CARPENTER TECHNOLOGY CORP
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<p align="center">MANAGEMENT AND OFFICERS CAPITAL APPRECIATION PLAN,<br>
AN INCENTIVE STOCK OPTION PLAN<br>
ADOPTED MAY 12, 1977<br>
(As Amended August 9, 1990)<br>
</p>
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<p align="left">1. Purpose.</p>

<p>The purposes of this Plan are to attract, retain and motivate key employees of
Carpenter Technology Corporation and its wholly owned subsidiaries (&quot;the
Corporation&quot;), 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.</p>

<p>2. Administration.</p>

<p>The Board of Directors (&quot;the Board&quot;) 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.</p>

<p>3. Participants.</p>

<p>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.</p>

<p>4. Types of Benefits.</p>

<p>Benefits under the Plan may be granted in (a) non-qualified stock options
(&quot;options&quot; or individually an &quot;option&quot;) 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.</p>

<p>5. Shares Reserved Under the Plan.</p>

<p>(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 the
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.</p>

<p>6. Options.</p>

<p>Options may be granted by the Board from time to time, subject to the following
provisions:</p>

<p>(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 &quot;date of grant&quot;), and shall
expire ten years from the date of grant. Exercise of any or all prior existing options
shall not be required.</p>

<p>(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 the Corporation's stock on the date of grant.
For the purpose of this Plan, the term &quot;fair market value&quot; 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.</p>

<p>(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 (&quot;transferee&quot;) 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.</p>

<p>Notwithstanding anything in the Plan to the contrary, in the event an optionee's
employment with the Corporation is terminated for &quot;cause&quot;, 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
&quot;cause&quot; 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).</p>

<p>(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
the 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. </p>

<p>7. Stock Appreciation Rights.</p>

<p>(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 &quot;the
spread&quot;.</p>

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

<p>(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 the 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. </p>

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

<p>(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. </p>

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

<p>8. Valuation Date.</p>

<p>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.</p>

<p>9. Adjustment Provisions.</p>

<p>If the 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 the 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.</p>

<p>10. Change in Control.</p>

<p>(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.</p>

<p>(b) For purposes of this Plan, a &quot;Change in Control of the Corporation&quot; shall
be deemed to have occurred if (A) any &quot;person&quot; (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the &quot;Exchange
Act&quot;), other than a trustee or other fiduciary holding securities under an employee
benefit plan of the Corporation or a corporation owned, directly or indirectly, by the
stockholders of the Corporation in substantially the same proportions as their ownership
of stock of the Corporation, is or becomes the &quot;beneficial owner&quot; (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Corporation's then
outstanding securities; or (B) during any period of two consecutive years (not including
any period prior to the date this Section was adopted as an amendment to the Plan),
individuals who at the beginning of such period constitute the Board and any new director
(other than a director designated by a person who has entered into an agreement with the
Corporation to effect a transaction described in clauses (A), (C) or (D) of this
Subsection) whose election by the Board or nomination for election by the Corporation's
stockholders was approved by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease for any reason to constitute
a majority thereof; or (C) the shareholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least 75% of the
combined voting power of the voting securities of the Corporation or such surviving entity
outstanding immediately after such merger or consolidation, or (D) the shareholders of the
Corporation approve a plan of complete liquidation of the Corporation or an agreement for
the sale or disposition by the Corporation of all or substantially all the Corporation's
assets.</p>

<p>(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 or (ii) the highest fair market value per share of Corporation common
stock as reported in the Wall Street Journal at any time during the sixty-day period
preceding the Change in Control.</p>

<p>11. Amendment, Modification and Termination of the Plan.</p>

<p>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.</p>

<p>12. Effective Date of the Plan.</p>

<p>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 the Corporation at such Meeting
and no option shall be exercisable before such ratification.</p>

<p>&nbsp;</p>

<p>STK15.10</p>
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