EX-10.3






EXHIBIT 10.3

MATERION CORPORATION

Appreciation Rights Agreement




WHEREAS, [GRANTEE NAME] (the “Grantee”) is an employee of Materion Corporation (the
“Corporation”) or a Subsidiary.



WHEREAS, the execution of an agreement in the form hereof has been authorized by a resolution
of the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of the
Corporation that was duly adopted on March 1, 2011.



NOW, THEREFORE, the Corporation hereby confirms to the Grantee the grant, effective May 4,
2011 (the “Date of Grant”), pursuant to the 2006 Stock Incentive Plan, as amended from time to time
(the “Plan”), of        Free-standing Appreciation Rights (“SARs”) subject to the terms and
conditions of the Plan and the terms and conditions described below.



1. Definitions



As used in this Agreement:




(A) “Base Price” means $      which was the Market Value per Share on the Date of Grant.




(B) “Detrimental Activity” shall have the meaning set forth in Section 7 of this Agreement.




(C) “Spread” means the excess of the Market value per Share on the date when an SAR is
exercised over the Base Price.




(D) Capitalized terms used herein without definition shall have the meanings assigned to
them in the Plan.



2. Grant of SARs.



The Corporation hereby grants to the Grantee the number of SARs set forth above. The SARs are
a right to receive Common Shares in an amount equal to 100% of the Spread at the time of exercise.



3. Vesting of SARs.




(A) The SARs granted hereby shall become exercisable after the Grantee shall have remained
in the continuous employ of the Corporation or any Subsidiary for three years from the Date of
Grant, except such continuous employ shall not be required if the Grantee ceases to be an
employee of the Corporation or any Subsidiary as described in Section 5(C) of this Agreement.




(B) Notwithstanding Section 3(A) above, the SARs granted hereby shall become immediately
exercisable in full if (i) the Grantee should die while in the employ of the Corporation or any
subsidiary; or (ii) the Grantee should become permanently disabled while in the employ of the
Corporation.




(C) (i) Notwithstanding Section 3(A) above, the SARs granted hereby shall become immediately
exercisable in full if at any time during the employment of the Grantee and prior to the
termination of the SARs:




(a) a Change in Control shall occur after the Date of Grant; and




(b) within two years following the Change in Control, the Grantee’s employment with the
Corporation or a Subsidiary is terminated by the Grantee as a Termination for Good Cause (as
defined in Section 3(E) below) or the Grantee is terminated by the Corporation other than
as a Termination for Cause (as defined in Section 3(D) below).




(ii) Notwithstanding anything in this Section 3(C) to the contrary, in
connection with a Business Combination, the result of which is that the Outstanding
Corporation Voting Stock is exchanged for or becomes exchangeable for securities of
another entity, cash or a combination thereof, if the entity resulting from such
Business Combination does not assume the SARs evidenced hereby and the Corporation’s
obligations hereunder, or replace the SARs evidenced hereby with a substantially
equivalent security of the entity resulting from such Business Combination, then the
SARs evidenced hereby shall become immediately exercisable in full as of immediately
prior to such Business Combination.




(D) “Termination for Cause” means a termination of Grantee’s employment by the
Corporation for “Cause” (as defined in Section 7(F) of this Agreement).




(E) “Termination for Good Cause” shall mean the Grantee’s termination of the Grantee’s
employment with the Corporation or a Subsidiary as a result of the occurrence of any of the
following:




(i) a change in the Grantee’s principal location of employment that is greater
than 50 miles from its location as of the date hereof without the Grantee’s consent;
provided, however, that the Grantee hereby acknowledges that the Grantee may be
required to engage in travel in connection with the performance of the Grantee’s
duties hereunder and that such travel shall not constitute a change in the Grantee’s
principal location of employment for purposes hereof;




(ii) a material diminution in the Grantee’s base compensation;




(iii) a change in the Grantee’s position with the Corporation without the
Grantee’s consent such that there is a material diminution in the Grantee’s
authority, duties or responsibilities; or




(iv) any other action or inaction that constitutes a material breach by the
Corporation of the agreement under which the Grantee provides services.



Notwithstanding the foregoing, the Grantee’s termination of the Grantee’s employment with the
Corporation as a result of the occurrence of any of the foregoing shall not constitute a
“Termination for Good Cause” unless (a) the Grantee gives the Corporation written notice of such
occurrence within 90 days of such occurrence and such occurrence is not cured by the Corporation
within 30 days of the date on which such written notice is received by the Corporation and (b) the
Grantee actually terminates his or her employment with the Corporation prior to the 365th day
following such occurrence.



4. Exercise of SARs.




(A) To the extent exercisable as provided in Section 3 of this agreement, SARs may be
exercised in whole or in part by giving notice to the Corporation specifying the number of SARs
to be exercised.




(B) The Corporation will issue to the Grantee the number of Common Shares that equals the
Market Price per Share divided into the Spread on the date of exercise rounded down to the
nearest whole share.



5. Termination of SARs.



The SARs granted hereby shall terminate upon the earliest to occur of the following:




(A) 190 days after the Grantee ceases to be an employee of the Corporation or a Subsidiary,
unless he ceases to be such employee by reason of death or in a manner described in
clause (B), (C) or (F) below;




(B) One year after the Grantee ceases to be an employee of the Corporation or a Subsidiary
if the Grantee is disabled within the meaning of Section 105(d)(4) of the Internal Revenue Code;




(C) Seven years from the Date of Grant after the Grantee ceases to be an employee of the
Corporation or a Subsidiary if the Grantee is at the time of such termination (i) at least age 65
or (ii) at least age 55 and has completed at least 10 years of continuous employment with the
Corporation or a Subsidiary;




(D) One year after the death of the Grantee, if the Grantee dies while an employee of the
Corporation or a subsidiary or within the period specified in (A) or (B) above which is
applicable to the Grantee;




(E) Seven years from the Date of Grant; and




(F) Immediately if the Grantee engages in any Detrimental Activity (as hereinafter defined).



6. Effect of Detrimental Activity.



If the Grantee, either during employment by the Corporation or a subsidiary or within one year
after termination of such employment, shall engage in any Detrimental Activity, and the Board shall
so find:




(A) All SARs held by the Grantee, whether or not exercisable, shall be forfeited to the
Corporation.




(B) Return to the Corporation all Common Shares that the Grantee has not disposed of that
were purchased pursuant to this Agreement, and




(C) With respect to any Common Shares that the Grantee received upon exercise of the SARs
that have been disposed of pay to the Corporation in cash the amount equal to the Spread
applicable to such Common Shares on the date of exercise of such SARs.



To the extent that such amounts are not paid to the Corporation, the Corporation may, to the extent
permitted by law, set off the amounts so payable to it against any amounts that may be owing from
time to time by the Corporation or a Subsidiary to the Grantee, whether as wages, deferred
compensation or vacation pay or in the form of any other benefit or for any other reason, except
that no set-off shall be permitted against any amount that constitutes “deferred compensation”
within the meaning of Section 409A of the Code.



7. Definition of Detrimental Activity.



For purposes of this Agreement, the term “Detrimental Activity” shall include:




(A) (i) Engaging in any activity in violation of the Section entitled “Competitive Activity;
Confidentiality; Nonsolicitation” in the Severance Agreement between the Corporation and the
Grantee, if such agreement is in effect on the date hereof, or in violation of any corresponding
provision in any other agreement between the Corporation and the Grantee in effect on the date
hereof providing for the payment of severance compensation; or




(ii) If no such severance agreement is in effect or if a severance agreement
does not contain a section corresponding to “Competitive Activity; Confidentiality;
Nonsolicitation” as of the date hereof:




(a) Competitive Activity During Employment. Competing with the Corporation anywhere
within the United States during the term of the Grantee’s employment, including, without
limitation:




	 	(1)	 	entering into or engaging in any
business which competes with the business of the Corporation;






	 	(2)	 	soliciting customers, business,
patronage or orders for, or selling, any products or services in
competition with, or for any business that competes with, the
business of the Corporation;






	 	(3)	 	diverting, enticing or otherwise
taking away any customers, business, patronage or orders of the
Corporation or attempting to do so; or






	 	(4)	 	promoting or assisting,
financially or otherwise, any person, firm, association,
partnership, corporation or other entity engaged in any business
which competes with the business of the Corporation.






(b) Following Termination. For a period of one year following the Grantee’s
termination date:




	 	(1)	 	entering into or engaging in any
business which competes with the Corporation’s business within
the Restricted Territory (as hereinafter defined);






	 	(2)	 	soliciting customers, business,
patronage or orders for, or selling, any products or services in
competition with, or for any business, wherever located, that
competes with, the Corporation’s business within the Restricted
Territory;






	 	(3)	 	diverting, enticing or otherwise
taking away any customers, business, patronage or orders of the
Corporation within the Restricted Territory, or attempting to do
so; or






	 	(4)	 	promoting or assisting,
financially or otherwise, any person, firm, association,
partnership, corporation or other entity engaged in any business
which competes with the Corporation’s business within the
Restricted Territory.






For the purposes of Sections 7(A)(ii)(a) and (b) above,
inclusive, but without limitation thereof, the Grantee will
be in violation thereof if the Grantee engages in any or all
of the activities set forth therein directly as an individual
on the Grantee’s own account, or indirectly as a partner,
joint venturer, employee, agent, salesperson, consultant,
officer and/or director of any firm, association,
partnership, corporation or other entity, or as a stockholder
of any corporation in which the Grantee or the Grantee’s
spouse, child or parent owns, directly or indirectly,
individually or in the aggregate, more than five percent (5%)
of the outstanding stock.




(c) “The Corporation.” For the purposes of this Section 7(A)(ii), the “Corporation”
shall include any and all direct and indirect subsidiaries, parents, and affiliated, or related
companies of the Corporation for which the Grantee worked or had responsibility at the time of
termination of the Grantee’s employment and at any time during the two year period prior to such
termination.




(d) “The Corporation’s Business.” For the purposes of this Section 7 inclusive, the
Corporation’s business is defined to be the manufacture, marketing and sale of high performance
engineered materials serving global telecommunications and computer, magnetic and optical data
storage, aerospace and defense, automotive electronics, industrial components and appliance
markets, as further described in any and all manufacturing, marketing and sales manuals and
materials of the Corporation as the same may be altered, amended, supplemented or otherwise
changed from time to time, or of any other products or services substantially similar to or
readily substitutable for any such described products and services.




(e) “Restricted Territory.” For the purposes of Section 7(A)(ii)(b), the Restricted
Territory shall be defined as and limited to:




	 	(1)	 	the geographic area(s) within a
one hundred mile radius of any and all Corporation location(s)
in, to, or for which the Grantee worked, to which the Grantee
was assigned or had any responsibility (either direct or
supervisory) at the time of termination of the Grantee’s
employment and at any time during the two-year period prior to
such termination; and






	 	(2)	 	all of the specific customer
accounts, whether within or outside of the geographic area
described in (1) above, with which the Grantee had any contact
or for which the Grantee had any responsibility (either direct
or supervisory) at the time of termination of the Grantee’s
employment and at any time during the two-year period prior to
such termination.






(f) Extension. If it shall be judicially determined that the Grantee has violated
any of the Grantee’s obligations under Section 7(A)(ii)(b), then the period applicable to each
obligation that the Grantee shall have been determined to have violated shall automatically be
extended by a period of time equal in length to the period during which such violation(s)
occurred.



(B) Non-Solicitation. Except as otherwise provided in Section 7(A)(i), Detrimental
Activity shall also include directly or indirectly at any time soliciting or inducing or attempting
to solicit or induce any employee(s), sales representative(s), agent(s) or consultant(s) of the
Corporation and/or of its parents, or its other subsidiaries or affiliated or related companies to
terminate their employment, representation or other association with the Corporation and/or its
parent or its other subsidiary or affiliated or related companies.



(C) Further Covenants. Except as otherwise provided in Section 7(A)(i), Detrimental
Activity shall also include:




(i) directly or indirectly, at any time during or after the Grantee’s
employment with the Corporation, disclosing, furnishing, disseminating, making
available or, except in the course of performing the Grantee’s duties of employment,
using any trade secrets or confidential business and technical information of the
Corporation or its customers or vendors, including without limitation as to when or
how the Grantee may have acquired such information. Such confidential information
shall include, without limitation, the Corporation’s unique selling, manufacturing
and servicing methods and business techniques, training, service and business
manuals, promotional materials, training courses and other training and
instructional materials, vendor and product information, customer and prospective
customer lists, other customer and prospective customer information and other
business information. The Grantee specifically acknowledges that all such
confidential information, whether reduced to writing, maintained on any form of
electronic media, or maintained in the Grantee’s mind or memory and whether compiled
by the Corporation, and/or the Grantee, derives independent economic value from not
being readily known to or ascertainable by proper means by others who can obtain
economic value from its disclosure or use, that reasonable efforts have been made by
the Corporation to maintain the secrecy of such information, that such information
is the sole property of the Corporation and that any retention and use of such
information by the Grantee during the Grantee’s employment with the Corporation
(except in the course of performing the Grantee’s duties and obligations to the
Corporation) or after the termination of the Grantee’s employment shall constitute a
misappropriation of the Corporation’s trade secrets.




(ii) Upon termination of the Grantee’s employment with the Corporation, for any
reason, the Grantee’s failure to return to the Corporation, in good condition, all
property of the Corporation, including without limitation, the originals and all
copies of any materials which contain, reflect, summarize, describe, analyze or
refer or relate to any items of information listed in Section 4(C)(i) of this
Agreement.



(D) Discoveries and Inventions. Except as otherwise provided in Section 7(A)(i),
Detrimental Activity shall also include the failure or refusal of the Grantee to assign to the
Corporation, its successors, assigns or nominees, all of the Grantee’s rights to any discoveries,
inventions and improvements, whether patentable or not, made, conceived or suggested, either solely
or jointly with others, by the Grantee while in the Corporation’s employ, whether in the course of
the Grantee’s employment with the use of the Corporation’s time, material or facilities or that is
in any way within or related to the existing or contemplated scope of the Corporation’s business.
Any discovery, invention or improvement relating to any subject matter with which the Corporation
was concerned during the Grantee’s employment and made, conceived or suggested by the Grantee,
either solely or jointly with others, within one year following termination of the Grantee’s
employment under this Agreement or any successor agreements shall be irrebuttably presumed to have
been so made, conceived or suggested in the course of such employment with the use of the
Corporation’s time, materials or facilities. Upon request by the Corporation with respect to any
such discoveries, inventions or improvements, the Grantee will execute and deliver to the
Corporation, at any time during or after the Grantee’s employment, all appropriate documents for
use in applying for, obtaining and maintaining such domestic and foreign patents as the Corporation
may desire, and all proper assignments therefor, when so requested, at the expense of the
Corporation, but without further or additional consideration.



(E) Work Made For Hire. Except as otherwise provided in Section 7(A)(i), Detrimental
Activity shall also include violation of the Corporation’s rights in any or all work papers,
reports, documentation, drawings, photographs, negatives, tapes and masters therefor, prototypes
and other materials (hereinafter, “items”), including without limitation, any and all such items
generated and maintained on any form of electronic media, generated by Grantee during the Grantee’s
employment with the Corporation. The Grantee acknowledges that, to the extent permitted by law,
all such items shall be considered a “work made for hire” and that ownership of any and all
copyrights in any and all such items shall belong to the Corporation. The item will recognize the
Corporation as the copyright owner, will contain all proper copyright notices, e.g., “(creation
date) [Corporation Name], All Rights Reserved,” and will be in condition to be registered or
otherwise placed in compliance with registration or other statutory requirements throughout the
world.



(F) Termination for Cause. Except as otherwise provided in Section 7(A)(i),
Detrimental Activity shall also include activity that results in termination for Cause. For the
purposes of this Section, “Cause” shall mean that, the Grantee shall have:




(i) been convicted of a criminal violation involving fraud, embezzlement, theft
or violation of federal antitrust statutes or federal securities laws in connection
with his duties or in the course of his employment with the Corporation or any
affiliate of the Corporation;




(ii) committed intentional wrongful damage to property of the Corporation or
any affiliate of the Corporation; or




(iii) committed intentional wrongful disclosure of secret processes or
confidential information of the Corporation or any affiliate of the Corporation;




and any such act shall have been demonstrably and materially harmful to the
Corporation.



(G) Other Injurious Conduct. Detrimental Activity shall also include any action
contributing to a restatement of the Corporation’s financials if this award of SARs to the Grantee
is favorably affected by such restatement as provided under Section 10D of the Exchange Act and any
applicable rules or regulations promulgated by the Securities and Exchange Commission or any
national securities exchange or national securities association on which the Common Shares may be
traded, and any other conduct or act determined to be injurious, detrimental or prejudicial to any
significant interest of the Corporation or any Subsidiary unless the Grantee acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the best interests of the
Corporation.



(H) Reasonableness. The Grantee acknowledges that the Grantee’s obligations under
this Section 4 are reasonable in the context of the nature of the Corporation’s business and the
competitive injuries likely to be sustained by the Corporation if the Grantee were to violate such
obligations. The Grantee further acknowledges that this Agreement is made in consideration of, and
is adequately supported by the agreement of the Corporation to perform its obligations under this
Agreement and by other consideration, which the Grantee acknowledges constitutes good, valuable and
sufficient consideration.



8. Transferability.



No SAR granted hereunder may be transferred by the Grantee other than by will or the laws of
descent and distribution and may be exercised during a Grantee’s lifetime only by the Grantee or,
in the event of the Grantee legal incapacity, by the Grantee’s guardian or legal representative
acting in a fiduciary capacity on behalf of the Grantee under state law and court supervision.



9. Compliance with Law.



The SARs granted hereby shall not be exercisable if such exercise would involve a violation of
any applicable federal or state securities law, and the Corporation hereby agrees to make
reasonable efforts to comply with any applicable state securities law. If the Ohio Securities Act
shall be applicable to the SARs, they shall not be exercisable unless under said Act at the time of
exercise the shares of Common Stock or other securities purchasable hereunder are exempt, are the
subject matter of an exempt transaction, are registered by description or by qualification, or at
such time are the subject matter of a transaction which has been registered by description.



10. Adjustments.



In the event of any change in the aggregate number of outstanding Common Shares by reason of
(a) any stock dividend, stock split, combination of shares, recapitalization or other change in the
capital structure of the Corporation, or (b) any merger, consolidation, spin-off, spin-out,
split-off, split-up, reorganization, partial or complete liquidation of the Corporation or other
distribution of assets, issuance of rights or warrants to purchase securities of the Corporation,
or (c) any other corporate transaction or event having an effect similar to any of the foregoing,
then the Committee shall adjust the number of SARs covered by this Agreement and the Base Price in
such manner as may be appropriate to prevent the dilution or enlargement of the rights of the
Grantee that would otherwise result from such event.



11. Withholding Taxes.



To the extent that the Corporation is required to withhold federal, state, local or foreign
taxes in connection with the exercise of the SARs, and the amounts available to the Corporation for
such withholding are insufficient, it shall be a condition to such exercise that the Grantee make
arrangements satisfactory to the Corporation for payment of the balance of such taxes required to
be withheld. The Grantee may elect that all or any part of such withholding requirement be
satisfied by retention by the Corporation of a portion of the Common Shares to be delivered to the
Grantee. If such election is made, the shares so retained shall be credited against such
withholding requirement at the Market Value per Share on the date of such exercise. In no event
shall the Market Value per Share of the Common Shares to be withheld and/or delivered pursuant to
this Section to satisfy applicable withholding taxes in connection with the benefit exceed the
minimum amount of taxes required to be withheld.



12. Continuous Employment.



For purposes of this Agreement, the continuous employment of the Grantee with the Corporation
or a Subsidiary shall not be deemed to have been interrupted, and the Grantee shall not be deemed
to have ceased to be an employee of the Corporation or a Subsidiary, by reason of the transfer of
his employment among the Corporation and its Subsidiaries or a leave of absence approved by the
Board.



13. No Employment Contract; Right to Terminate Employment.



The grant of the SARs under this Agreement to the Grantee is a voluntary, discretionary award
being made on a one-time basis and it does not constitute a commitment to make any future awards.
The grant of the SARs and any payments made hereunder will not be considered salary or other
compensation for purposes of any severance pay or similar allowance, except as otherwise required
by law. Nothing in this Agreement will give the Grantee any right to continue employment with the
Corporation or any Subsidiary, as the case may be, or interfere in any way with the right of the
Corporation or a Subsidiary to terminate the employment of the Grantee at any time.



14. Relation to Other Benefits.



Any economic or other benefit to the Grantee under this Agreement or the Plan shall not be
taken into account in determining any benefits to which the Grantee may be entitled under any
profit-sharing, retirement or other benefit or compensation plan maintained by the Corporation or a
Subsidiary and shall not affect the amount of any life insurance coverage available to any
beneficiary under any life insurance plan covering employees of the Corporation or a Subsidiary.



15. Information.



Information about the Grantee and the Grantee’s participation in the Plan may be collected,
recorded and held, used and disclosed for any purpose related to the administration of the Plan.
The Grantee understands that such processing of this information may need to be carried out by the
Corporation and its Subsidiaries and by third party administrators whether such persons are located
within the Grantee’s country or elsewhere, including the United States of America. The Grantee
consents to the processing of information relating to the Grantee and the Grantee’s participation
in the Plan in any one or more of the ways referred to above.



16. Amendments.



Any amendment to the Plan shall be deemed to be an amendment to this agreement to the extent
that the amendment is applicable hereto; provided, however, that no amendment shall
adversely affect the rights of the Grantee with respect to the SARs without the Grantee’s consent.



17. Severability.



In the event that one or more of the provisions of this agreement shall be invalidated for any
reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be
separable from the other provisions hereof, and the remaining provisions hereof shall continue to
be valid and fully enforceable.



18. Governing Law.



This agreement is made under, and shall be construed in accordance with the internal
substantive laws of the State of Ohio.



19. Relation to Severance Agreement.



Section 3(C) hereof shall supersede the provisions of any Severance Agreement between the
Grantee and the Corporation, in effect at the Date of Grant, providing for earlier vesting of the
SARs granted hereby in the event of a Change in Control.



The undersigned hereby acknowledges receipt of an executed original of this Appreciation
Rights Agreement and accepts the Appreciation Rights granted thereunder on the terms and conditions
set forth herein and in the Plan.



Date:



[GRANTEE NAME]



Executed in the name and on behalf of the Corporation at Mayfield Heights, Ohio as of the      
day of        2011.




MATERION CORPORATION




By:

Michael C. Hasychak

Vice President, Treasurer and Secretary