Document:

EXHIBIT 10.3

 Exhibit 10.3 
 [R&G Financial Corporation Letterhead] 
 August 28, 2006 
 CONFIDENTIAL 
 Mr. Andrés Pérez 
 Executive Vice President 
 R&G Financial Corporation 
 San Juan, Puerto Rico 
 Dear Mr. Pérez: 
 This Agreement (the “Agreement”) sets forth the terms and conditions pursuant to which R&G Financial Corporation (the “Company”) will pay you the
amount (the “Change of Control Bonus”) of $500,000.00, in the event that a “Change of Control” (as defined below) should occur with respect to the Company between the date hereof and December 31, 2008. Such expiration date shall
be extended consistent with the duration of your Employment Agreement with the Company dated as of August 28, 2006 (the “Employment Agreement”). 
 Your right to receive payment of the Change of Control Bonus shall be also contingent upon your continued employment with the Company from the date hereof through and until the Effective CC Date (as defined below). 
 For purposes of this Agreement, the following words and terms shall have the meanings set forth below: 
 “Change of Control” means the consummation of: 
 (i) the sale of all or substantially all of the assets of the Company to an unrelated person or entity; 
 (ii) a merger, reorganization or consolidation involving the Company, as a result of which the holders of the Company’s outstanding voting power immediately prior to such transaction do not own a majority of the outstanding voting
power of the surviving or resulting entity immediately upon completion of such transaction; or 
 (iii) any other transaction involving the
Company, as a result of which the owners of The Company’s outstanding voting power immediately prior to such transaction do not own a majority of the outstanding voting power of the relevant entity after the transaction, in each case,
regardless of the form thereof. 
 For purposes of this Agreement, the sale of all or substantially all of the assets of any of the
Company’s subsidiaries, or a merger transaction involving any of the Company’s subsidiaries shall not constitute a Change of Control. In addition, any internal reorganization of any of the Company’s subsidiaries shall not constitute a
Change in Control. 

 Mr. Andrés Pérez 
 August 28, 2006 
 Page 2 
 “Effective CC Date” means the date as of which a Change of Control shall be consummated and become effective, after receipt of any and all applicable regulatory and/or shareholder approvals therefor and the lapse of any
applicable waiting period therefor, and without any pending approvals, actions, or filings for its consummation and effectiveness. 
 You are referred to in
this Agreement as “you” or “the Executive”. 
 Your right to receive the Change of Control Bonus is also subject to the following terms
and conditions: 
 1. By agreeing to the terms and conditions of this Agreement, you indicate your intent and agreement to continue to be employed by the
Company through and until the Expiration Date, and you will devote your best efforts and all of your business time, attention, and skill to the performance of the duties associated with your employment. You will also perform such other duties as the
Chairman of the Board and/or the Chief Executive Officer of the Company may in good faith assign to you, which shall not be inconsistent with your position with the Company. 
 2. The Change of Control Bonus shall be payable separately from, and in addition to, any other compensation and benefits to which you are entitled for your employment and performance; provided, however, that
the Change of Control Bonus shall not be considered as earnings, compensation, or otherwise for purposes of determining your benefits under any other plan or program of the Company (including, without limitation, any bonus, stock option, disability,
life insurance, and/or retirement benefits under any qualified or unqualified plan.) Your entitlement to any compensation or benefits other than the Change of Control Bonus provided herein shall be determined in accordance with the compensation and
employee benefit plans of the Company as in effect from time to time and as may be modified. 
 3. This Agreement shall not confer, and shall not be
construed as conferring, any legal or other right for the continuation of your employment with the Company for any period. The Company expressly reserves the authority (which may be exercised at any time and without regard to any Change of Control
or the Expiration Date) to discharge you from your employment, and such discharge shall not entitle you to the Change of Control Bonus, but in any event such discharge shall be without prejudice to any other rights you may have in the event of such
termination under any plan and/or under any applicable law. 

 Mr. Andrés Pérez 
 August 28, 2006 
 Page 3 
 4. Termination of
Employment Prior to a Change of Control. 
 (a) If you terminate your employment for any reason, or if your employment is terminated by the Company for
cause, as that term is defined in the Employment Agreement, prior to the Effective CC Date, you will not be entitled to the Change of Control Bonus. 
 (b)
Any termination of your employment by the Company shall be effective in accordance with the terms of your Employment Agreement with the Company. 
 5. This
Agreement sets forth the entire agreement of the parties with respect to the Change of Control Bonus and supersedes any and all agreements, oral or written, with respect thereto. 
 6. The validity, interpretation, construction, and performance of this Agreement shall in all respects be governed by the laws of the Commonwealth of Puerto Rico. 
 7. The payment of the Change of Control Bonus hereunder shall be subject to all income tax, social security, and other applicable taxes and/or other amounts required to
be withheld by the Company pursuant to federal or Commonwealth laws. 
 8. You shall not assign, pledge or otherwise transfer all or any portion of the
Change of Control Bonus or any other rights conferred to you under this Agreement, and any attempted assignment, pledge or other transfer by you (other than by will or the laws of descent and distribution) shall cause any right that you may have to
receive payment of the Change of Control Bonus (or any portion thereof) to be immediately forfeited. 
 9. No provision of this Agreement may be modified,
altered, or amended except by an instrument in writing executed by (a) you and (b) the Chief Executive Officer or the Director of the Human Resources Department of the Company, on behalf of the Company. 
 10. Arbitration. 
 (a) By signing this Agreement, you agree that all
claims or disputes covered by this Agreement or otherwise arising out of or relating to your right or entitlement to, or forfeiture of, the Change of Control Bonus, and which disputes or claims cannot be resolved informally, must be submitted to
binding arbitration and that this arbitration will be the sole and exclusive remedy for resolving any such claim or dispute. This promise to resolve claims by arbitration is equally binding upon both you and the Company. 
 (b) Any arbitration will be administered by the American Arbitration Association under its Commercial Arbitration Rules, and any arbitration shall take place in San
Juan, Puerto Rico. The arbitrator shall have jurisdiction to hear and rule on pre-hearing disputes and is authorized to hold pre-hearing conferences by telephone or in person as the arbitrator deems necessary. The decision of the arbitrator shall be
final and binding and judgment upon the award may be entered in any court having jurisdiction thereof. 

 Mr. Andrés Pérez 
 August 28, 2006 
 Page 4 
 (c) The Company shall pay
the costs of arbitration and each party shall bear its own expenses; provided, however, that if you are the prevailing party in any such proceeding, the Company shall reimburse you for your reasonable costs and expenses, including
attorney’s fees, incurred in connection with such proceeding. 
 (d) The arbitration proceedings and the decision rendered by the arbitrator shall
remain strictly confidential. 
 (e) The arbitration provisions of this Section shall survive termination of this Agreement. 
 (f) If, notwithstanding the foregoing provisions of this Section, any claim, arising under this Agreement is found not to be subject to final and binding arbitration,
the parties agree to waive any right to a jury trial if such claim is brought in federal court. 
 11. Notwithstanding anything to the contrary, the
Expiration Date shall be extended until the Effective CC Date if the shareholders of the Company and the applicable regulatory agencies shall have approved the Change of Control prior to the Expiration Date, but the consummation and effectiveness
thereof shall be pending as of the Expiration Date. 
 * * * 
 If you accept the terms of this Agreement, please read the “Statement of Agreement and Acceptance by Executive” and sign in the space provided. 
 Very truly yours, 
 R&G FINANCIAL CORPORATION 
  

			
	 By:
	 	 /s/ HECTOR SECOLA MARCHESE

	Name:	 	 Hector Secola Marchese

	Position:	 	 Human Resources Director

 Mr. Andrés Pérez 
 August 28, 2006 
 Page 5 
 STATEMENT OF AGREEMENT AND ACCEPTANCE BY EXECUTIVE: 
 I hereby accept and agree to be bound by the terms of the foregoing Agreement, and I further
declare and represent that I have carefully read and fully understand the terms of this Agreement, and that I knowingly and voluntarily, of my own free will, without any duress, being fully informed and after due deliberate thought and action,
accept the terms of and sign the same as my own free act. 
  

			
	 /s/ ANDRÉS PÉREZ

	Andrés Pérez
	Date: August 28, 2006Management and Officers Capital Appreciation Plan amended as of April 26, 2001

 Exhibit 10(B) 
 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. 
  

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 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 

  

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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 

  

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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. 
  

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 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 

  

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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 

  

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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. 
  

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 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. 
  

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