders will be forfeited if the Director terminates service as a Director for any reason other than Board approved Retirement, Board determined disability, or death, before the immediately following annual meeting of stockholders.

        d)     Stock Units in Lieu of Pension. Effective October 20, 1997, the present value on that date of any Eligible Director's accrued pension benefit under the Carpenter Technology Corporation Director Retirement Plan, excluding any Eligible Director who is required to retire on or before the 1998 Annual Meeting of Stockholders, shall be converted to Stock Units. The number of Stock Units to be awarded under this Section 8 d) shall be determined by dividing average of the Fair Market Value on the last ten business days of October 1997 into the present value of each Eligible Director's accrued pension. The present value will be determined using the UP-84 mortality table and a 7.5% interest rate. Stock Units awarded under this Section 8 d) shall not be subject to the vesting schedule of Section 8 c). Instead, such Stock Units will be payable upon the earlier of the Director's Retirement, Board determined disability, or death.

9.     Performance Units:

        a)     Grant of Performance Units. Performance Units may be granted annually to Eligible Directors in such amounts and subject to such Performance Goals as shall be determined by the Board. Each Performance Unit shall have an initial value equal to the Fair Market Value of a Share (or similar fractional Share) on the Grant Date. The Board shall set one or more Performance Goals as described in Section 2(n) of this Plan. The extent to which those Performance Goals are met will determine the number and value of Performance Units that will be paid out to the Eligible Director.

        b)     Form and Timing of Payment of Performance Units. Payment of earned Performance Units shall be made as soon as practicable following the close of the applicable period in a manner designated by the Board, in its sole discretion. The Board, in its sole discretion, may pay earned Performance Units in the form of cash or in Shares (or in a combination thereof) that have an aggregate Fair Market Value equal to the value of the earned Performance Units at the close of the applicable period. Such Shares may be granted subject to any restrictions deemed appropriate by the Board.

        c)     Dividends on Earned but Undistributed Shares. Eligible Directors shall be entitled to receive any dividends declared with respect to Shares that have been earned in connection with grants of Performance Units, but not yet distributed to Eligible Directors.

10.   Nontransferability of Units:

        Neither Performance Units nor Stock Units may be sold, transferred, pledged, assigned or otherwise alienated, other than by will or by the laws of descent and distribution.

11.   Dividend Equivalents:

        An Eligible Director who has been awarded Stock Units will also be awarded additional Units, determined on a quarterly basis. The number of additional Units to be awarded will be determined by multiplying the quarterly dividend per Share for the immediately preceding quarter by the number of Units credited to the Director on the first day of that calendar quarter and dividing the result by the Fair Market Value on the last business day of that quarter.

12.   Payment of Units:

        a)     Following an Eligible Director's Retirement, or termination of service on account of disability, the Director shall be paid a number of Shares equal to the number of whole Units credited to the Director, with cash paid in lieu of any fractional Units. The amount of cash to be paid will be based on the Fair Market Value on the date of the Director's termination of service as a Director. In the case of the Director's death, the payment will be made to the Director's Beneficiary.

        b)     Manner of Payment.

                (1)      An Eligible Director may elect to receive Shares in payment of Units credited to the Director's account in a lump sum or in annual installments payable over either ten or fifteen years.

                (2)      The election shall be made by the Director, in writing, filed with the Board no later than the end of the calendar year immediately preceding the Director's termination of service. If no election is made, the Director's Units will be paid in a lump sum as soon as is practicable following the Director's termination of service.

                (3)      If a Director elects installment payments, the amount of each annual installment will be the number of Units to the Director's credit at the end of the immediately preceding calendar year multiplied by a fraction the numerator of which is one and the denominator of which is the number of years remaining in the original installment period. Dividend equivalents will continue to be credited to the Director's account through the end of the calendar quarter immediately preceding the final installment.

                (4)      An Eligible Director who has elected installment payment of Units may, with the consent of the Board, which may be given or denied in the Board's sole discretion, change that election and receive a lump sum distribution of all remaining Units credited to the Director's account.

13.    Stock Appreciation Rights or SARs:

        SARs may be granted by the Board from time to time, subject to the following provisions:

        a)     The Board may grant a SAR either in connection with the grant of an Option ("Tandem SAR") or independent of the grant of an Option ("Freestanding SAR"). The grant of any Freestanding SAR must be related to the attainment of Performance Goals under Section 9. Each Tandem SAR shall be exercisable only with the exercise and surrender of the related Option or portion thereof and shall entitle the Eligible Director to receive the excess of the Fair Market Value of the Shares on the date the Tandem SAR is exercised over the option price under the related Option. The excess is hereafter called the "Spread" for both Tandem SARs and Freestanding SARs. If the Eligible Director elects instead to exercise the related Option, the Tandem SAR shall be canceled automatically.

        b)     A Tandem SAR shall be exercisable only to the extent and at the same time that the related Option is exercisable.

        c)     A Freestanding SAR shall be exercisable pursuant to the terms and conditions that are specified in the agreement in which the Freestanding SAR is granted.

        d)     Upon the exercise of a SAR, the Company shall pay to the Eligible Director an amount equivalent to the spread (less any applicable withholding taxes) in cash, or in Shares, or a combination of both, as the Board shall determine. Such determination may be made at the time of the granting of the SAR. No fractional Shares of Stock shall be issued and the Board shall determine whether cash shall be given in lieu of such fractional Share or whether such fractional Share shall be eliminated.

        e)     A Tandem SAR shall terminate and may no longer be exercised upon the termination or expiration of the related Option.

        f)      Income attributable to the exercise of a SAR shall not be included in the calculation of any other benefits payable at any time by reason of the Eligible Director's service to the Company.

        g)     No SAR shall be transferable by the Eligible Director.

        h)     The agreement under which a SAR is granted shall set forth the extent to which the Eligible Director shall have the right to exercise the SAR following termination of the Eligible Director's service as a Director. Such provisions shall be determined at the sole discretion of the Board and need not be uniform among all SARs issued pursuant to this Section 13, and may reflect distinctions based on the reasons for termination of service.

        i)     The Board may only grant Freestanding SARs pursuant to the achievement of Performance Goals and it may impose additional restrictions upon the vesting and exercise of such SARs on the attainment of Performance Goals. For all purposes under this Plan, "Performance Goals" means goals that must be met by the end of a period specified by the Board based upon one or more of the following criteria: (i) price of the Common Stock, (ii) market share of the Company, (iii) sales by the Company, (iv) earnings per share of the Common Stock, (v) return on shareholder equity of the Company, or (vi) costs of the Company.

14.   Change in Control:

        a)     Notwithstanding anything in this Plan to the contrary, in the event of a Change in Control of the Company, the Options granted under Sections 5 and 6 and any SARs granted under Section 13 shall vest and become immediately exercisable and any unvested Stock Units granted under Section 8 shall vest.

        b)     For purposes of this Plan, "Change in Control of the Company" means:

                (1)      The acquisition by any individual, entity or group [within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act] (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then-outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (B) 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, for purposes of this Section 14(b), the following acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any affiliated company or (iv) any acquisition by any corporation pursuant to a transaction that complies with Sections 14(b)(3)(A), 14(b)(3)(B) and 14(b)(3)(C);

                (2)      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; 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;

                (3)      consummation of a reorganization, merger, consolidation or 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 (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 and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation 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 of the corporation 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)      approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

        c)     Payment for Performance Units. Within 30 days following a Change in Control of the Company, as defined in Section 14(b) of this Plan, there shall be paid in cash to Eligible Directors holding Performance Units a pro rata amount based upon the assumed achievement of all relevant Performance Goals at target levels, and upon the length of time with the performance period that has elapsed before the Change in Control of the Company; provided, however, that if the Board determines that actual performance to the date of the Change in Control of the Company exceeds targeted levels, the prorated payouts shall be made using the actual performance data; and provided further, that there shall not be an accelerated payout with respect to Performance Units that qualify as "Derivative Securities" under Section 16 of the Exchange Act that were granted less than six months before the Change in Control of the Company.

15.    Amendments and Termination:

        a)     Board Authority. The Board may amend or terminate the Plan at any time; provided that no amendment may be made (i) without the appropriate approval of the Company's stockholders if such approval is necessary to comply with any tax or other regulatory requirement, including any stockholder approval required as a condition to exemptive relief under Section 16(b) of the Exchange Act; (ii) which would adversely impair or affect, without the consent of the Eligible Director, any rights or obligations under any Option, Unit or SAR theretofore granted to such Eligible Director; or (iii) more than once every six months with respect to the timing, amount and price of Options or SARs to be awarded to Eligible Directors, other than to comport with changes to the Code, the Employee Retirement Income Security Act, or the rules thereunder.

        b)     Prior Stockholder and Eligible Director Approval. Anything herein to the contrary notwithstanding, in the event that amendments to the Plan are required in order that the Plan or any other stock-based compensation plan of the Company comply with the requirements of Rule 16b-3 issued under the Exchange Act, as amended from time to time, or any successor rules promulgated by the Securities and Exchange Commission related to the treatment of benefit and compensation plans under Section 16 of the Exchange Act, the Board is authorized to make such amendments without the consent of Eligible Directors or the stockholders of the Company.

16.    General Provisions:

        a)     Compliance Regulations. All certificates for Shares delivered under this Plan pursuant to any Option, Unit or SAR shall be subject to such stock-transfer orders and other restrictions as the Board may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed, and any applicable federal or state securities law, and the Board may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. The Company shall not be required to issue or deliver any Shares under the Plan prior to the completion of any registration or qualification of such Shares under any federal or state law, or under any ruling or regulations of any governmental body or national securities exchange that the Board in its sole discretion shall deem to be necessary or appropriate.

        b)     Other Plans. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required by applicable law or the rules of any stock exchange on which the Common Stock is then listed; and such arrangements may be either generally applicable or applicable only in specific cases.

        c)     Governing Law. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Delaware and applicable federal law.

        d)     Conformity With Law. If any provision of this Plan is or becomes or is deemed invalid, illegal, or unenforceable in any jurisdiction, or would disqualify the Plan or any Option under any law deemed applicable by the Board, such provision shall be construed or deemed amended in such jurisdiction to conform to applicable laws or if it cannot be construed or deemed amended without, in the determination of the Board, materially altering the intent of the Plan, it shall be stricken and the remainder of the Plan shall remain in full force and effect.

        e)     Insufficient Shares. In the event there are insufficient Shares remaining to satisfy all of the grants of Options, Units or SARs made on the same day, such Options, Units or SARs shall be reduced pro-rata.

17.    Effective Date and Termination:

        The Plan's original effective date, as approved by the Board, was August 9, 1990, and last amended by the Board on August 10, 1995; and ratified by the stockholders at the Annual Meeting held October 23, 1995. The effective date of this amendment is April 26, 2001, while the effective date of the latest restatement was October 20, 1997, as ratified by the Company's stockholders at the Annual Meeting held on October 20, 1997. The Plan will terminate upon the date on which all outstanding Options have expired or terminated, and all outstanding Units and SARs have been paid or otherwise provided for.

EX-99.HOTHMATCONT

MANAGEMENT AND OFFICERS CAPITAL APPRECIATION PLAN,
AN INCENTIVE STOCK OPTION PLAN
Adopted May 12, 1977
(As last amended April 26, 2001)

1. Purpose.

        The purposes of this Plan are to attract, retain and motivate key employees of Carpenter Technology Corporation and its wholly owned subsidiaries ("the Corporation"), to encourage stock ownership by such employees by providing them with a means to acquire a proprietary interest or to increase their proprietary interest in the Corporation's success and to provide a greater community of interest between such employees and the Corporation's stockholders.

2. Administration.

        The Board of Directors of Carpenter Technology Corporation ("the Board") shall be responsible for the operation of the Plan. It shall be authorized, subject to the provisions of the Plan, from time to time to establish such rules and regulations and to appoint such agents as it deems appropriate for the proper administration of the Plan, and to make such determinations under, and such interpretations of, and to take such steps in connection with, the Plan or the options or stock appreciation rights granted hereunder as it deems necessary or advisable. Any questions of interpretation as determined by the Board shall be final and binding upon all persons. The Board may delegate these powers to the Compensation and Stock Option Committee of the Board, consisting of at least three Directors not participating in the Plan.

3. Participants.

        Participants in the Plan will consist of such officers or key employees of the Corporation as the Board in its sole discretion may, from time to time, designate. The Board's designation of a participant at any time to receive benefits under the Plan shall not obligate it to designate such person to receive benefits at any other time. The Board shall consider such factors as it deems pertinent in selecting participants and in determining the type and amount of options and rights granted hereunder.

4. Types of Benefits.

        Benefits under the Plan may be granted in (a) non-qualified stock options ("options" or individually an "option") which are intended to be nonstatutory options not qualifying under Section 422 or any other section of the Internal Revenue Code, and (b) stock appreciation rights, each as described below.

5. Shares Reserved Under the Plan.

        (a)         Subject to the provisions of Section 11, the maximum aggregate number of shares which may be made available for options hereunder is 400,000 shares of common stock of Carpenter Technology Corporation and no more than 40,000 shares of said 400,000 shares shall be optioned to any one individual. The shares involved in the unexercised portion of any terminated or expired option or stock appreciation right under the Plan may again be subject to options under the Plan. Such shares may be either authorized and unissued shares, or issued shares reacquired by the Corporation.

6. Options.

        Options may be granted by the Board from time to time, subject to the following provisions:

        (a)         Each option granted under this Plan shall become exercisable by the optionee only after the optionee has completed one year of employment immediately following the date the option is granted, as determined by the Board (the "date of grant"), and shall expire ten years from the date of grant. Exercise of any or all prior existing options shall not be required.

        (b)         The option price per share of an option shall be determined by the Board but shall not be less than the fair market value of Carpenter Technology Corporation's stock on the date of grant. For the purpose of this Plan, the term "fair market value" shall mean the closing price of Carpenter Technology Corporation common stock on the New York Stock Exchange on the date in question, or, in the absence of a closing price on such date, then the closing price on the last trading day preceding the date of grant, as reflected on the consolidated tape of New York Stock Exchange issues.

        (c)         No option under this Plan may be transferable by the optionee except by will or the laws of descent and distribution. In the event of the death of the optionee more than one year after the date of grant and not more than three months after the termination of the optionee's employment by the Corporation, the option may be transferred to the optionee's personal representative, heirs or legatees ("transferee") and may be exercised by the transferee before the earlier of (i) the expiration of one year from the date of the death of the optionee or (ii) the expiration of 10 years from the date of grant. In the event of the retirement of an optionee, an option may be exercised prior to its expiration during the five year period beginning with the date of retirement; provided, however, that in the event of a retiree's death during such five year period, unexercised options may be exercised by the transferee before the earlier of either items (i) or (ii) of this Section 6(c). In all other cases of termination of employment of an optionee, the option, if otherwise exercisable by the optionee at the time of such termination, may be exercised within three months after such termination.

        Notwithstanding anything in the Plan to the contrary, in the event an optionee's employment with the Corporation is terminated for "cause", the Board (or if the Board has delegated its authority, the Compensation and Stock Option Committee) may, in its sole discretion, cancel each unexercised option awarded to such terminated optionee effective upon the termination. For purposes of this Section, a termination for "cause" shall mean termination of an optionee's employment with the Corporation which results from either (a) the optionee committing an Intolerable Offense (as defined in the Corporation's Personnel Practices and Policies as in effect on the date of termination) or (b) the operation of the Corporation's Corrective Performance System (as set forth in the Corporation's Personnel Procedures and Policies as in effect on the date of termination).

        (d)         Each option shall be exercisable for the full amount or any part thereof, including a partial exercise from time to time. All shares purchased under options shall be paid for in full at the time of purchase. Exercised options may be paid for with cash or stock of Carpenter Technology Corporation which has been held by the optionee for a period of at least six months, the value of which shall be the fair market value on the date of exercise of the options, as determined in Section 6(b) of the Plan.

7. Stock Appreciation Rights.

        (a)         Stock appreciation rights may be granted from time to time by the Board upon such terms and conditions as it may prescribe. The Board shall grant one stock appreciation right for every option share granted hereunder prior to August 9, 1990. The Board may in its discretion grant no more than one stock appreciation right for every option share granted hereunder on or subsequent to August 9, 1990. A stock appreciation right shall be exercisable only with exercise and surrender of the related option or portion thereof and shall entitle the optionee to receive the excess of the fair market value of the shares of the common stock for which the right is exercised on the date of such exercise over the option price under the related option. Such excess is hereafter called "the spread".

        (b)         A stock appreciation right shall be exercisable only to the extent and at the same time that the related option is exercised.

        (c)         Upon the exercise of a stock appreciation right, the Corporation shall give to the optionee an amount equivalent to the spread (less any applicable withholding taxes) in cash, or in shares of Carpenter Technology Corporation's common stock, or a combination of both, as the Board shall determine. Such determination may be made at the time of the granting of the stock appreciation right. The shares may consist either in whole or in part of authorized and unissued shares or issued shares reacquired by the Corporation. The payment of the stock appreciation right spread in shares of common stock will correspondingly reduce the number of shares reserved under Section 5. No fractional shares of common stock shall be issued and the Board shall determine whether cash shall be given in lieu of such fractional share or whether such fractional share shall be eliminated.

        (d)         A stock appreciation right shall terminate and may no longer be exercised upon the termination or expiration of the related option.

        (e)         Income attributable to the exercise of a stock appreciation right shall not be included in the calculation of pension or other benefits payable at any time by reason of the optionee's employment by the Corporation.

        (f)          No stock appreciation right shall be transferable by the optionee except as provided in Section 6(c) of this Plan.

8. Valuation Date.

        The options granted hereunder shall be valued for Federal income tax purposes on the date said options are exercised and the optionee, by accepting the option, agrees not to elect to value said options for tax purposes at any other date, including, without limitation, the date of grant.

9. Adjustment Provisions.

        If Carpenter Technology Corporation shall at any time change the number of issued shares of common stock without new consideration to the Corporation (such as by stock dividends, stock splits or stock combinations), the total number of shares reserved for issuance under this Plan and the number of shares covered by each outstanding benefit shall be adjusted so that the aggregate consideration payable to the Corporation and the value of each benefit shall not be changed. In the event of a merger or consolidation of Carpenter Technology Corporation, the Board shall make such adjustments with respect to options or take such other action as it deems necessary or appropriate to equitably reflect such merger or consolidation including, without limitation, the substitution of new options, the termination of existing options or the acceleration of the right to exercise. Appropriate adjustments shall be made by the Board in the terms of stock appreciation rights to reflect the foregoing changes.

10. Change in Control.

        (a)         Notwithstanding anything in this Plan to the contrary, in the event of a Change in Control of the Corporation (i) each Option shall become immediately exercisable and (ii) each stock appreciation right shall be fully exercisable for the sixty-day period immediately following the Change in Control of the Corporation using the Change in Control Price instead of the fair market value to determine the amount payable upon the exercise of such stock appreciation right. In addition, notwithstanding anything in this Plan to the contrary, if the employment of an optionee or holder of a stock appreciation right is terminated by the Corporation without "cause" as defined in Section 6(c), or, in the case of an employee who is covered by an employment arrangement or agreement that enables such employee to terminate for Good Reason (as defined in such arrangement or agreement), for Good Reason, during the two-year period commencing on the date of the occurrence of a Change in Control of the Corporation, then such employee shall be able to exercise his or her options and stock appreciation rights until the earlier of (x) the second anniversary of such employment termination or (y) the expiration of their original term.

        (b)         For purposes of this Plan, a "Change in Control of the Corporation" means:

                            (1)     The acquisition by 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") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then-outstanding shares of common stock of Carpenter Technology Corporation (the "Outstanding Company Common Stock") or (B) the combined voting power of the then-outstanding voting securities of Carpenter Technology Corporation entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that, for purposes of this Section 10(b), the following acquisitions shall not constitute a Change in Control of the Corporation: (i) any acquisition directly from Carpenter Technology Corporation, (ii) any acquisition by Carpenter Technology Corporation, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Carpenter Technology Corporation or any affiliated company or (iv) any acquisition by any corporation pursuant to a transaction that complies with Sections 10(b)(3)(A), 10(b)(3)(B) and 10(b)(3)(C);

                            (2)     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; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by Carpenter Technology Corporation'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;

                            (3)     consummation of a reorganization, merger, consolidation or sale or other disposition of all or substantially all of the assets of Carpenter Technology Corporation or the acquisition of the assets or stock of another entity (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 and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that, as a result of such transaction, owns Carpenter Technology Corporation or all or substantially all of Carpenter Technology Corporation'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 Carpenter Technology Corporation 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 of the corporation 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)     approval by the stockholders of Carpenter Technology Corporation of a complete liquidation or dissolution of Carpenter Technology Corporation.

                    (c) For purposes of this Plan, Change in Control Price shall mean the higher of (i) the highest price paid per share of Corporation common stock in any transaction constituting a Change in Control of the Corporation or (ii) the highest fair market value per share of Carpenter Technology Corporation common stock as reported in the Wall Street Journal at any time during the sixty-day period preceding the Change in Control of the Corporation.

11. Amendment, Modification and Termination of the Plan.

        The Board, at any time, may terminate, and at any time and from time to time, and in any respect, may amend or modify, the Plan; provided, however, that no such action by the Board, without approval of the stockholders, may (a) increase the total amount of common stock which may be purchased under options granted under the Plan or the maximum number of shares of common stock for which options may be granted under the Plan to any one individual, except as contemplated in Section 9, (b) permit options to be granted at less than fair market value, (c) permit any person while a member of the committee contemplated in Section 2 to be eligible to receive or hold an option or stock appreciation right under the Plan or (d) change the manner of computing the spread upon the exercise of a stock appreciation right.

12. Effective Date of the Plan.

        The Plan shall become effective upon approval by the Board; provided, however, that the Plan shall be submitted for ratification by the stockholders at the Annual Meeting to be held on November 7, 1977, and if not ratified shall be of no force and effect. All options and stock appreciation rights granted prior to such Annual Meeting shall be granted subject to ratification of the Plan by the stockholders of Carpenter Technology Corporation at such Meeting and no option shall be exercisable before such ratification.

STK15.10

EX-99.HOTHMATCONT

SPECIAL SEVERANCE AGREEMENT

                AGREEMENT, dated as of the [____] day of [___________], [_____________] (this "Agreement"), by and between Carpenter Technology Corporation, a Delaware corporation (the "Company"), and [_________] (the "Executive").

                WHEREAS, the Board of Directors of the Company (the "Board"), has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined herein). The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive's full attention and dedication to the current Company and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control that ensure that the compensation and benefits expectations of the Executive will be satisfied and that are competitive with those of other corporations. Therefore, in order to accomplish these objectives, the Board has caused the Company to enter into this Agreement.

                NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

                Section 1.    Certain Definitions. (a) "Effective Date" means the first date during the Change of Control Period (as defined herein) on which a Change of Control occurs. Notwithstanding anything in this Agreement to the contrary, if a Change of Control occurs and if the Executive's employment with the Company is terminated prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment (1) was at the request of a third party that has taken steps reasonably calculated to effect a Change of Control or (2) otherwise arose in connection with or anticipation of a Change of Control, then "Effective Date" means the date immediately prior to the date of such termination of employment.
             (a)    [hidden text]

                (b)     "Change of Control Period" means the period commencing on the date hereof and ending on the third anniversary of the date hereof; provided, however, that, commencing on the date one year after the date hereof, and on each annual anniversary of such date (such date and each annual anniversary thereof, the "Renewal Date"), unless previously terminated, the Change of Control Period shall be automatically extended so as to terminate three years from such Renewal Date, unless, at least 60 days prior to the Renewal Date, the Company shall give notice to the Executive that the Change of Control Period shall not be so extended.

                (c)     "Affiliated Company" means any company controlled by, controlling or under common control with the Company.

                (d)     "Change of Control" means:

                (1)     The acquisition by 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") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then-outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (B) 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, for purposes of this Section 1(d), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliated Company or (iv) any acquisition by any corporation pursuant to a transaction that complies with Sections 1(d)(3)(A), 1(d)(3)(B) and 1(d)(3)(C).

                (2)     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; 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.

                (3)     Consummation of a reorganization, merger, consolidation or 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 (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 and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation 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 of the corporation 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)     Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

                Section 2.    Employment Period. The Company hereby agrees to continue the Executive in its employ, subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the third anniversary of the Effective Date (the "Employment Period"). The Employment Period shall terminate upon the Executive's termination of employment for any reason.

                Section 3.    Terms of Employment. (a) Position and Duties. (1) During the Employment Period, (A) the Executive's position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 120-day period immediately preceding the Effective Date and (B) the Executive's services shall be performed at the office where the Executive was employed immediately preceding the Effective Date or at any other location less than 35 miles from such office.

         (1)    [hidden text]

                (2)     During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive's reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period, it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Company in accordance with this Agreement. It is expressly understood and agreed that, to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive's responsibilities to the Company.

                (b)     Compensation. (1) Base Salary. During the Employment Period, the Executive shall receive an annual base salary (the "Annual Base Salary") at an annual rate at least equal to 12 times the highest monthly base salary paid or payable, including any base salary that has been earned but deferred, to the Executive by the Company and the Affiliated Companies in respect of the 12-month period immediately preceding the month in which the Effective Date occurs. The Annual Base Salary shall be paid at such intervals as the Company pays executive salaries generally. During the Employment Period, the Annual Base Salary shall be reviewed at least annually, beginning no more than 12 months after the last salary increase awarded to the Executive prior to the Effective Date. Any increase in the Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. The Annual Base Salary shall not be reduced after any such increase and the term "Annual Base Salary" shall refer to the Annual Base Salary as so increased.

         (1)    [hidden text]

                (2)   Annual Bonus. In addition to the Annual Base Salary, the Executive shall be awarded, for each fiscal year ending during the Employment Period, an annual bonus (the "Annual Bonus") in cash at least equal to the Annual Target Bonus, where the "Annual Target Bonus" is an amount equal to the Annual Base Salary times the Executive Annual Compensation Plan Total Target Percentage (as most recently approved by the Company's Board of Directors or Human Resources Committee for the year in which the Effective Date occurs), or any comparable bonus under any predecessor or successor plan. Each such Annual Bonus shall be paid no later than the end of the third month of the fiscal year next following the fiscal year for which the Annual Bonus is awarded, unless the Executive shall elect to defer the receipt of such Annual Bonus.

                (3)    Incentive, Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all cash incentive, equity incentive, savings and retirement plans, practices, policies, and programs applicable generally to other peer executives of the Company and the Affiliated Companies, but in no event shall such plans, practices, policies and programs provide the Executive with incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by the Company and the Affiliated Companies for the Executive under such plans, practices, policies and programs as in effect at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and the Affiliated Companies.

                (4)    Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and the Affiliated Companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer executives of the Company and the Affiliated Companies, but in no event shall such plans, practices, policies and programs provide the Executive with benefits that are less favorable, in the aggregate, than the most favorable of such plans, practices, policies and programs in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and the Affiliated Companies.

                (5)     Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies, practices and procedures of the Company and the Affiliated Companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and the Affiliated Companies.

                (6)     Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe benefits, including, without limitation, tax and financial planning services, payment of club dues, and, if applicable, use of an automobile and payment of related expenses, in accordance with the most favorable plans, practices, programs and policies of the Company and the Affiliated Companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and the Affiliated Companies.

                (7)     Office and Support Staff. During the Employment Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to exclusive personal secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Executive by the Company and the Affiliated Companies at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as provided generally at any time thereafter with respect to other peer executives of the Company and the Affiliated Companies.

                (8)     Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of the Company and the Affiliated Companies as in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and the Affiliated Companies.

                Section 4.    Termination of Employment. (a) Death or Disability. The Executive's employment shall terminate automatically if the Executive dies during the Employment Period. If the Company determines in good faith that the Disability (as defined herein) of the Executive has occurred during the Employment Period (pursuant to the definition of "Disability"), it may give to the Executive written notice in accordance with Section 11(b) of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the "Disability Effective Date"), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive's duties. "Disability" means the absence of the Executive from the Executive's duties with the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness that is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive's legal representative.

         (a)    [hidden text]

                (b)     Cause. The Company may terminate the Executive's employment during the Employment Period for Cause. "Cause" means:

      (1)    the willful and continued failure of the Executive to perform substantially the Executive's duties (as   contemplated by Section 3(a)(1)(A)) with the Company or any Affiliated Company (other than any such failure resulting from incapacity due to physical or mental illness or following the Executive's delivery of a Notice of Termination for Good Reason), after a written demand for substantial performance is delivered to the Executive by the Board or the Chief Executive Officer of the Company that specifically identifies the manner in which the Board or the Chief Executive          Officer of the Company believes that the Executive has not substantially performed the Executive's  duties, or

      (2)    the willful engaging by the Executive in illegal conduct or gross misconduct that is materially and demonstrably injurious to the Company.

For purposes of this Section 4(b), no act, or failure to act, on the part of the Executive shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer of the Company or a senior officer of the Company or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board (excluding the Executive, if the Executive is a member of the Board) at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel for the Executive, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in Section 4(b)(1) or 4(b)(2), and specifying the particulars thereof in detail.

                (c)     Good Reason. The Executive's employment may be terminated by the Executive for Good Reason or by the Executive voluntarily without Good Reason. "Good Reason" means:

      (1)    the assignment to the Executive of any duties inconsistent in any respect with the Executive's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 3(a), or any other diminution in such position, authority, duties or responsibilities (whether or not occurring solely as a result of the Company's ceasing to be a publicly traded entity), excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by the Executive;

      (2)    any failure by the Company to comply with any of the provisions of Section 3(b), other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by the Executive;

      (3)    the Company's requiring the Executive (i) to be based at any office or location other than as provided in Section 3(a)(1)(B), (ii) to be based at a location other than the principal executive offices of the Company if the Executive was employed at such location immediately preceding the Effective Date, or (iii) to travel on Company business to a substantially greater extent than required immediately prior to the Effective Date;

      (4)    any purported termination by the Company of the Executive's employment otherwise than as expressly permitted by this Agreement; or

                (5)     any failure by the Company to comply with and satisfy Section 10(c).

For purposes of this Section 4(c), any good faith determination of Good Reason made by the Executive shall be conclusive. Anything in this Agreement to the contrary notwithstanding, a termination by the Executive for any reason pursuant to a Notice of Termination given during the 30-day period immediately following the first anniversary of the Effective Date shall be deemed to be a termination for Good Reason for all purposes of this Agreement. The Executive's mental or physical incapacity following the occurrence of an event described above in clauses (1) through (5) shall not affect the Executive's ability to terminate employment for Good Reason.

                (d)     Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 11(b). "Notice of Termination" means a written notice that (1) indicates the specific termination provision in this Agreement relied upon, (2) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated, and (3) if the Date of Termination (as defined herein) is other than the date of receipt of such notice, specifies the Date of Termination (which Date of Termination shall be not more than 30 days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive's or the Company's respective rights hereunder.

                (e)     Date of Termination. "Date of Termination" means (1) if the Executive's employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified in the Notice of Termination, (which date shall not be more than 30 days after the giving of such notice), as the case may be, (2) if the Executive's employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination, and (3) if the Executive's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be.

                Section 5.    Obligations of the Company upon Termination. (a) Good Reason; Other Than for Cause, Death or Disability. If, during the Employment Period, the Company terminates the Executive's employment other than for Cause or Disability or the Executive terminates employment for Good Reason:

      (1)    The Company shall pay to the Executive, in a lump sum in cash within 10 days after the Date of Termination, the aggregate of the following amounts:

                         (A)     the sum of (i) the Executive's Annual Base Salary through the Date of Termination to the
               extent not theretofore paid, (ii) the Annual Target Bonus times a fraction, the numerator of which is
               the   number of days in the current fiscal year through the Date of Termination and the denominator
               of which is 365, and (iii) any compensation previously deferred by the Executive (together with any
               accrued interest or earnings thereon) and any accrued vacation pay, in each case, to the extent not
               theretofore paid (the sum of the amounts described in subclauses (i), (ii) and (iii), the "Accrued
               Obligations"); and

                         (B)     the amount equal to three times the sum of (x) the Executive's Annual Base Salary and (y)
                the Annual Target Bonus, reduced by any lump sum severance amount payable to the Executive
                pursuant to the General Retirement Plan for Employees of Carpenter Technology Corporation or any
                successor thereto (the "GRP").

      (2)    For three years after the Executive's Date of Termination, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, the Company shall continue benefits to the Executive and/or the Executive's family at least equal to those that would have been provided to them in accordance with the plans, programs, practices and policies described in Section 3(b)(4) or 3(b)(6) (including, without limitation, tax and financial planning services to the extent the Executive was entitled to such services under Section 3(b)(6)) if the Executive's employment had not been terminated or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and the Affiliated Companies and their families, provided, however, that, if the Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility.

       (3)    To the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or that the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and the Affiliated Companies (such other amounts and benefits, the "Other Benefits").

       (4)    The Company shall at its sole expense provide the Executive with reasonable outplacement services, at a cost not to exceed $20,000, during the one-year period following the Executive's Date of Termination. The Executive shall not, however, be entitled to any payment in lieu of accepting outplacement assistance services.

       (5)    Notwithstanding any contrary provision of this Agreement or any other agreement between the Executive and the Company, or of the Supplemental Retirement Plan for Executives of Carpenter Technology Corporation (the "CSRP"), upon the Executive's Date of Termination, the Executive will be considered to have attained the greater of age 62 or the Executive's actual age, and to have completed the greater of five years of service, or the Executive's actual number of years of service, and therefore will be entitled to retire with an immediate pension under Section 7(A) of the CSRP, and to:

          (A)    receive the normal supplemental executive retirement benefit payable to the Executive under Section 5 of the CSRP, based on the sum of the Executive's actual years of service, plus an additional 3 years, and the greater of the Executive's attained age or age 62, reduced in accordance with Section 6(C) of the CSRP. Notwithstanding the provisions of Section 6(C) of the CSRP, the reduction provided therein shall be based on the benefits actually payable to the Executive under the GRP, the Benefit Equalization Plan of Carpenter Technology Corporation, the Earnings Adjustment Plan of Carpenter Technology Corporation, the Officers' Supplemental Retirement Plan of Carpenter Technology Corporation, and the Executive's primary Social Security retirement benefit, beginning when the Executive actually commences receipt of those benefits;

          (B)    receive a special supplemental benefit payable for life to the Executive under the CSRP in an amount equal to the benefits that would have been payable to the Executive under the Retirement Plan had the Executive attained age 62 and completed the greater of ten years of service or the Executive's actual number of completed years of service, plus an additional 3 years of service. This benefit shall be reduced, beginning when the Executive actually commences receipt of the benefits to which the Executive is entitled under the Retirement Plan, by the benefit actually payable to the Executive under the Retirement Plan at that time. The benefit payable under this Section 5(a)(4)(B) will be paid in the same form, and the necessary adjustments computed using the same actuarial methods and assumptions, as the Executive has elected with respect to the Executive's benefit under the Retirement Plan, or if no such election has been made, in the form of an annuity for the Executive's life and, if the Executive is married as of the Executive's Date of Termination, 50% of that amount payable to the Executive's surviving spouse for the spouse's life; and

          (C)     participate in, and receive coverage under, any post-retirement medical and life insurance benefits sponsored by the Company for executive-level employees who retire from active service, in accordance with the terms of any such plan as in effect during the 90 days preceding the Change of Control, or as such plans may be subsequently improved. If the Company determines to amend any such plan in any way that could reasonably be expected to be adverse to the Executive, or to discontinue any such plan, the Company will pay the Executive an amount in cash, payable annually in advance, sufficient to enable the Executive, after the payment of any income or payroll taxes imposed on such amount, to pay the premiums necessary to maintain in effect, on an individual basis, insurance at least equal to that provided to the Executive by the Company immediately before any such amendment or termination. Any such insurance shall be provided by the insurer(s) selected by the Executive, provided, that if the Company is able to procure such coverage at a lower cost from another insurer rated by Moody's rating service at least equal to the rating of the insurer selected by the Executive, and requiring no more proof of insurability than the insurer selected by the Executive, the Executive shall accept coverage from such insurer.

                    (b)     Death. If the Executive's employment is terminated by reason of the Executive's death during the Employment Period, the Company shall provide the Executive's estate or beneficiaries with the Accrued Obligations and the timely payment or delivery of the Other Benefits, and shall have no other severance obligations under this Agreement. The Accrued Obligations shall be paid to the Executive's estate or beneficiary, as applicable, in a lump sum in cash within 10 days of the Date of Termination. With respect to the provision of the Other Benefits, the term "Other Benefits" as utilized in this Section 5(b) shall include, without limitation, and the Executive's estate and/or beneficiaries shall be entitled to receive, benefits at least equal to the most favorable benefits provided by the Company and the Affiliated Companies to the estates and beneficiaries of peer executives of the Company and the Affiliated Companies under such plans, programs, practices and policies relating to death benefits, if any, as in effect with respect to other peer executives and their beneficiaries at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive's estate and/or the Executive's beneficiaries, as in effect on the date of the Executive's death with respect to other peer executives of the Company and the Affiliated Companies and their beneficiaries.

                    (c)     Disability. If the Executive's employment is terminated by reason of the Executive's Disability during the Employment Period, the Company shall provide the Executive with the Accrued Obligations and the timely payment or delivery of the Other Benefits, and shall have no other severance obligations under this Agreement. The Accrued Obligations shall be paid to the Executive in a lump sum in cash within 10 days of the Date of Termination. With respect to the provision of the Other Benefits, the term "Other Benefits" as utilized in this Section 6(c) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits at least equal to the most favorable of those generally provided by the Company and the Affiliated Companies to disabled executives and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, as in effect generally with respect to other peer executives and their families at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect at any time thereafter generally with respect to other peer executives of the Company and the Affiliated Companies and their families.

                    (d)     Cause; Other Than for Good Reason. If the Executive's employment is terminated for Cause during the Employment Period, the Company shall provide to the Executive (1) the Executive's Annual Base Salary through the Date of Termination, (2) the amount of any compensation previously deferred by the Executive, and (3) the Other Benefits, in each case, to the extent theretofore unpaid, and shall have no other severance obligations under this Agreement. If the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, the Company shall provide to the Executive the Accrued Obligations and the timely payment or delivery of the Other Benefits, and shall have no other severance obligations under this Agreement. In such case, all the Accrued Obligations shall be paid to the Executive in a lump sum in cash within 10 days of the Date of Termination.

                    Section 6.    Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any plan, program, policy or practice provided by the Company or the Affiliated Companies and for which the Executive may qualify, nor, subject to Section 11(f), shall anything herein limit or otherwise affect such rights as the Executive may have under any other contract or agreement with the Company or the Affiliated Companies. Amounts that are vested benefits or that the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or the Affiliated Companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement, except as explicitly modified by this Agreement. Notwithstanding the foregoing, if the Executive receives payments and benefits pursuant to Section 5(a) of this Agreement, the Executive shall not be entitled to other severance pay or benefits under any severance plan, program or policy of the Company and the Affiliated Companies, unless otherwise specifically provided therein by an explicit reference to this Agreement, or provided under the GRP.

                    Section 7.    Full Settlement. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense, or other claim, right or action that the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not the Executive obtains other employment except as set forth in Section 5(a)(2). The Company agrees to pay as incurred (within 10 days following the Company's receipt of an invoice from the Executive), to the full extent permitted by law, all legal fees and expenses that the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus, in each case, interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code").

                    Section 8.    Certain Additional Payments by the Company.

                    (a)     Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment would be subject to the Excise Tax, then the Executive shall be entitled to receive an additional payment (the "Gross-Up Payment") in an amount such that, after payment by the Executive of all taxes (and any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. The Company's obligation to make Gross-Up Payments under this Section 8 shall not be conditioned upon the Executive's termination of employment.

                    (b)     Subject to the provisions of Section 8(c), all determinations required to be made under this Section 8, including whether and when a Gross-Up Payment is required, the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by PricewaterhouseCoopers LLP, or such other nationally recognized certified public accounting firm as may be designated by the Executive (the "Accounting Firm"). The Accounting Firm shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive may appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 8, shall be paid by the Company to the Executive within 5 days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. 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 Gross-Up Payments that will not have been made by the Company should have been made (the "Underpayment"), consistent with the calculations required to be made hereunder. In the event the Company exhausts its remedies pursuant to Section 8(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.

                    (c)     The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than 30 business days after the Executive is informed in writing of such claim. The Executive shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which the Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that the Company desires to contest such claim, the Executive shall:

                    (1)     give the Company any information reasonably requested by the Company relating to such              claim,

                    (2)     take such action in connection with contesting such claim as the Company shall reasonably              request in writing from time to time, including, without limitation, accepting legal representation with
             respect to such claim by an attorney reasonably selected by the Company,

                    (3)     cooperate with the Company in good faith in order effectively to contest such claim, and

                    (4)     permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest, and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 8(c), the Company shall control all proceedings taken in connection with such contest, and, at its sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable taxing authority in respect of such claim and may, at its sole discretion, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that, if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis, and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties) imposed with respect to such advance or with respect to any imputed income in connection with such advance; and provided, further, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which the Gross-Up Payment would be payable hereunder, and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

                    (d)     If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 8(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company's complying with the requirements of Section 8(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 8(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

                    (e)     Notwithstanding any other provision of this Section 8, the Company may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of the Executive, all or any portion of the Gross-Up Payment, and the Executive hereby consents to such withholding.

                    (f)     Definitions. The following terms shall have the following meanings for purposes of this Section 8.

                    (i)     "Excise Tax" shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

                    (ii)     A "Payment" shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise.

                    Section 9.    Confidential Information. The Executive 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 the Affiliated Companies, and their respective businesses, which information, knowledge or data shall have been obtained by the Executive during the Executive's employment by the Company or the Affiliated Companies and which information, knowledge or data shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). After termination of the Executive's employment with the Company, the Executive 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 persons designated by the Company. In no event shall an asserted violation of the provisions of this Section 9 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement.

                    Section 10.    Successors. (a) This Agreement is personal to the Executive, and, without the prior written consent of the Company, shall not be assignable by the Executive other than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives.

            (a)   [hidden text]

                    (b)     This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. Except as provided in Section 10(c), without the prior written consent of the Executive this Agreement shall not be assignable by the Company.

                    (c)     The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. "Company" means the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law or otherwise.

                    Section 11.    Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified other than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

            (a)   [hidden text]

                    (b)     All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

                    if to the Executive:
                                to the last address listed for the Executive in the Company's books and records.

                    if to the Company:

                                Carpenter Technology Corporation
                               1047 North Park Road
                                Wyomissing, PA 19610-1339
                                Attention: General Counsel

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

                    (c)     The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

                    (d)     The Company may withhold from any amounts payable under this Agreement such United States federal, state or local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

                    (e)     The Executive's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Sections 4(c)(1) through 4(c)(5), shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

                    (f)     The Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and the Company, the employment of the Executive by the Company is "at will" and, subject to Section 1(a), prior to the Effective Date, the Executive's employment may be terminated by either the Executive or the Company at any time prior to the Effective Date, in which case the Executive shall have no further rights under this Agreement. From and after the Effective Date, except as specifically provided herein, this Agreement shall supersede any other agreement between the parties with respect to the subject matter hereof.

                    IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization from the Board, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

EXECUTIVE

                                                                 
[Name of Executive]

CARPENTER TECHNOLOGY CORPORATION


By___________________________
      Name:
      Title:

EX-99.HOTHMATCONT

SPECIAL SEVERANCE AGREEMENT

            AGREEMENT, dated as of the [____] day of [___________], [_____________] (this "Agreement"), by and between Carpenter Technology Corporation, a Delaware corporation (the "Company"), and [_________] (the "Executive").

            WHEREAS, the Board of Directors of the Company (the "Board"), has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined herein). The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive's full attention and dedication to the current Company and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control that ensure that the compensation and benefits expectations of the Executive will be satisfied and that are competitive with those of other corporations. Therefore, in order to accomplish these objectives, the Board has caused the Company to enter into this Agreement.

            NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

            Section 1.     Certain Definitions.   (a) "Effective Date" means the first date during the Change of Control Period (as defined herein) on which a Change of Control occurs. Notwithstanding anything in this Agreement to the contrary, if a Change of Control occurs and if the Executive's employment with the Company is terminated prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment (1) was at the request of a third party that has taken steps reasonably calculated to effect a Change of Control or (2) otherwise arose in connection with or anticipation of a Change of Control, then "Effective Date" means the date immediately prior to the date of such termination of employment.

            (a)     [hidden text]

            (b)     "Change of Control Period" means the period commencing on the date hereof and ending on the third anniversary of the date hereof; provided, however, that, commencing on the date one year after the date hereof, and on each annual anniversary of such date (such date and each annual anniversary thereof, the "Renewal Date"), unless previously terminated, the Change of Control Period shall be automatically extended so as to terminate three years from such Renewal Date, unless, at least 60 days prior to the Renewal Date, the Company shall give notice to the Executive that the Change of Control Period shall not be so extended.

            (c)     "Affiliated Company" means any company controlled by, controlling or under common control with the Company.

            (d)     "Change of Control" means:

            (1)     The acquisition by 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") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then-outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (B) 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, for purposes of this Section 1(d), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliated Company or (iv) any acquisition by any corporation pursuant to a transaction that complies with Sections 1(d)(3)(A), 1(d)(3)(B) and 1(d)(3)(C).

            (2)     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; 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.

            (3)     Consummation of a reorganization, merger, consolidation or 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 (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 and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation 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 of the corporation 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)     Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

            Section 2.     Employment Period.   The Company hereby agrees to continue the Executive in its employ, subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the third anniversary of the Effective Date (the "Employment Period"). The Employment Period shall terminate upon the Executive's termination of employment for any reason.

            Section 3.     Terms of Employment.   (a) Position and Duties.   (1) During the Employment Period, (A) the Executive's position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 120-day period immediately preceding the Effective Date and (B) the Executive's services shall be performed at the office where the Executive was employed immediately preceding the Effective Date or at any other location less than 35 miles from such office.

            (1)     [hidden text]

            (2)     During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive's reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period, it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Company in accordance with this Agreement. It is expressly understood and agreed that, to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive's responsibilities to the Company.

            (b)     Compensation.   (1) Base Salary.   During the Employment Period, the Executive shall receive an annual base salary (the "Annual Base Salary") at an annual rate at least equal to 12 times the highest monthly base salary paid or payable, including any base salary that has been earned but deferred, to the Executive by the Company and the Affiliated Companies in respect of the 12-month period immediately preceding the month in which the Effective Date occurs. The Annual Base Salary shall be paid at such intervals as the Company pays executive salaries generally. During the Employment Period, the Annual Base Salary shall be reviewed at least annually, beginning no more than 12 months after the last salary increase awarded to the Executive prior to the Effective Date. Any increase in the Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. The Annual Base Salary shall not be reduced after any such increase and the term "Annual Base Salary" shall refer to the Annual Base Salary as so increased.

            (1)     [hidden text]

            (2)     Annual Bonus.     In addition to the Annual Base Salary, the Executive shall be awarded, for each fiscal year ending during the Employment Period, an annual bonus (the "Annual Bonus") in cash at least equal to the Annual Target Bonus, where the "Annual Target Bonus" is an amount equal to the Annual Base Salary times the Executive Annual Compensation Plan Total Target Percentage (as most recently approved by the Company's Board of Directors or Human Resources Committee for the year in which the Effective Date occurs), or any comparable bonus under any predecessor or successor plan. Each such Annual Bonus shall be paid no later than the end of the third month of the fiscal year next following the fiscal year for which the Annual Bonus is awarded, unless the Executive shall elect to defer the receipt of such Annual Bonus.

            (3)     Incentive, Savings and Retirement Plans.     During the Employment Period, the Executive shall be entitled to participate in all cash incentive, equity incentive, savings and retirement plans, practices, policies, and programs applicable generally to other peer executives of the Company and the Affiliated Companies, but in no event shall such plans, practices, policies and programs provide the Executive with incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by the Company and the Affiliated Companies for the Executive under such plans, practices, policies and programs as in effect at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and the Affiliated Companies.

            (4)     Welfare Benefit Plans.     During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and the Affiliated Companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer executives of the Company and the Affiliated Companies, but in no event shall such plans, practices, policies and programs provide the Executive with benefits that are less favorable, in the aggregate, than the most favorable of such plans, practices, policies and programs in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and the Affiliated Companies.

            (5)     Expenses.     During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies, practices and procedures of the Company and the Affiliated Companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and the Affiliated Companies.

            (6)     Fringe Benefits.     During the Employment Period, the Executive shall be entitled to fringe benefits, including, without limitation, tax and financial planning services, payment of club dues, and, if applicable, use of an automobile and payment of related expenses, in accordance with the most favorable plans, practices, programs and policies of the Company and the Affiliated Companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and the Affiliated Companies.

            (7)     Office and Support Staff.     During the Employment Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to exclusive personal secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Executive by the Company and the Affiliated Companies at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as provided generally at any time thereafter with respect to other peer executives of the Company and the Affiliated Companies.

            (8)      Vacation.     During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of the Company and the Affiliated Companies as in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and the Affiliated Companies.

            Section 4.     Termination of Employment.     (a) Death or Disability.     The Executive's employment shall terminate automatically if the Executive dies during the Employment Period. If the Company determines in good faith that the Disability (as defined herein) of the Executive has occurred during the Employment Period (pursuant to the definition of "Disability"), it may give to the Executive written notice in accordance with Section 11(b) of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the "Disability Effective Date"), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive's duties. "Disability" means the absence of the Executive from the Executive's duties with the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness that is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive's legal representative.

            (a)     [hidden text]

            (b)     Cause.     The Company may terminate the Executive's employment during the Employment Period for Cause. "Cause" means:

            (1)     the willful and continued failure of the Executive to perform substantially the Executive's duties
      (as contemplated by Section 3(a)(1)(A)) with the Company or any Affiliated Company (other than any
      such failure resulting from incapacity due to physical or mental illness or following the Executive's
      delivery of a Notice of Termination for Good Reason), after a written demand for substantial
      performance is delivered to the Executive by the Board or the Chief Executive Officer of the
      Company that specifically identifies the manner in which the Board or the Chief Executive Officer
      of the Company believes that the Executive has not substantially performed the Executive's duties, or

            (2)     the willful engaging by the Executive in illegal conduct or gross misconduct that is materially
      and demonstrably injurious to the Company.

For purposes of this Section 4(b), no act, or failure to act, on the part of the Executive shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer of the Company or a senior officer of the Company or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board (excluding the Executive, if the Executive is a member of the Board) at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel for the Executive, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in Section 4(b)(1) or 4(b)(2), and specifying the particulars thereof in detail.

            (c)     Good Reason.     The Executive's employment may be terminated by the Executive for Good Reason or by the Executive voluntarily without Good Reason. "Good Reason" means:

            (1)     the assignment to the Executive of any duties inconsistent in any respect with the Executive's
      position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as
      contemplated by Section 3(a), or any other diminution in such position, authority, duties or responsibilities
      (whether or not occurring solely as a result of the Company's ceasing to be a publicly traded entity),
      excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and that is
      remedied by the Company promptly after receipt of notice thereof given by the Executive;

            (2)     any failure by the Company to comply with any of the provisions of Section 3(b), other than an
      isolated, insubstantial and inadvertent failure not occurring in bad faith and that is remedied by the
      Company promptly after receipt of notice thereof given by the Executive;

            (3)     the Company's requiring the Executive (i) to be based at any office or location other than as
      provided in Section 3(a)(1)(B), (ii) to be based at a location other than the principal executive offices of the
      Company if the Executive was employed at such location immediately preceding the Effective Date, or (iii)
      to travel on Company business to a substantially greater extent than required immediately prior to the
      Effective Date;

            (4)     any purported termination by the Company of the Executive's employment otherwise than as
      expressly permitted by this Agreement; or

            (5)     any failure by the Company to comply with and satisfy Section 10(c).

For purposes of this Section 4(c), any good faith determination of Good Reason made by the Executive shall be conclusive. Anything in this Agreement to the contrary notwithstanding, a termination by the Executive for any reason pursuant to a Notice of Termination given during the 30-day period immediately following the first anniversary of the Effective Date shall be deemed to be a termination for Good Reason for all purposes of this Agreement. The Executive's mental or physical incapacity following the occurrence of an event described above in clauses (1) through (5) shall not affect the Executive's ability to terminate employment for Good Reason.

            (d)     Notice of Termination.     Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 11(b). "Notice of Termination" means a written notice that (1) indicates the specific termination provision in this Agreement relied upon, (2) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated, and (3) if the Date of Termination (as defined herein) is other than the date of receipt of such notice, specifies the Date of Termination (which Date of Termination shall be not more than 30 days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive's or the Company's respective rights hereunder.

            (e)     Date of Termination.      "Date of Termination" means (1) if the Executive's employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified in the Notice of Termination, (which date shall not be more than 30 days after the giving of such notice), as the case may be, (2) if the Executive's employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination, and (3) if the Executive's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be.

            Section 5.     Obligations of the Company upon Termination. (a) Good Reason; Other Than for Cause, Death or Disability.     If, during the Employment Period, the Company terminates the Executive's employment other than for Cause or Disability or the Executive terminates employment for Good Reason:

            (1)     The Company shall pay to the Executive, in a lump sum in cash within 10 days after the Date of Termination, the aggregate of the following amounts:

                       (A)     the sum of (i) the Executive's Annual Base Salary through the Date of Termination to the    
            extent not theretofore paid, (ii) the Annual Target Bonus times a fraction, the numerator of which is the
            number of days in the current fiscal year through the Date of Termination and the denominator of which
            is 365, and (iii) any compensation previously deferred by the Executive (together with any accrued
            interest or earnings thereon) and any accrued vacation pay, in each case, to the extent not theretofore
            paid (the sum of the amounts described in subclauses (i), (ii) and (iii), the "Accrued Obligations");

                       (B)     the amount equal to three times the sum of (x) the Executive's Annual Base Salary and (y)
            the Annual Target Bonus, reduced by any lump sum severance amount payable to the Executive
            pursuant to the General Retirement Plan for Employees of Carpenter Technology Corporation or any
            successor thereto (the "GRP"); and

                       (C)     an amount equal to the excess of (i) the actuarial equivalent of the benefit under the
            Company's qualified defined benefit retirement plan (the "Retirement Plan") (utilizing actuarial
            assumptions no less favorable to the Executive than those in effect under the Retirement Plan
            immediately prior to the Effective Date), any excess plan, and any supplemental retirement plan in
            which the Executive participates (collectively, the "SERP") that the Executive would receive if the
            Executive's employment continued for three years after the Date of Termination, assuming for this
            purpose that all accrued benefits are fully vested and assuming that the Executive's compensation in
            each of the three years is that required by Sections 3(b)(1) and 3(b)(2), over (ii) the actuarial equivalent
            of the Executive's actual benefit (paid or payable), if any, under the Retirement Plan and the SERP as of
            the Date of Termination.

            (2)     For three years after the Executive's Date of Termination, or such longer period as may be
      provided by the terms of the appropriate plan, program, practice or policy, the Company shall continue
      benefits to the Executive and/or the Executive's family at least equal to those that would have been
      provided to them in accordance with the plans, programs, practices and policies described in Section
      3(b)(4) or 3(b)(6) (including, without limitation, tax and financial planning services to the extent the Executive
      was entitled to such services under Section 3(b)(6)) if the Executive's employment had not been terminated
      or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer
      executives of the Company and the Affiliated Companies and their families, provided, however, that, if the
      Executive becomes reemployed with another employer and is eligible to receive medical or other welfare
      benefits under another employer provided plan, the medical and other welfare benefits described herein
      shall be secondary to those provided under such other plan during such applicable period of eligibility. For
      purposes of determining eligibility (but not the time of commencement of benefits) of the Executive for
      retiree medical and life insurance benefits, the Executive shall be considered to have remained employed
      until three years after the Date of Termination and to have retired on the last day of such period.

            (3)     To the extent not theretofore paid or provided, the Company shall timely pay or provide to the
      Executive any other amounts or benefits required to be paid or provided or that the Executive is eligible to
      receive under any plan, program, policy or practice or contract or agreement of the Company and the
      Affiliated Companies (such other amounts and benefits, the "Other Benefits").

            (4)     The Company shall at its sole expense provide the Executive with reasonable outplacement
      services, at a cost not to exceed $20,000, during the one-year period following the Executive's Date of
      Termination. The Executive shall not, however, be entitled to any payment in lieu of accepting outplacement
      assistance services.

            (b)     Death.     If the Executive's employment is terminated by reason of the Executive's death during the Employment Period, the Company shall provide the Executive's estate or beneficiaries with the Accrued Obligations and the timely payment or delivery of the Other Benefits, and shall have no other severance obligations under this Agreement. The Accrued Obligations shall be paid to the Executive's estate or beneficiary, as applicable, in a lump sum in cash within 10 days of the Date of Termination. With respect to the provision of the Other Benefits, the term "Other Benefits" as utilized in this Section 5(b) shall include, without limitation, and the Executive's estate and/or beneficiaries shall be entitled to receive, benefits at least equal to the most favorable benefits provided by the Company and the Affiliated Companies to the estates and beneficiaries of peer executives of the Company and the Affiliated Companies under such plans, programs, practices and policies relating to death benefits, if any, as in effect with respect to other peer executives and their beneficiaries at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive's estate and/or the Executive's beneficiaries, as in effect on the date of the Executive's death with respect to other peer executives of the Company and the Affiliated Companies and their beneficiaries.

            (c)     Disability.     If the Executive's employment is terminated by reason of the Executive's Disability during the Employment Period, the Company shall provide the Executive with the Accrued Obligations and the timely payment or delivery of the Other Benefits, and shall have no other severance obligations under this Agreement. The Accrued Obligations shall be paid to the Executive in a lump sum in cash within 10 days of the Date of Termination. With respect to the provision of the Other Benefits, the term "Other Benefits" as utilized in this Section 6(c) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits at least equal to the most favorable of those generally provided by the Company and the Affiliated Companies to disabled executives and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, as in effect generally with respect to other peer executives and their families at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect at any time thereafter generally with respect to other peer executives of the Company and the Affiliated Companies and their families.

            (d)     Cause; Other Than for Good Reason.     If the Executive's employment is terminated for Cause during the Employment Period, the Company shall provide to the Executive (1) the Executive's Annual Base Salary through the Date of Termination, (2) the amount of any compensation previously deferred by the Executive, and (3) the Other Benefits, in each case, to the extent theretofore unpaid, and shall have no other severance obligations under this Agreement. If the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, the Company shall provide to the Executive the Accrued Obligations and the timely payment or delivery of the Other Benefits, and shall have no other severance obligations under this Agreement. In such case, all the Accrued Obligations shall be paid to the Executive in a lump sum in cash within 10 days of the Date of Termination.

            Section 6.     Non-exclusivity of Rights.     Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any plan, program, policy or practice provided by the Company or the Affiliated Companies and for which the Executive may qualify, nor, subject to Section 11(f), shall anything herein limit or otherwise affect such rights as the Executive may have under any other contract or agreement with the Company or the Affiliated Companies. Amounts that are vested benefits or that the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or the Affiliated Companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement, except as explicitly modified by this Agreement. Notwithstanding the foregoing, if the Executive receives payments and benefits pursuant to Section 5(a) of this Agreement, the Executive shall not be entitled to other severance pay or benefits under any severance plan, program or policy of the Company and the Affiliated Companies, unless otherwise specifically provided therein by an explicit reference to this Agreement, or provided under the GRP.

            Section 7.     Full Settlement.     The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense, or other claim, right or action that the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not the Executive obtains other employment except as set forth in Section 5(a)(2). The Company agrees to pay as incurred (within 10 days following the Company's receipt of an invoice from the Executive), to the full extent permitted by law, all legal fees and expenses that the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus, in each case, interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code").

            Section 8.     Certain Additional Payments by the Company.

            (a)     Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment would be subject to the Excise Tax, then the Executive shall be entitled to receive an additional payment (the "Gross-Up Payment") in an amount such that, after payment by the Executive of all taxes (and any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. The Company's obligation to make Gross-Up Payments under this Section 8 shall not be conditioned upon the Executive's termination of employment.

            (b)     Subject to the provisions of Section 8(c), all determinations required to be made under this Section 8, including whether and when a Gross-Up Payment is required, the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by PricewaterhouseCoopers LLP, or such other nationally recognized certified public accounting firm as may be designated by the Executive (the "Accounting Firm"). The Accounting Firm shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive may appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 8, shall be paid by the Company to the Executive within 5 days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. 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 Gross-Up Payments that will not have been made by the Company should have been made (the "Underpayment"), consistent with the calculations required to be made hereunder. In the event the Company exhausts its remedies pursuant to Section 8(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.

             (c)     The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than 30 business days after the Executive is informed in writing of such claim. The Executive shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which the Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that the Company desires to contest such claim, the Executive shall:

            (1)     give the Company any information reasonably requested by the Company relating to such claim,

            (2)     take such action in connection with contesting such claim as the Company shall reasonably
      request in writing from time to time, including, without limitation, accepting legal representation with respect
      to such claim by an attorney reasonably selected by the Company,

            (3)     cooperate with the Company in good faith in order effectively to contest such claim, and

            (4)     permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest, and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 8(c), the Company shall control all proceedings taken in connection with such contest, and, at its sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable taxing authority in respect of such claim and may, at its sole discretion, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that, if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis, and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties) imposed with respect to such advance or with respect to any imputed income in connection with such advance; and provided, further, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which the Gross-Up Payment would be payable hereunder, and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

            (d)     If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 8(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company's complying with the requirements of Section 8(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 8(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

            (e)     Notwithstanding any other provision of this Section 8, the Company may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of the Executive, all or any portion of the Gross-Up Payment, and the Executive hereby consents to such withholding.

            (f)     Definitions.     The following terms shall have the following meanings for purposes of this Section 8.

            (i)     "Excise Tax" shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

            (ii)     A "Payment" shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise.

            Section 9.     Confidential Information.     The Executive 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 the Affiliated Companies, and their respective businesses, which information, knowledge or data shall have been obtained by the Executive during the Executive's employment by the Company or the Affiliated Companies and which information, knowledge or data shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). After termination of the Executive's employment with the Company, the Executive 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 persons designated by the Company. In no event shall an asserted violation of the provisions of this Section 9 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement.

            Section 10.    Successors.     (a) This Agreement is personal to the Executive, and, without the prior written consent of the Company, shall not be assignable by the Executive other than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives.

            (a)     [hidden text]

            (b)     This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. Except as provided in Section 10(c), without the prior written consent of the Executive this Agreement shall not be assignable by the Company.

            (c)     The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. "Company" means the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law or otherwise.

            Section 11.     Miscellaneous.     (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified other than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

            (a)     [hidden text]

            (b)     All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

            if to the Executive:
                     to the last address listed for the Executive in the Company's books and records.

            if to the Company:

Carpenter Technology Corporation
1047 North Park Road
Wyomissing, PA 19610-1339
Attention: General Counsel

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

            (c)     The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

            (d)     The Company may withhold from any amounts payable under this Agreement such United States federal, state or local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

            (e)     The Executive's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Sections 4(c)(1) through 4(c)(5), shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

            (f)     The Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and the Company, the employment of the Executive by the Company is "at will" and, subject to Section 1(a), prior to the Effective Date, the Executive's employment may be terminated by either the Executive or the Company at any time prior to the Effective Date, in which case the Executive shall have no further rights under this Agreement. From and after the Effective Date, except as specifically provided herein, this Agreement shall supersede any other agreement between the parties with respect to the subject matter hereof.

            IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization from the Board, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

EXECUTIVE

                                                                
[Name of Executive]

CARPENTER TECHNOLOGY CORPORATION


By                                                            
     Name:
     Title:

10-Q

                                                         UNITED STATES
                                SECURITIES AND EXCHANGE COMMISSION
                                               WASHINGTON, D.C. 20549

                                                              FORM 10-Q

(Mark One)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2001
	OR
[  ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ____ to ____

Commission File Number 1-5828 

 

                                    CARPENTER TECHNOLOGY CORPORATION
                                  (Exact name of Registrant as specified in its Charter)

Delaware	23-0458500
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1047 North Park Road, Wyomissing, Pennsylvania	19610-1339
(Address of principal executive offices)	(Zip Code)

                                                                       610-208-2000
                                     (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

                                                                                                                                                         Yes  X   No      

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of
April 30, 2001.

Common stock, $5 par value	22,058,546
Class	Number of shares outstanding

CARPENTER TECHNOLOGY CORPORATION
FORM 10-Q
INDEX

	Page
Part I FINANCIAL INFORMATION
Consolidated Balance Sheet as of March 31, 2001 (unaudited) and June 30, 2000......................…………………………………......	3
Consolidated Statement of Income (unaudited) for the Three and Nine Months Ended March 31, 2001 and 2000…………...…............	4
Consolidated Statement of Comprehensive Income (unaudited) for the Three and Nine Months Ended March 31, 2001 and 2000.............................……………………………...............	5
Consolidated Statement of Cash Flows (unaudited) for the Nine Months Ended March 31, 2001 and 2000.......…………………............	6
Notes to Consolidated Financial Statements (unaudited)……………………....	7 - 15
Management's Discussion and Analysis of Financial Condition and Results of Operations.................……………………………….....	16 - 22
Forward-looking Statements...........................………………………………….....	23
Part II OTHER INFORMATION..............…………………………….......................	24- 26

PART I

CARPENTER TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEET
March 31, 2001 and June 30, 2000
(in millions)

	March 31,  2001	June 30,   2000
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$     5.9	$     9.5
Accounts receivable, net	184.9	187.0
Inventories	270.1	270.2
Other current assets	18.4	16.3
Total current assets	479.3	483.0
Property, plant and equipment, net	770.7	789.9
Prepaid pension cost	221.1	185.2
Goodwill, net	167.5	172.3
Other assets	106.5	115.5
Total assets	$1,745.1	$1,745.9
LIABILITIES
Current liabilities:
Short-term debt	$  209.0	$  219.9
Accounts payable	81.3	97.3
Accrued liabilities	63.7	61.2
Deferred income taxes	8.4	5.6
Current portion of long-term debt	15.2	10.4
Total current liabilities	377.6	394.4
Long-term debt, net of current portion	337.0	352.3
Accrued postretirement benefits	156.1	152.3
Deferred income taxes	172.4	158.0
Other liabilities	35.0	35.3
Total liabilities	1,078.1	1,092.3
SHAREHOLDERS' EQUITY
Convertible preferred stock -    authorized 2 million shares	25.6	26.0
Common stock - authorized     100 million shares	115.8	115.4
Capital in excess of par value - common stock	194.2	192.2
Reinvested earnings	401.0	388.0
Common stock in treasury, at cost	(38.4)	(38.4)
Deferred compensation	(12.6)	(14.1)
Accumulated other comprehensive income	(18.6)	(15.5)
Total shareholders' equity	667.0	653.6
Total liabilities and shareholders' equity	$1,745.1	$1,745.9

See accompanying notes to consolidated financial statements.

CARPENTER TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
for the three and nine months ended March 31, 2001 and 2000
(in millions, except per share data)

	Three Months		Nine Months
	2001	2000	2001	2000
Net sales	$311.8	$301.5	$878.2	$797.2
Costs and expenses:
Cost of sales	243.5	236.5	678.2	619.5
Selling and administrative          expenses	38.4	39.4	114.7	109.2
Interest expense	9.9	8.7	31.2	23.7
Other income, net	-	(2.3)	(3.0)	(8.0)
Total costs and expenses	291.8	282.3	821.1	744.4
Income before income taxes	20.0	19.2	57.1	52.8
Income taxes	8.4	7.3	21.1	18.0
Net income	$ 11.6	$ 11.9	$ 36.0	$ 34.8
Earnings per common share:
Basic	$  .51	$  .53	$ 1.58	$ 1.54
Diluted	$  .50	$  .52	$ 1.55	$ 1.51
Dividends per common share	$  .33	$  .33	$  .99	$  .99

See accompanying notes to consolidated financial statements.

CARPENTER TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
for the three and nine months ended March 31, 2001 and 2000
(in millions)

	Three Months		Nine Months
	2001	2000	2001	2000
Net income	$11.6	$11.9	$36.0	$34.8
Cumulative effect of change in     accounting principle for derivatives     and hedging activities (SFAS 133),     net of tax	-	-	0.8	-
Net losses on derivative instruments,     net of tax	(0.5)	-	(2.8)	-
Unrealized loss on investment,     net of tax	-	-	(0.1)	-
Foreign currency translation, net of tax	(0.7)	0.1	(1.0)	-
Comprehensive income	$10.4	$12.0	$32.9	$34.8

See accompanying notes to consolidated financial statements.

CARPENTER TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
for the nine months ended March 31, 2001 and 2000
(in millions)

	2001	2000
OPERATIONS
Net income	$36.0	$34.8
Adjustments to reconcile net income to    net cash provided from operations:
Depreciation	41.6	38.5
Amortization of intangible assets	12.3	11.2
Deferred income taxes	17.2	11.8
Pension and postretirement costs, net	(31.1)	(28.7)
Net gain on asset disposals	(2.4)	(2.1)
Changes in working capital and other,        net of acquisitions:
Receivables	2.1	(28.1)
Inventories	0.1	(23.4)
Accounts payable	(16.0)	35.9
Accrued current liabilities	(2.1)	(4.7)
Other, net	11.5	(9.1)
Net cash provided from operations	69.2	36.1
INVESTING ACTIVITIES
Purchases of plant, equipment and software	(39.6)	(75.1)
Proceeds from disposals of plant  and equipment	8.7	7.8
Acquisitions of businesses, net of cash received	-	(6.7)
Net cash used for investing activities	(30.9)	(74.0)
FINANCING ACTIVITIES
Net change in short-term debt	(10.9)	71.0
Payments on long-term debt	(10.5)	(15.4)
Proceeds from issuance of long-term debt	-	7.6
Dividends paid	(23.0)	(22.7)
Proceeds from issuance of common stock	2.5	0.3
Net cash provided from (used for)         financing activities	(41.9)	40.8
INCREASE (DECREASE) IN CASH AND CASH    EQUIVALENTS	(3.6)	2.9
Cash and cash equivalents at beginning of period	9.5	5.5
Cash and cash equivalents at end of period	$  5.9	$  8.4

See accompanying notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.   Basis of Presentation

      The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments necessary for a fair presentation have been included. Operating results for the nine months ended March 31, 2001 are not necessarily indicative of the results that may be expected for the year ending June 30, 2001. The June 30, 2000 condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in Carpenter's Fiscal Year 2000 Annual Report on Form 10-K.

      The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

      Certain reclassifications of prior year's amounts have been made to conform with the current year's presentation. These reclassifications did not affect reported net income. See Note 9 to Consolidated Financial Statements regarding adoption of EITF00-10.

2.   Earnings Per Common Share
     The calculations of earnings per share for the periods ended March 31, 2001
     and 2000 are as follows:

(in millions, except   per share data)	Three Months		Nine Months
	2001		2001
	Basic	Diluted	Basic	Diluted
Net income	$11.6	$11.6	$36.0	$36.0
Dividends accrued    on convertible preferred    stock, net of tax benefits	(0.4)	-	(1.3)	-
Assumed shortfall between    common and preferred dividend	-	(0.1)	-	(0.5)
Earnings available for     common shareholders	$11.2	$11.5	$34.7	$35.5
Weighted average number    of common shares outstanding	22.1	22.1	22.0	22.0
Assumed conversion of    preferred shares	-	0.8	-	0.8
Effect of shares issuable    under stock option plans	-	0.1	-	0.1
Weighted average common shares	22.1	23.0	22.0	22.9
Earnings per share	$ .51	$ .50	$1.58	$1.55

	Three Months		Nine Months
	2000		2000
	Basic	Diluted	Basic	Diluted
Net income	$11.9	$11.9	$34.8	$34.8
Dividends accrued on    convertible preferred stock,    net of tax benefits	(0.3)	-	(1.0)	-
Assumed shortfall between    common and preferred dividend	-	(0.1)	-	(0.5)
Earnings available for common    shareholders	$11.6	$11.8	$33.8	$34.3
Weighted average number of    common shares outstanding	22.0	22.0	22.0	22.0
Assumed conversion of preferred    shares	-	0.8	-	0.8
Effect of shares issuable under    stock option plans	-	-	-	-
Weighted average common shares	22.0	22.8	22.0	22.8
Earnings per share	$ .53	$ .52	$1.54	$1.51

3.   Inventories

	March 31, 2001	June 30, 2000
	(In Millions)
Finished and purchased products	$ 139.1	$ 138.1
Work in process	206.3	211.9
Raw materials and supplies	51.2	46.2
Total at current cost	396.6	396.2
Less excess of current cost over  LIFO values	126.5	126.0
Total inventory	$ 270.1	$ 270.2

     The current cost of LIFO-valued inventories was $326.4 million at
March 31, 2001 and $331.9 million at June 30, 2000.

4.   Property, Plant and Equipment

	March 31, 2001		June 30, 2000
	(In Millions)
Property, plant and equipment at cost	$1,377.8	$1,341.4
Less accumulated depreciation and   amortization	607.1	551.5
	$  770.7	$  789.9

5.   Shareholders' Equity Data

	March 31, 2001		June 30, 2000
Preferred shares issued	406.0	413.1
Common shares issued	23,166,793	23,071,635
Common shares in Treasury	(1,108,247)	(1,107,200)
Net common shares outstanding	22,058,546	21,964,435

6. Commitments and Contingencies

Environmental

     Carpenter is subject to various stringent federal, state and local environmental laws and regulations. The liability for future environmental remediation costs is evaluated by management on a quarterly basis. Carpenter accrues amounts for environmental remediation costs which represent management's best estimate of the probable and reasonably estimable costs relating to environmental remediation. For the nine months ended March 31, 2001, the liability for environmental remediation costs was increased by $.6 million, which was included in cost of sales. For the nine months ended March 2000, the liability for environmental remediation costs was reduced by $.8 million which was included in other income. The liability for environmental remediation costs remaining at March 31, 2001 was $8.1 million. The estimated range of the reasonably possible future costs of remediation at superfund sites and at Carpenter-owned operating facilities is between $8.1 million and $11.3 million.

     Carpenter entered into partial settlements of litigation relating to insurance coverages for certain environmental remediation sites and recognized income before income taxes of $.6 million and $.5 million for the nine months ended March 31, 2001 and 2000, respectively.

     Estimates of the amount and timing of future costs of environmental remediation requirements are necessarily imprecise because of the continuing evolution of environmental laws and regulatory requirements, the availability and application of technology, the identification of presently unknown remediation sites and the allocation of costs among the potentially responsible parties. Based upon information presently available, such future costs are not expected to have a material effect on Carpenter's competitive or financial position. However, such costs could be material to results of operations in a particular future quarter or year.

     Other

     On August 6, 1999, the Bridgeport, Connecticut Port Authority filed a Certificate of Taking, acquiring fee simple ownership of Carpenter's former plant site in that city. The proposed compensation for the site is $2.5 million and the Port Authority has stated its intention to seek reimbursement of any additional site remediation costs. The carrying value for the site on Carpenter's books was approximately $14.5 million (prior to the receipt of $2.2 million in the third quarter from the Port Authority) and was based upon a recent appraisal and arms-length negotiated selling prices with interested parties. Carpenter has begun legal proceedings in court to obtain a fair value for the property and a declaratory judgment absolving Carpenter from any remediation costs caused by the Port Authority's development efforts. Trial on this matter commenced in April 2001 in the U.S. District Court for the District of Connecticut. While the ultimate outcome of the trial is undeterminable at this time, in the opinion of management, the Port Authority's proposed compensation and remediation reimbursement are unreasonable and will not be upheld. Accordingly, no adjustment has been made for an impairment in carrying value.

6. Commitments and Contingencies (continued)

     Carpenter is also defending various claims and legal actions, and is subject to contingencies which are common to its operations. Carpenter provides for costs relating to these matters when a loss is probable and the amount is reasonably estimable. The effect of the outcome of these matters on Carpenter's future results of operations and liquidity cannot be predicted because any such effect depends on future results of operations and the amount and timing (both as to recording future charges to operations and cash expenditures) of the resolution of such matters. While it is not feasible to determine the outcome of these matters, in the opinion of management, any total ultimate liability will not have a material effect on Carpenter's financial position, results of operations or cash flows.

7.   Business Segments

     Statement of Financial Accounting Standards (SFAS) 131, "Disclosures about Segments of an Enterprise and Related Information," requires companies to disclose segment information on the same basis as that used internally by executive management to evaluate segment performance. Carpenter is organized on a product basis and managed in three segments: Specialty Alloys, Titanium Alloys and Engineered Products. For the following segment reporting, the Specialty Alloys and Titanium Alloys (Dynamet) segments have been aggregated into one reportable segment (Specialty Metals) because of the similarities in products, processes, customers, distribution methods and economic characteristics.

     Specialty Metals includes the manufacture and distribution of stainless, titanium, high temperature, electronic, tool and other alloys in bar, wire, rod, and strip forms. Sales are distributed both directly from producing plants and from Carpenter's distribution network.

     Engineered Products includes structural ceramic products, ceramic cores for the casting industry, metal-injection molded products, tubular metal products for nuclear and aerospace applications, custom shaped bar and ultra hard wear materials.

     Carpenter evaluates segment performance based upon income before interest and income taxes (EBIT) and return on assets. Both of these measures include the allocation of certain corporate costs. Sales between the segments are generally made at market-related prices.

     The pension credit represents the income relating to Carpenter's overfunded defined benefit pension plans. None of the pension credit is allocated to the business segments. The corporate costs primarily represent the unallocated portion of the operating costs of the finance, information services, law and human resource departments and corporate management staff. Corporate assets are primarily cash and cash equivalents, prepaid pension cost, certain assets held for sale, life insurance, other investments and corporate operating assets.

7.   Business Segments (continued)

     Carpenter's sales are not materially dependent on a single customer or small group of customers.

Segment Data

(In Millions)	Three Months Ended March 31,		Nine Months Ended March 31,
	2001	2000	2001	2000
Net sales:
Specialty Metals	$276.1	$270.2	$771.8	$706.3
Engineered Products	36.0	32.3	107.7	93.2
Intersegment	(0.3)	(1.0)	(1.3)	(2.3)
Consolidated net sales	$311.8	$301.5	$878.2	$797.2
Income before income taxes:
Specialty Metals	$ 22.1	$ 23.1	$ 64.0	$ 55.9
Engineered Products	2.7	1.4	8.6	3.8
Pension credit	12.0	11.5	36.0	34.3
Corporate costs	(7.3)	(8.7)	(22.4)	(19.4)
Consolidated EBIT	29.5	27.3	86.2	74.6
Interest expense	(9.9)	(8.7)	(31.2)	(23.7)
Interest income	0.4	0.6	2.1	1.9
Consolidated income       before income taxes	$ 20.0	$ 19.2	$ 57.1	$ 52.8

	March 31, 2001	June 30,   2000
Total assets:
Specialty Metals	$1,347.9	$1,360.8
Engineered Products	115.1	121.0
Corporate assets	282.1	264.1
Consolidated total assets	$1,745.1	$1,745.9

8.   Adoption of SFAS 133

     Carpenter adopted SFAS 133, as amended, "Accounting for Derivative Instruments and Hedging Activities", on July 1, 2000. SFAS 133 requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in earnings or other comprehensive income, depending on the type of hedging instrument and the effectiveness of the hedges. In accordance with the transition provisions of SFAS 133, Carpenter recorded a cumulative positive adjustment to other comprehensive income of $.8 million, after taxes, to recognize the fair value of its derivative instruments as of the date of adoption.

     Carpenter’s current risk management strategies include the use of derivative instruments to reduce certain risks. These strategies are:

The use of foreign currency forwards and options to hedge a portion of anticipated future sales denominated in foreign currencies, principally the Euro and Pound Sterling, in order to offset the effect of changes in exchange rates.

The use of foreign currency forwards and options to hedge certain foreign currency denominated intercompany receivables, primarily in Euros and Pound Sterling, to offset the effect on earnings of changes in exchange rates until these receivables are collected.

The use of commodity swaps and options to fix the price of a portion of anticipated future purchases of nickel and cobalt to offset the effects of changes in the costs of those commodities.

The use of interest rate swaps to fix the interest rate on certain floating rate debt to stabilize interest rates.

     All of the derivatives used by Carpenter in its risk management strategies are highly effective hedges because all of the critical terms of the derivative instruments match those of the hedged item. All of the described derivative instruments except for hedges of receivables have been designated as cash flow hedges at the time of adoption of SFAS 133 or at the time they were executed, if later than July 1, 2000. The hedges of intercompany receivables do not qualify for hedge accounting. All derivatives are adjusted to their fair market values at the end of each calendar quarter. Unrealized net gains and losses for cash flow hedges are recorded in other comprehensive income. At the time the anticipated transactions occur, any unrealized gains and losses on the related hedge are reclassified from other comprehensive income to the Statement of Income, thus offsetting the income effects of the anticipated transactions to which they relate. Amounts reclassified to the Statement of Income are included in cost of sales (commodity hedges), interest expense (interest rate swaps) and sales (foreign exchange hedges of anticipated sales). All unrealized gains or losses on hedges of intercompany receivables are recorded in income each quarter, as are changes in the value of the receivables. If an anticipated transaction is no longer expected to occur, unrealized gains and losses on the related hedge are reclassified to the Statement of Income. Cash flow hedges at March 31, 2001 have various settlement dates, the latest of which is December 2003.

     Carpenter evaluates all derivative instruments each quarter to determine that they are highly effective. Any ineffectiveness is recorded in the Statement of Income. The ineffectiveness for existing derivative instruments for the quarter ending March 31, 2001 was primarily related to option premiums and was immaterial. During the quarter ended March 31, 2001, unrealized net losses totaling $1.0 million after taxes were recorded in other comprehensive income and $.5 million of expense, net of taxes was reclassified from other comprehensive income to the Statement of Income. During the nine months ended March 31, 2001, unrealized net losses totaling $1.7 million after taxes were recorded in other comprehensive income, including the $.8 million cumulative effect as of July 1, 2000, and $.3 million of income was reclassified from other comprehensive income to the Statement of Income, net of income taxes. There were no reclassifications from other comprehensive income to earnings during the quarter or nine months ended March 31, 2001 that were caused by anticipated transactions which are no longer expected to occur.

     As of March 31, 2001, $2.0 million of net losses from derivative instruments was included in accumulated other comprehensive income, $1.7 million of which is expected to be reclassified to the Statement of Income within one year.

9.   Other Accounting Pronouncements

     The Emerging Issues Task Force (EITF) of the Financial Accounting Standards Board issued EITF00-10 at the end of July 2000 regarding the classification of freight and handling costs billed to customers. EITF00-10 requires freight and handling costs billed separately to be included as part of sales on the Statement of Income. In addition, the preferred classification of freight and handling costs expensed on the Statement of Income is to include them in cost of sales. Carpenter adopted this requirement effective July 1, 2000. Reclassification of the prior year's third quarter resulted in increasing sales by $3.4 million, increasing cost of sales by $12.0 million and decreasing selling and administrative expenses by $8.6 million. Reclassification of the prior year's nine months resulted in increasing sales by $9.7 million, increasing cost of sales by $30.5 million and decreasing selling and administrative expenses by $20.8 million.

     The Securities and Exchange Commission has issued Staff Accounting Bulletin 101 (SAB 101) and interpretive releases, setting forth the SEC's guidance on revenue recognition. This bulletin will be effective for Carpenter in the fourth quarter of fiscal year 2001 (June 2001 quarter), with retroactive effect to the beginning of fiscal year 2001. In accordance with the guidance of SAB 101, Carpenter will be required to change its revenue recognition policies retroactive to July 1, 2000. Carpenter's standard terms and conditions of sale for most of its sales include a provision that title to the goods is retained as a security interest until payment is received, even though the risks and benefits of ownership are passed to the customer at the time of shipment. Under SAB 101, except for certain foreign units, revenue cannot be recognized until title passes to the customer, which in Carpenter's case, is when payment is received.

     On April 1, 2001, Carpenter changed its terms and conditions of sale so that revenue can be recognized when product is shipped, in accordance with its historical practice. This will have the effect of increasing fourth quarter sales and earnings beyond a normal quarter's level. The net effect of the change in terms and conditions of sales in the fourth quarter and the restatement of the first three quarters under SAB 101 on full fiscal year 2001 earnings per share is estimated to be minimal. However, the change in accounting will result in a negative cumulative adjustment as of July 1, 2001, of approximately $14 million after taxes, or $.62 per diluted share, and the restatement of the results for the first three quarters of fiscal 2001. Carpenter plans to provide disclosures to show the impacts on its quarterly results caused by the change in accounting and revision of its terms and conditions of sales.

     The Financial Accounting Standards Board has issued an exposure draft on accounting for goodwill and intangible assets. The current draft requires that goodwill and certain intangible assets no longer be amortized. Should this exposure draft be finalized in its present form, the elimination of amortization would increase Carpenter's earnings by an estimated $.30 per share on a non-cash basis annually. The effective date of this proposed standard has not yet been set.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations - Three Months Ended March 31, 2001 vs.
Three Months Ended March 31, 2000:

     Net income for the quarter ended March 31, 2001 was $11.6 million compared with $11.9 million in the prior year period. Diluted earnings per share were $.50 compared with $.52 a year ago.

     Net sales for the quarter rose 3 percent to $311.8 million, up from $301.5 million for the same period a year ago. The increase in sales for the quarter was due to higher shipments to the aerospace and power generation markets which impacted the Specialty Metals and Engineered Products segments. Sales for Specialty Alloys Operations (SAO) were similar to last year's quarter, with higher aerospace and power generation sales offset by lower stainless steel shipments.

     The gross margin of 21.9 percent for the third quarter was slightly higher than last year's 21.6 percent. This reflects the benefit of an improved sales mix and lower raw material costs, partially offset by the effect of lower stainless shipments, higher natural gas and electricity costs and lower production volume in the Specialty Metals segment.

     Selling and administrative expenses as a percent of sales declined to 12.3 percent from 13.1 percent last year. In absolute terms, selling and administrative expenses were down $1.0 million compared with the same quarter a year ago due to reduced staff levels and lower annual compensation expense.

     Although short-term debt was reduced during the quarter by $15 million, interest expense increased by $1.2 million, compared with the same quarter last year due to less interest expense being capitalized on construction in progress.

     Other income was $2.3 million less favorable than a year ago, primarily because of higher gains on the sales of warehouses in last year's third quarter and foreign exchange losses recognized in this year's third quarter.

     Carpenter's effective tax rate (income taxes as a percent of income before taxes) for the quarter ended March 31, 2001 was 42.1 percent. This rate was higher in this year's quarter in order to bring the year-to-date effective rate in line with a revised forecasted rate for the year of 38 percent, due to foreign income in lower taxed jurisdictions being less than anticipated.

Business Segment Results

Specialty Metals Segment

     Net sales for the quarter ended March 31, 2001 for this segment, which aggregates the Specialty Alloys Operations (SAO) and Dynamet units of Carpenter were $276.1 million, which was 2 percent higher than in the same quarter a year ago. The sales of SAO were similar to the prior year's quarter. SAO unit volume decreased by 15 percent but was offset by improved pricing and product mix. Dynamet's sales increased 21 percent compared to the same quarter last year. The aerospace and power generation market sectors were stronger than a year ago while stainless steel shipments were lower for SAO because of reduced shipments to the automotive market and the effects of higher imports of stainless bar and rod products.

     Earnings before interest and taxes (EBIT) for the Specialty Metals segment were $22.1 million which was 4 percent lower than in last year's third quarter. This decrease was due primarily to SAO's decreased unit volume, higher energy costs and lower production levels, offset by lower raw material costs and an improved sales mix.

Engineered Products Segment

     Net sales for this segment were $36 million which was 11 percent higher than the same quarter of last year. EBIT was $2.7 million which was $1.3 million higher than the third quarter of last year. The profit growth was primarily due to higher sales volume. Most units within the segment had sales improvements with the ceramic cores products for aerospace, and industrial gas turbine applications and nuclear fuel channels showing the most growth.

Pension Credits

     Pension credits, which result from the significant overfunded position of Carpenter's defined benefit pension plans, were $12.0 million in the March 2001 quarter versus $11.5 million in the same quarter a year ago. This slightly higher level of credits was due primarily to the investment returns on the pension plan assets during fiscal 2000. This favorable variance from the previous year's level of pension credits will continue for the balance of fiscal 2001. Carpenter has other retirement obligations such as post-retirement medical benefits and supplemental employee retirement plans that are not included in this pension credit. The net impact of all retirement plans on Carpenter's Statement of Income for the March 2001 quarter was $10.0 million of income before taxes compared to $9.2 million for the same quarter last year.

Results of Operations - Nine Months Ended March 31, 2001 vs.
Nine Months Ended March 31, 2000:

     Net income for the nine months ended March 31, 2001, was $36.0 million compared to $34.8 million for the same period a year ago. Diluted earnings per share were $1.55 per share compared to $1.51 per share for the year-earlier period.

     Net sales were $878.2 million compared to $797.2 million for the first nine months of last fiscal year. This was primarily the result of the Specialty Metals segment's improved product sales mix and increased raw material surcharge revenues and sales volume improvement in the Engineered Products Segment.

     The gross margin of 22.8 percent for the nine months ended March 31, 2001 was slightly higher than last year's 22.3 percent. This increase was primarily due to an improved sales mix and lower nickel costs of the Specialty Metals segment and a sales volume improvement in the Engineered Products segment. Significant natural gas and electricity cost increases and lower production levels partially offset the favorable gross margin effects.

     Selling and administrative expenses as a percentage of sales decreased to 13.1 percent compared to 13.7 percent last year. However, total selling and administrative expenses increased $5.5 million from the prior year period primarily because of costs of e-business initiatives, increased consulting and legal fees and the inclusion of costs of an acquired company.

     Other income was less favorable than a year ago by $5.0 million, primarily due to the lower market valuation of investments in life insurance policies and more favorable effects reported in the prior year for adjustments to liabilities for environmental remediation, worker's compensation and other matters related to the acquisition of Talley Industries, Inc.

     The effective tax rate was 37 percent for the nine months ended March 31, 2001, and 34 percent for the year-earlier period. The rates in both periods were lower than a normal annual rate of approximately 39 percent because of adjustments related to certain state and foreign tax issues for which tax expense had been provided in prior years.

Business Segment Results

Specialty Metals Segment

     Net sales for this segment, which aggregates the Specialty Alloys Operations (SAO) and Dynamet units of Carpenter, were $771.8 million which was 9 percent higher than those for the same period a year ago. The increase was primarily due to an increase in SAO sales, resulting from an improved product mix and improved raw material surcharge revenues offset by lower unit volume. Dynamet's sales increased by 10 percent as a result of the inclusion of an acquired company and an increase in titanium product sales volume.

     EBIT was $64.0 million compared to $55.9 million for the same period last year. This $8.1 million increase was due primarily to SAO's improved sales mix and lower nickel costs. Higher natural gas and electricity costs and lower production levels partially offset these favorable profit effects.

Engineered Products Segment

     Net sales for this segment were $107.7 million which was 16 percent higher than the same period last year. Increased demand for ceramic tubular and metal injection molded products accounted for most of the sales improvement.

     EBIT was $8.6 million compared to $3.8 million for the first nine months of last year. This profit improvement was primarily due to higher sales volume.

Pension Credits

     Pension credits were $36.0 million for the nine months ending March 31, 2001 compared to $34.3 million for the same period a year ago. The improved level of credits was due primarily to the significant investment returns on the pension plan assets during fiscal 2000. This favorable variance from the previous year's level will continue for the balance of fiscal 2001 because the amount of the credit is based upon an actuarial valuation at the beginning of each fiscal year and changed annually. The net impact of all retirement plans on Carpenter's Statement of Income for the nine months ended March 31, 2001 was $30.2 million of income before taxes compared to $27.6 million for the same period last year. Amounts shown in the Consolidated Statement of Cash Flows for pension and postretirement benefits are net of cash payments of approximately $1 million made to the plans.

Cash Flow and Financial Condition:

     Carpenter has maintained the ability to provide adequate cash to meet its needs through cash flow from operations, management of working capital and the flexibility to use outside sources of financing to supplement internally generated funds.

     During the nine months ended March 31, 2001, Carpenter's free cash flow (cash flow after capital expenditures and disposals and dividends) was $15 million. Cash from operations was $69.2 million for the current nine month period as compared to $36.1 million a year ago.

     Investing activities for plant, equipment and software consumed $39.6 million in cash during the first nine months of fiscal 2001 and $75.1 million for the same year ago period. This decrease in capital expenditures reflects the completion of a five-year capital investment program. Total capital expenditures for all of fiscal 2001 are anticipated to be about $50 million. In addition, $8.7 million in proceeds was received primarily due to the sale of non-operating assets.

     Total debt decreased $21.4 million since June 30, 2000 to a level of $561.2 million or 39.8 percent of total capital employed, including deferred taxes, compared to 41.6 percent at June 30, 2000.

     Financing of $275 million is available under revolving credit agreements with four banks. Carpenter limits the aggregate commercial paper and credit facility borrowings at any one time to a maximum of $275 million. As of March 31, 2001, $66.0 million was available under the credit facility and commercial paper program.

     At March 31, 2001, current assets exceeded current liabilities by $101.7 million (a ratio of 1.3 to 1). The current ratio is conservatively stated because certain inventories are valued $126.5 million less than the current cost as a result of using the LIFO method.

     Carpenter believes that its present financial resources, both from internal and external sources, will be adequate to meet its foreseeable short-term and long-term liquidity needs.

Other Matters

     SFAS 133, "Accounting for Derivative Instruments and Hedging Activities" requires that derivative instruments be recorded on the balance sheet at their fair value and that changes in fair value be recorded each period in current earnings or comprehensive income. The adoption of SFAS 133 resulted in recording a cumulative adjustment as of July 1, 2000 for this required change in accounting. This adjustment increased current assets by $1.2 million and other comprehensive income, net of tax, by $.8 million (see note 8 to the consolidated financial statements).

     The Emerging Issues Task Force (EITF) of the Financial Accounting Standards Board issued EITF00-10 at the end of July 2000 regarding the classification of freight and handling costs billed to customers. EITF00-10 requires freight and handling costs billed separately to be included as part of sales on the Statement of Income. In addition, the preferred classification of freight and handling costs expensed on the Statement of Income is to include them in cost of sales. Carpenter adopted this requirement effective July 1, 2000. Reclassification of the prior year's third quarter resulted in increasing sales by $3.4 million, increasing cost of sales by $12.0 million and decreasing selling and administrative expenses by $8.6 million. Reclassification of the prior year's nine months resulted in increasing sales by $9.7 million, increasing cost of sales by $30.5 million and decreasing selling and administrative expenses by $20.8 million.

     The Securities and Exchange Commission has issued SAB 101 and interpretive releases, setting forth the SEC's guidance on revenue recognition. This bulletin will be effective for Carpenter in the fourth quarter of fiscal year 2001 (June 2001 quarter), with retroactive effect to the beginning of fiscal year 2001. In accordance with the guidance of SAB 101, Carpenter will be required to change its revenue recognition policies retroactive to July 1, 2000. Carpenter's standard terms and conditions of sale for most of its sales include a provision that title to the goods is retained as a security interest until payment is received, even though the risks and benefits of ownership are passed to the customer at the time of shipment. Under SAB 101, except for certain foreign units, revenue cannot be recognized until title passes to the customer, which in Carpenter's case is when payment is received.

     On April 1, 2001, Carpenter changed its terms and conditions of sale so that revenue can be recognized when product is shipped, in accordance with its historical practice. This will have the effect of increasing fourth quarter sales and earnings beyond a normal quarter's level. The net effect of the change in terms and conditions of sales in the fourth quarter and the restatement of the first three quarters under SAB 101 on full fiscal year 2001 earnings per share is estimated to be minimal. However, the change in accounting will result in a negative cumulative adjustment as of July 1, 2001, of approximately $14 million after taxes, and the restatement of the results for the first three quarters of fiscal 2001. Carpenter plans to provide disclosures to show the impacts on its quarterly results caused by the change in accounting and revision of its terms and conditions of sales.

Environmental

     Carpenter is subject to various stringent federal, state and local environmental laws and regulations. The liability for future environmental remediation costs is evaluated by management on a quarterly basis. Carpenter accrues amounts for environmental remediation costs which represent management's best estimate of the probable and reasonably estimable costs relating to environmental remediation. For the nine months ended March 31, 2001, the liability for environmental remediation costs was increased by $.6 million, which was included in cost of sales. For the nine months ended March 31, 2000, the liability for environmental remediation costs was reduced by $.8 million, which was included in other income. The liability for environmental remediation costs remaining at March 31, 2001 was $8.1 million. The estimated range of the reasonably possible future costs of remediation at superfund sites and at Carpenter-owned operating facilities is between $8.1 million and $11.3 million.

     Carpenter entered into partial settlements of litigation relating to insurance coverages for certain environmental remediation sites and recognized income before income taxes of $.6 million and $.5 million for the nine months ended March 31, 2001 and 2000, respectively.

     Estimates of the amount and timing of future costs of environmental remediation requirements are necessarily imprecise because of the continuing evolution of environmental laws and regulatory requirements, the availability and application of technology, the identification of presently unknown remediation sites and the allocation of costs among the potentially responsible parties. Based upon information presently available, such future costs are not expected to have a material effect on Carpenter's competitive or financial position. However, such costs could be material to results of operations in a particular future quarter or year.

Future Outlook

     SAO's sales backlogs for aerospace and power generation products continue at historically high levels, and manufacturing facilities for these products are operating at near full capacity. At the same time, the demand for stainless bar and rod for the automotive and fastener markets has declined sharply due to the U. S. economic slowdown and the effect of increased imports. In addition, continuing high energy costs and the effect of lower operating levels to reduce inventories will continue to negatively impact margins. Carpenter now anticipates that earnings per share for the fourth fiscal quarter will be in the range of $.55 to $.60 per diluted share and for the full fiscal year ending June 30, 2001, will be in the range of $2.10 to $2.15 per diluted share.

     Carpenter anticipates a positive free cash flow in excess of $50 million for fiscal year 2001, which will be used to reduce debt.

Fiscal 2002 Pension Credit

     Under present accounting rules, Carpenter's after-tax pension credit of $1.25 per diluted share for fiscal year 2001 and after-tax post-retirement medical cost of $.14 per diluted share for fiscal year 2001 are largely non-cash effects for the fiscal year, which are based on valuations of the preceding year. These must be re-calculated for fiscal year 2002, based on pension trust asset values and other actuarial assumptions as of June 30, 2001.

     Given the decline in the equity markets from June 30, 2000, to March 31, 2001, it is likely this pension income will decline and the post-retirement medical cost will increase for fiscal year 2002. To illustrate the impact that the current market volatility could have on Carpenter's earnings in the next fiscal year, pro-forma estimates of a range of impact using interim market values have been made.

     For example, if the calculation of these non-cash items was made using asset values at December 31, 2000, and March 31, 2001, and no other actuarial changes were made, the earnings effect of the pension income would decline to $.67 and $.37 per share, respectively, and the postretirement medical cost would increase to $.25 and $.31 per share, respectively. The actual calculation and related earnings impact of these non-cash items for fiscal 2002 cannot be made until the assets are valued at June 30, 2001, and all actuarial assumptions are reevaluated.

Goodwill Accounting

     The Financial Accounting Standards Board has issued an exposure draft on accounting for goodwill and intangible assets. The current draft requires that goodwill and certain intangible assets no longer be amortized. Should this exposure draft be finalized in its present form, the elimination of amortization would increase Carpenter's earnings by an estimated $.30 per share on a non-cash basis annually. The effective date of this proposed standard has not yet been set.

Forward-looking Statements

     This Form 10-Q contains various "Forward-looking Statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, which represent Carpenter's expectation or beliefs concerning various future events, include statements concerning future revenues and continued growth in various market segments. These statements are based on current expectations regarding future events that involve a number of risks and uncertainties which could cause actual results to differ from those of such forward-looking statements. These risks and uncertainties include those set forth in other filings made by Carpenter under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and also include the following factors: 1) the cyclical nature of the specialty materials business and certain end-use markets, (including, but not limited to, aerospace, automotive and consumer durables), all of which are subject to changes in general economic and financial market conditions, such as the decline in demand for stainless steel for the automotive and fastener markets due to the general economic slowdown in the U.S.; 2) Carpenter's lower operating levels in order to reduce inventories and the continuing high levels of imports of stainless steel products and the excess inventories of these products in the distributor supply chain; 3) the ability of Carpenter to recoup increased costs of electricity, fuel, such as natural gas, and raw material through increased prices and surcharges; 4) worldwide excess capacity for certain alloys which Carpenter produces and fluctuations in currency exchange rates, resulting in increased competition and downward pricing pressure on Carpenter products; 5) stock market fluctuations which could impact the valuation of the assets in Carpenter's pension trusts and the accounting for pension benefits; 6) the criticality of certain raw materials acquired from foreign sources, some of which are located in countries that may be subject to unstable political and economic conditions, potentially affecting the prices of these materials; 7) the level of export sales impacted by political and economic instability, particularly in Asia, Eastern Europe and Latin America, resulting in lower global demand for stainless steel products; 8) the ability of Carpenter, along with other domestic producers of stainless steel products, to obtain and retain favorable rulings in dumping and countervailing duty claims against foreign producers; 9) the level of sales impacted by export controls, changes in legal and regulatory requirements, policy changes affecting the markets, changes in tax laws and tariffs, exchange rate fluctuations and accounts receivable collection; 10) the effects on operations of changes in U.S. and foreign governmental laws and public policy, including environmental regulations; and 11) the outcome of the litigation between the City of Bridgeport, Connecticut and the Bridgeport Port Authority and Carpenter concerning the value of the Corporation's former steel plant site in Bridgeport and responsibility for site remediation costs caused by the Port Authority's development efforts; if the cash received in either a settlement or final judgment is considerably less than the carrying value, a non-cash charge to earnings would be made. Any of these factors could have an adverse and/or fluctuating effect on Carpenter's results of operations. The forward-looking statements in this document are intended to be subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Carpenter undertakes no obligation to update or revise any forward-looking statements.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

     On August 6, 1999, the Bridgeport, Connecticut Port Authority filed a Certificate of Taking, acquiring fee simple ownership of Carpenter's former plant site in that city. The proposed compensation for the site is $2.5 million and the Port Authority has stated its intention to seek reimbursement of any additional site remediation costs. The carrying value for the site on Carpenter's books was approximately $14.5 million (prior to the receipt of $2.2 million in the third quarter from the Port Authority) and was based upon a recent appraisal and arms-length negotiated selling prices with interested parties. Carpenter has begun legal proceedings in court to obtain a fair value for the property and a declaratory judgment absolving Carpenter from any remediation costs caused by the Port Authority's development efforts. Trial on this matter commenced in April 2001 in the U.S. District Court for the District of Connecticut. While the ultimate outcome of the trial is undeterminable at this time, in the opinion of management, the Port Authority's proposed compensation and remediation reimbursement are unreasonable and will not be upheld. Accordingly, no adjustment has been made for an impairment in carrying value.

     Other pending legal proceedings involve ordinary routine litigation incidental to the business of Carpenter. There are no material proceedings to which any Director, Officer, or affiliate of the Company, or any owner of more than five percent of any class of voting securities of the Company, or any associate of any Director, Officer, affiliate, or security holder of the Company, is a party adverse to the Company or has a material interest adverse to the interest of the Company or its subsidiaries. There is no administrative or judicial proceeding arising under any Federal, State or local provisions regulating the discharge of materials into the environment or primarily for the purpose of protecting the environment that (1) is material to the business or financial condition of the Company, (2) involves a claim for damages, potential sanctions or capital expenditures exceeding ten percent of the current assets of the Company or (3) includes a governmental authority as a party and involves potential monetary sanctions in excess of $100,000.

Item 5. Other Information

     Effective March 1, 2001, Edward B. Bruno, then Vice President and Corporate Controller, was
elected to the Corporate Officer position of Vice President - Financial Analysis and Richard D. Chamberlain,
then Controller, Specialty Alloys Operations, was elected to the Corporate Officer position of Vice President
and Corporate Controller.  Mr. Bruno has announced that he will be retiring June 30, 2001.  Jaime Vasquez, who had been Vice President and Treasurer of Pillowtex Corporation, was elected to the Corporate Officer position of Vice President and Treasurer, effective March 12, 2001.  Mr. Vasquez replaced Robert J. Dickson,
who resigned in January 2001.

     On March 22, 2001, the Board of Directors increased the number of Directors to 14 members and elected Stephen M. Ward, Jr., as a Director, effective immediately, to serve in Class III and to stand for election with his respective Class at the 2001 Annual Meeting of Stockholders. Mr. Ward, who is qualified for audit committee service under the New York Stock Exchange listing requirements, was appointed to the Audit and Corporate Governance Committees of the Board.

Item 6. Exhibits and Reports on Form 8-K.

1. The following documents are filed as Exhibits:

   10. Material Contracts

2. The Company did not file any Reports on Form 8-K for events occurring during
    the quarter of the fiscal year covered by this report.
   

     Items 2, 3 and 4 are omitted as the answer is negative or the items are not applicable.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Carpenter Technology Corporation

                   (Registrant)

Date:      May 7, 2001   s/Terrence E. Geremski                                  
Terrence E. Geremski
Senior Vice President - Finance
and Chief Financial Officer

EX-99

EXHIBIT INDEX

Exhibit No.
Title
Page

10.		Material Contracts
	A.	Stock-Based Incentive Compensation Plan for Officers and Key Employees, amended as of April 26, 2001, is attached as an Exhibit to this Quarterly Report on Form 10-Q.
	B.	Stock-Based Compensation Plan for Non-Employee Directors, amended as of April 26, 2001, is attached as an Exhibit to this Quarterly Report on Form 10-Q.
	C.	Management and Officers Capital Appreciation Plan, an Incentive Stock Option Plan amended as of April 26, 2001, is attached as an Exhibit to this Quarterly Report on Form 10-Q.
	D.	Form of Special Severance Agreement entered into between Carpenter and each of the following executive officers: Dennis M. Draeger, Robert W. Lodge and John R. Welty is attached as an Exhibit to this Quarterly Report on Form 10-Q.
	E.	Form of Special Severance Agreement entered into between Carpenter and each of the following executive officers: Terrence E. Geremski, Michael L. Shor and Robert J. Torcolini is attached as an Exhibit to this Quarterly Report on Form 10-Q.
	F.	Supplemental Retirement Plan for Executive Officers, amended as of January 1, 2001, is attached as an Exhibit to this Quarterly Report on Form 10-Q.

E-1