Document:

EX-10.5

Exhibit 10.5

BRUSH ENGINEERED MATERIALS INC.

Appreciation Rights Agreement

WHEREAS, [GRANTEE NAME] (the “Grantee”) is an employee of Brush Engineered Materials Inc. (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 February      , 2007.

NOW, THEREFORE, the Corporation hereby confirms to the Grantee the grant, effective on
February      , 2007 (the “Date of Grant”), pursuant to the 2006 Incentive Stock Plan (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 of on the Date of Grant.

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

(C) “Market Value per Share” means, as of any particular date, the per share closing price of
a Common Share on the New York Stock Exchange on the day such determination is being made (as
reported in The Wall Street Journal) or, if there was no closing price reported on such
day, on the next day on which such a closing price was reported; or if the Common Shares are not
listed or admitted to trading on the New York Stock Exchange on the day as of which the
determination is being made, the amount determined by the Committee to be the fair market value of
a Common Share on such day.

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

(E) 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,
unless the Grantee ceases to be an employee of the Corporation or any Subsidiary as described in
Section 5(C) of this Agreement.

(B) Notwithstanding the preceding paragraph, 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; (ii) the Grantee should become permanently disabled while in the employ of the
Corporation; or (iii) if a Change in Control occurs.

(C) For purposes of this Agreement, “Change in Control” means:

(i) 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
voting securities of the Corporation where such acquisition causes such
Person to own (X) 20% or more of the combined voting power of the then
outstanding voting securities of the Corporation entitled to vote generally
in the election of directors (the “Outstanding Corporation Voting
Securities”) without the approval of the Incumbent Board as defined in (ii)
below or (Y) 35% or more of the Outstanding Voting Securities of the
Corporation with the approval of the Incumbent Board; provided, however,
that for purposes of this subsection (i), the following acquisitions shall
not be deemed to result in a Change of Control: (A) any acquisition directly
from the Corporation that is approved by the Incumbent Board (as defined in
subsection (ii), below), (B) any acquisition by the Corporation or a
subsidiary of the Corporation, (C) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Corporation or any
corporation controlled by the Corporation, (D) any acquisition by any Person
pursuant to a transaction described in clauses (A), (B) and (C) of
subsection (iii) below, or (E) any acquisition by, or other Business
Combination (as defined in (iii) below) with, a person or group of which
employees of the Corporation or any subsidiary of the Corporation control a
greater than 25% interest (a “MBO”) but only if the Executive is one of
those employees of the Corporation or any subsidiary of the Corporation that
are participating in the MBO; provided, further, that if any Person’s
beneficial ownership of the Outstanding Corporation Voting Securities
reaches or exceeds 20% or 35%, as the case may be, as a result of a
transaction described in clause (A) or (B) above, and such Person
subsequently acquires beneficial ownership of additional voting securities
of the Corporation, such subsequent acquisition shall be treated as an
acquisition that causes such Person to own 20% or 35% or more, as the case
may be, of the Outstanding Corporation Voting Securities; and provided,
further, that if at least a majority of the members of the Incumbent Board
determines in good faith that a Person has acquired beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20%
or more of the Outstanding Corporation Voting Securities inadvertently, and
such Person divests as promptly as practicable a sufficient number of shares
so that such Person beneficially owns (within the meanings of Rule 13d-3
promulgated under the Exchange Act) less than 20% of the Outstanding
Corporation Voting Securities, then no Change of Control shall have occurred
as a result of such Person’s acquisition; or

(ii) individuals who, as of the date hereof, constitute the Board (the
“Incumbent Board”) (as modified by this clause (ii)) 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 Corporation’s shareholders, was approved
by a vote of at least a majority of the directors then comprising the
Incumbent Board (either by a specific vote or by approval of the proxy
statement of the Corporation in which such person is named as a nominee for
director, without objection to such nomination) 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; or

(iii) the consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Corporation or the acquisition of assets of another corporation, or other
transaction (“Business Combination”) excluding, however, such a Business
Combination pursuant to which (A) the individuals and entities who were the
ultimate beneficial owners of voting securities of the Corporation
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 65% of, respectively, 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 entity resulting from such Business Combination
(including, without limitation, an entity that as a result of such
transaction owns the Corporation or all or substantially all of the
Corporation’s assets either directly or through one or more subsidiaries),
(B) no Person (excluding any employee benefit plan (or related trust) of the
Corporation, the Corporation or such entity resulting from such Business
Combination) beneficially owns, directly or indirectly (X) 20% or more, if
such Business Combination is approved by the Incumbent Board or (Y) 35% or
more, if such Business Combination is not approved by the Incumbent Board,
of the combined voting power of the then outstanding securities entitled to
vote generally in the election of directors of the entity resulting from
such 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

(iv) approval by the shareholders of the Corporation of a complete
liquidation or dissolution of the Corporation except pursuant to a Business
Combination described in clauses (A), (B) and (C) of subsection (iii),
above.

	 	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) Three years 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) Ten 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.

7. Definition of Detrimental Activity.

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

(A) Engaging in any activity in violation of the Section entitled “Competitive Activity;
Confidentiality; Nonsolicitation” in the Severance Agreement between the Corporation and the
Optionee, 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 Optionee in effect on the date
hereof providing for the payment of severance compensation; or

(i) 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 Optionee’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 Optionee’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 Optionee will be in
violation thereof if the Optionee engages in any or all of the
activities set forth therein directly as an individual on the
Optionee’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 Optionee or the
Optionee’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 Optionee worked or had responsibility at the time of
termination of the Optionee’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 Optionee
worked, to which the Optionee was assigned or had any responsibility
(either direct or supervisory) at the time of termination of the
Optionee’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
Optionee had any contact or for which the Optionee had any
responsibility (either direct or supervisory) at the time of
termination of the Optionee’s employment and at any time during the
two-year period prior to such termination.

(B) Extension. If it shall be judicially determined that the
Optionee has violated any of the Optionee’s obligations under Section
7(A)(ii)(b), then the period applicable to each obligation that the Optionee
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:

(ii) directly or indirectly, at any time during or after the Optionee’s
employment with the Corporation, disclosing, furnishing, disseminating, making
available or, except in the course of performing the Optionee’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 Optionee 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 Optionee specifically acknowledges that all such
confidential information, whether reduced to writing, maintained on any form of
electronic media, or maintained in the Optionee’s mind or memory and whether
compiled by the Corporation, and/or the Optionee, 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 Optionee during the Optionee’s employment with the
Corporation (except in the course of performing the Optionee’s duties and
obligations to the Corporation) or after the termination of the Optionee’s
employment shall constitute a misappropriation of the Corporation’s trade secrets.

(iii) Upon termination of the Optionee’s employment with the Corporation, for
any reason, the Optionee’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 Optionee to assign to the
Corporation, its successors, assigns or nominees, all of the Optionee’s rights to any discoveries,
inventions and improvements, whether patentable or not, made, conceived or suggested, either solely
or jointly with others, by the Optionee while in the Corporation’s employ, whether in the course of
the Optionee’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 Optionee’s employment and made, conceived or suggested by the Optionee,
either solely or jointly with others, within one year following termination of the Optionee’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 Optionee will execute and deliver to the
Corporation, at any time during or after the Optionee’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 Optionee during the
Optionee’s employment with the Corporation. The Optionee 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 Optionee shall have:

(iv) 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;

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

(vi) 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 other
conduct or act determined to be injurious, detrimental or prejudicial to any significant interest
of the Corporation or any subsidiary unless the Optionee 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 Optionee acknowledges that the Optionee’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 Optionee were to violate such
obligations. The Optionee 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 Optionee 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 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 this option, it 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 Restricted Shares 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.

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]

1

Executed in the name and on behalf of the Corporation at Cleveland, Ohio as of the      day of
     2007.

BRUSH ENGINEERED MATERIALS INC.

By:

Michael C. Hasychak

Vice President, Treasurer and Secretary

2EX-10.6

Exhibit 10.6

SEVERANCE AGREEMENT

THIS SEVERANCE AGREEMENT (this “Agreement”), dated as of      , 2007 is made and
entered by and between Brush Engineered Materials Inc., an Ohio corporation (the “Company”), and
     (the “Executive”).

WITNESSETH:

WHEREAS, the Executive is a senior executive of the Company or one or more of its Subsidiaries
and has made and is expected to continue to make major contributions to the short- and long-term
profitability, growth and financial strength of the Company;

WHEREAS, the Company desires to assure itself of both present and future continuity of
management and desires to establish certain minimum severance benefits for certain of its senior
executives, including the Executive;

WHEREAS, the Company wishes to ensure that its senior executives are not practically disabled
from discharging their duties in respect of a proposed or actual transaction involving a Change in
Control;

WHEREAS, the Company desires to provide additional inducement for the Executive to continue to
remain in the employ of the Company; and

WHEREAS, the Company and the Executive desire for this Severance Agreement to amend and
supersede the Severance Agreement, dated      , 200_, between the Company and the Executive
and any other Severance Agreements entered into prior to the date hereof;

NOW, THEREFORE, the Company and the Executive agree as follows:

1. Certain Defined Terms. In addition to terms defined elsewhere herein, the following
terms have the following meanings when used in this Agreement with initial capital letters:

(a) “Affiliate” means with respect to any Person, any holder of more than 10% of the
outstanding shares or equity interests of such Person or any other Person which directly or
indirectly controls, is controlled by or is under common control with such Person. A Person shall
be deemed to control another Person if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of the “controlled” Person, whether
through ownership of voting securities, by contract or otherwise.

(b) “Base Pay” means the Executive’s annual base salary rate as in effect from time to time.

(c) “Board” means the Board of Directors of the Company.

(d) “Cause” means that, prior to any termination of Executive’s employment by the Company or
any Affiliate of the Company, the Executive 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 Company or any Affiliate of the Company;

(ii) committed intentional wrongful damage to property of the Company or any Affiliate
of the Company;

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

(iv) intentionally engaged in any activity in violation of Section 6;

and any such act shall have been demonstrably and materially harmful to the Company. For
purposes of this Agreement, no act or failure to act on the part of the Executive shall be
deemed “intentional” if it was due primarily to an error in judgment or negligence, but
shall be deemed “intentional” only if done or omitted to be done by the Executive not in
good faith and without reasonable belief that the Executive’s action or omission was in the
best interest of the Company. Notwithstanding the foregoing, the Executive shall not be
deemed to have been terminated for “Cause” hereunder 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 Board then in office at a meeting of the Board called
and held for such purpose, after reasonable notice to the Executive and an opportunity for
the Executive, together with the Executive’s counsel (if the Executive chooses to have
counsel present at such meeting), to be heard before the Board, finding that, in the good
faith opinion of the Board, the Executive had committed an act constituting “Cause” as
herein defined and specifying the particulars thereof in detail. Nothing herein will limit
the right of the Executive or his beneficiaries to contest the validity or propriety of any
such determination.

(e) “Change in Control” means

(i) 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 voting securities of the Company where such acquisition causes
such Person to own (X) 20% or more of 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”) without the approval of the Incumbent Board as
defined in (ii) below or (Y) 35% or more of the Outstanding Voting Securities of the Company
with the approval of the Incumbent Board; provided, however, that for purposes of this
subsection (i), the following acquisitions shall not be deemed to result in a Change of
Control: (A) any acquisition directly from the Company that is approved by the Incumbent
Board (as defined in subsection (ii), below), (B) any acquisition by the Company or a
subsidiary of the Company, (C) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by the Company,
(D) any acquisition by any Person pursuant to a transaction described in clauses (A), (B)
and (C) of subsection (iii) below, or (E) any acquisition by, or other Business Combination
(as defined in (iii) below) with, a person or group of which employees of the Company or any
subsidiary of the Company control a greater than 25% interest (a “MBO”) but only if the
Executive is one of those employees of the Company or any subsidiary of the Company that are
participating in the MBO; provided, further, that if any Person’s beneficial ownership of
the Outstanding Company Voting Securities reaches or exceeds 20% or 35%, as the case may be,
as a result of a transaction described in clause (A) or (B) above, and such Person
subsequently acquires beneficial ownership of additional voting securities of the Company,
such subsequent acquisition shall be treated as an acquisition that causes such Person to
own 20% or 35% or more, as the case may be, of the Outstanding Company Voting Securities;
and provided, further, that if at least a majority of the members of the Incumbent Board
determines in good faith that a Person has acquired beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the Outstanding Company
Voting Securities inadvertently, and such Person divests as promptly as practicable a
sufficient number of shares so that such Person beneficially owns (within the meanings of
Rule 13d-3 promulgated under the Exchange Act) less than 20% of the Outstanding Company
Voting Securities, then no Change of Control shall have occurred as a result of such
Person’s acquisition; or

(ii) individuals who, as of the date hereof, constitute the Board (the “Incumbent
Board” (as modified by this clause (ii)) 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 shareholders,
was approved by a vote of at least a majority of the directors then comprising the Incumbent
Board (either by a specific vote or by approval of the proxy statement of the Company in
which such person is named as a nominee for director, without objection to such nomination)
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; or

(iii) the consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company or the acquisition of
assets of another corporation, or other transaction (“Business Combination”) excluding,
however, such a Business Combination pursuant to which (A) the individuals and entities who
were the ultimate beneficial owners of voting securities of the Company immediately prior to
such Business Combination beneficially own, directly or indirectly, more than 65% of,
respectively, 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 entity resulting from such Business Combination
(including, without limitation, an entity 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), (B) no Person (excluding any employee benefit plan (or related trust)
of the Company, the Company or such entity resulting from such Business Combination)
beneficially owns, directly or indirectly (X) 20% or more, if such Business Combination is
approved by the Incumbent Board or (Y) 35% or more, if such Business Combination is not
approved by the Incumbent Board, of the combined voting power of the then outstanding
securities entitled to vote generally in the election of directors of the entity resulting
from such 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

(iv) approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company except pursuant to a Business Combination described in clauses
(A), (B) and (C) of subsection (iii), above.

(f) “Change in Control Severance Period” means the period of time commencing on the date of
the first occurrence of a Change in Control and continuing until the earlier of (i) the third
anniversary of the occurrence of the Change in Control, or (ii) the Executive’s death; provided,
however, that commencing on each anniversary of the Change in Control, the Change in Control
Severance Period will automatically be extended for an additional year unless, not later than 90
calendar days prior to such anniversary date, either the Company or the Executive shall have given
written notice to the other that the Change in Control Severance Period is not to be so extended.

(g) “Employee Benefits” means the perquisites, benefits and service credit for benefits as
provided under any and all employee retirement income and welfare benefit policies, plans, programs
or arrangements in which Executive is entitled to participate, including without limitation any
stock option, performance share, performance unit, stock purchase, stock appreciation, savings,
pension, supplemental executive retirement, or other retirement income or welfare benefit, deferred
compensation, incentive compensation, group or other life, health, medical/hospital or other
insurance (whether funded by actual insurance or self-insured by the Company or an Affiliate of the
Company), disability, salary continuation, expense reimbursement and other employee benefit
policies, plans, programs or arrangements.

(h) “Gross Misconduct” means that prior to any termination of the Executive’s employment by
the Company or any Affiliate of the Company, the Executive shall have been found to have engaged in
willful gross misconduct in the performance of his duties to the Company or any Affiliate of the
Company, which continues after written notice thereof and a reasonable opportunity to cure is given
to the Executive, as determined by the Company or any Affiliate of the Company in its sole
discretion.

(i) “Incentive Pay” means the annual bonus, incentive or other payment of compensation under
the Management Performance Compensation Plan or, if such Management Performance Compensation Plan
is no longer in effect, the annual bonus, incentive or other payment of compensation in addition to
Base Pay, made or to be made in regard to services rendered in any year or other period pursuant to
any bonus, incentive, profit-sharing, performance, discretionary pay or similar agreement, policy,
plan, program or arrangement (whether or not funded) of the Company or an Affiliate of the Company,
or any successor thereto.

(j) “Involuntary Termination” means the termination of the Executive’s employment with the
Company or an Affiliate of the Company under circumstances where the Executive is entitled to
receive the benefits provided by Section 4(b) of this Agreement.

(k) “LTIP” means the incentive compensation, in addition to Base Pay and Incentive Pay, earned
in regard to services rendered in any year or other period pursuant to any incentive, performance
or similar agreement, policy, plan, program or arrangement (whether or not funded) of the Company
or an Affiliate of the Company, or any successor thereto, including, without limitation, (i) the
earnout of restricted performance shares that vest upon achievement of specified performance goals,
(ii) the payout of performance shares or (iii) the payout of incentive compensation under the Long
Term Cash Incentive Plan.

(l) “Retirement Plans” means the benefit plans (including the defined contribution plans and
defined benefit plans) of the Company that are intended to be qualified under Section 401(a) of the
Internal Revenue Code if the Executive was a participant in such Retirement Plan on the date of the
occurrence of the Change in Control or Involuntary Termination, as applicable.

(m) “Special Severance Term” means the period commencing as of the date hereof and expiring on
the close of business on December 31, 2007; provided, however, that (i) commencing on January 1,
2008 and each January 1 thereafter, the Special Severance Term of this Agreement will automatically
be extended for an additional year unless, not later than September 30 of the immediately preceding
year, the Company or the Executive shall have given notice that it or the Executive, as the case
may be, does not wish to have the Special Severance Term extended.

(n) “Subsidiary” means an entity in which the Company directly or indirectly beneficially owns
50% or more of the Outstanding Company Voting Securities.

(o) “Termination Date” means the date on which the Executive’s employment is terminated (the
effective date of which shall be the date of termination, or such other date that may be specified
by the Executive if the termination is pursuant to Section 2(b), Section 2(c) or Section 3(b)).

2. Termination Following a Change in Control.

(a) In the event of the occurrence of a Change in Control during the Special Severance Term,
the Executive’s employment may be terminated by the Company or an Affiliate of the Company during
the Change in Control Severance Period and the Executive shall be entitled to the benefits provided
by Section 4(a) unless such termination is the result of the occurrence of one or more of the
following events:

(i) The Executive’s death;

(ii) If the Executive becomes permanently disabled within the meaning of, and begins
actually to receive disability benefits pursuant to, the long-term disability plan in effect
for, or applicable to, Executive immediately prior to the Change in Control; or

(iii) Cause.

(b) In the event of the occurrence of a Change in Control during the Special Severance Term,
if (but only if) the Board determines that this Section 2(b) shall be operative following such
Change in Control, the Executive may terminate employment with the Company and any Affiliate of the
Company during the Change in Control Severance Period with the right to severance compensation as
provided in Section 4(a) upon the occurrence of one or more of the following events (regardless of
whether any other reason, other than Cause as hereinabove provided, for such termination exists or
has occurred, including without limitation other employment):

(i) Failure to elect or reelect or otherwise to maintain the Executive in the office or
the position, or a substantially equivalent or better office or position, of or with the
Company and/or an Affiliate of the Company (or any successor thereto by operation of law or
otherwise), as the case may be, which the Executive held immediately prior to a Change in
Control, or the removal of the Executive as a Director of the Company and/or an Affiliate of
the Company (or any successor thereto) if the Executive shall have been a Director of the
Company and/or an Affiliate of the Company immediately prior to the Change in Control;

(ii) (A) A significant adverse change in the nature or scope of the authorities,
powers, functions, responsibilities or duties attached to the position with the Company and
any Affiliate of the Company which the Executive held immediately prior to the Change in
Control, (B) a reduction in the aggregate of the Executive’s Base Pay and Incentive Pay
received from the Company and any Affiliate of the Company, or (C) the termination or denial
of the Executive’s rights to Employee Benefits or a reduction in the scope or value thereof,
any of which is not remedied by the Company within 10 calendar days after receipt by the
Company of written notice from the Executive of such change, reduction or termination, as
the case may be;

(iii) The liquidation, dissolution, merger, consolidation or reorganization of the
Company or the transfer of all or substantially all of its business and/or assets, unless
the successor or successors (by liquidation, merger, consolidation, reorganization, transfer
or otherwise) to which all or substantially all of its business and/or assets have been
transferred (by operation of law or otherwise) assumed all duties and obligations of the
Company under this Agreement pursuant to Section 9(a);

(iv) The Company relocates its principal executive offices (if such offices are the
principal location of Executive’s work), or requires the Executive to have his principal
location of work changed, to any location that, in either case, is in excess of 50 miles
from the location thereof immediately prior to the Change in Control, or requires the
Executive to travel away from his office in the course of discharging his responsibilities
or duties hereunder at least 20% more (in terms of aggregate days in any calendar year or in
any calendar quarter when annualized for purposes of comparison to any prior year) than was
required of Executive in any of the three full years immediately prior to the Change in
Control without, in either case, his prior written consent; or

(v) Without limiting the generality or effect of the foregoing, any material breach of
this Agreement by the Company or any successor thereto which is not remedied by the Company
within 10 calendar days after receipt by the Company of written notice from the Executive of
such breach.

(c) Notwithstanding anything contained in this Agreement to the contrary, in the event of a
Change in Control during the Special Severance Term, the Executive may terminate employment with
the Company and any Affiliate of the Company for any reason, or without reason, during the 30-day
period immediately following the first anniversary of the first occurrence of a Change in Control
with the right to severance compensation as provided in Section 4(a).

(d) A termination by the Company pursuant to Section 2(a) or by the Executive pursuant to
Section 2(b) or Section 2(c) will not affect any rights that the Executive may have pursuant to any
agreement, policy, plan, program or arrangement of the Company or an Affiliate of the Company
providing Employee Benefits, which rights shall be governed by the terms thereof.

(e) Unless otherwise expressly provided by the applicable plan, program or agreement, after
the occurrence of a Change in Control during the Special Severance Term, the Company shall pay in
cash to the Executive a lump sum amount equal to the value of any annual bonus (including, without
limitation, incentive-based annual cash bonuses and performance units, but not including any
equity-based compensation or compensation provided under a qualified plan) earned or accrued with
respect to the Executive’s service during the performance period or periods that includes the date
on which the Change in Control occurred, disregarding any applicable vesting requirements; provided
that (i) such amount shall be calculated at the plan target or payout rate, but prorated to base
payment only on the portion of the Executive’s service that had elapsed during the applicable
performance period; and (ii) such amount shall be reduced by any amount actually paid to the
Executive under the terms of such Plan. Such payment shall take into account service rendered
through the payment date and shall be made at the earlier of (i) the date prescribed for payment
pursuant to the applicable plan, program or agreement, or (ii) within five business days after the
Termination Date.

(f) Applicable Provisions if Excise Tax Applies.

(i) Certain Additional Payments by the Company. The provisions of this Section
2(f)(i) shall be operative for a period of five (5) years commencing on the date first
written above.

	 	(A)	 	In the event that it is determined (as
hereafter provided) that any payment (other than the Gross-Up Payments
provided for in this Section 2(f)(i) and Annex C) or distribution by
the Company or any of its Affiliates to or for the benefit of the
Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise pursuant to or by
reason of any other agreement, policy, plan, program or arrangement,
including without limitation any stock option, performance share,
performance unit, stock appreciation right or similar right, or the
lapse or termination of any restriction on or the vesting or
exercisability of any of the foregoing (a “Payment”), would be subject
to the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the “Code”) (or any successor provision thereto)
by reason of being considered “contingent on a change in ownership or
control” of the Company, within the meaning of Section 280G of the Code
(or any successor provision thereto) or to any similar tax imposed by
state or local law, or any interest or penalties with respect to such
tax (such tax or taxes, together with any such interest and penalties,
being hereafter collectively referred to as the “Excise Tax”), then the
Executive will be entitled to receive an additional payment or payments
(collectively, a “Gross-Up Payment”); provided, however, that no
Gross-Up Payment will be made with respect to the Excise Tax, if any,
attributable to (A) any incentive stock option, as defined by
Section 422 of the Code (“ISO”) granted prior to the execution of this
Agreement, or (B) any stock appreciation or similar right, whether or
not limited, granted in tandem with any ISO described in clause (A).
The Gross-Up Payment will be in an amount such that, after payment by
the Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including any 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 Payment. For purposes
of determining the amount of the Gross-Up Payment, the Executive will
be considered to pay (x) federal income taxes at the highest rate in
effect in the year in which the Gross-Up Payment will be made and
(y) state and local income taxes at the highest rate in effect in the
state or locality in which the Gross-Up Payment would be subject to
state or local tax, net of the maximum reduction in federal income tax
that could be obtained from deduction of such state and local taxes.

	 	(B)	 	The obligations set forth in Section 2(f)(i)
will be subject to the procedural provisions described in Annex C.

	 	(C)	 	Notwithstanding anything in this Agreement to
the contrary, the obligation to make the additional payments set forth
in this Section 2(f)(i) and the procedural provisions described in
Annex C shall expire and terminate on the fifth anniversary of the date
first written above (the “Sunset Date”).

(ii) Limitation on Payments and Benefits. The provisions of this Section
2(f)(ii) shall be operative after the Sunset Date. If any amount or benefit to be paid or
provided under Section 4(a) of this Agreement would be an “Excess Parachute Payment,” within
the meaning of Section 280G of the Code (or any successor provision thereto), but for the
application of this sentence, then the payments and benefits to be paid or provided under
Section 4(a) of this Agreement shall be reduced to the minimum extent necessary (but in no
event to less than zero) so that no portion of any such payment or benefit, as so reduced,
constitutes an Excess Parachute Payment; provided, however, that the foregoing reduction
shall be made only if and to the extent that such reduction would result in an increase in
the aggregate payments and benefits to be provided, determined on an after-tax basis (taking
into account the Excise Tax). The determination of whether any reduction in such payments
or benefits to be provided under Section 4(a) of this Agreement or otherwise is required
pursuant to the preceding sentence shall be made at the expense of the Company, if requested
by the Executive or the Company, by the Company’s independent accountants. The fact that
the Executive’s right to payments or benefits may be reduced by reason of the limitations
contained in this Section 2(f)(ii) shall not of itself limit or otherwise affect any other
rights of the Executive other than pursuant to Section 4(a) of this Agreement. In the event
that any payment or benefit intended to be provided under Section 4(a) of this Agreement or
otherwise is required to be reduced pursuant to this Section 2(f)(ii), the Executive shall
be entitled to designate the payments and/or benefits to be so reduced in order to give
effect to this Section 2(f)(ii). The Company shall provide the Executive with all
information reasonably requested by the Executive to permit the Executive to make such
designation. In the event that the Executive fails to make such designation within 10
business days of the Termination Date, the Company may effect such reduction in any manner
it deems appropriate.

(g) Legal Fees and Expenses.

(i) It is the intent of the Company that the Executive not be required to incur legal
fees and the related expenses associated with the interpretation, enforcement or defense of
the Executive’s right to the payment of benefits provided by Section 4(a) of this Agreement
by litigation or otherwise because the cost and expense thereof would substantially detract
from the benefits intended to be extended to the Executive thereunder. Accordingly, if it
should appear to the Executive that the Company has failed to comply with any of its
obligations with respect to the payment of benefits provided by Section 4(a) of this
Agreement or in the event that the Company or any other person takes or threatens to take
any action to declare the Executive’s right to the payment of benefits provided by Section
4(a) this Agreement void or unenforceable, or institutes any litigation or other action or
proceeding designed to deny, or to recover from, the Executive the benefits provided or
intended to be provided to the Executive by Section 4(a) of this Agreement, the Company
irrevocably authorizes the Executive from time to time to retain counsel of Executive’s
choice, at the expense of the Company as hereafter provided, to advise and represent the
Executive in connection with any such interpretation, enforcement or defense, including
without limitation the initiation or defense of any litigation or other legal action,
whether by or against the Company or any Director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction. Notwithstanding any existing or prior
attorney-client relationship between the Company and such counsel, the Company irrevocably
consents to the Executive’s entering into an attorney-client relationship with such counsel,
and in that connection the Company and the Executive agree that a confidential relationship
shall exist between the Executive and such counsel. Without respect to whether the
Executive prevails, in whole or in part, in connection with any of the foregoing, the
Company will pay and be solely financially responsible for any and all attorneys’ and
related fees and expenses incurred by the Executive in connection with any of the foregoing.

(ii) Without limiting the obligations of the Company pursuant to Section 2(g)(i)
hereof, in the event a Change in Control occurs during the Special Severance Term, the
performance of the Company’s obligations under Section 2 and Section 4(a) of this Agreement,
including, without limitation, this Section 2(g), shall be secured by amounts deposited or
to be deposited in trust pursuant to certain trust agreements to which the Company shall be
a party providing that the benefits to be provided hereunder and the fees and expenses of
counsel selected from time to time by the Executive pursuant to Section 2(g)(i) shall be
paid, or reimbursed to the Executive if paid by the Executive, either in accordance with the
terms of such trust agreements, or, if not so provided, on a regular, periodic basis upon
presentation by the Executive to the trustee of a statement or statements prepared by such
counsel in accordance with its customary practices. Any failure by the Company to satisfy
any of its obligations under this Section 2(g)(ii) shall not limit the rights of the
Executive hereunder. Subject to the foregoing, the Executive shall have the status of a
general unsecured creditor of the Company and shall have no right to, or security interest
in, any assets of the Company or any Affiliate of the Company.

(iii) In no event shall this Section 2(g) of this Agreement apply to any
interpretation, enforcement or defense of the Executive’s right to the payment of benefits
provided by Section 4(b) of this Agreement by litigation or otherwise.

3. Involuntary Termination

(a) In the event that the Executive’s employment terminates other than during the Change in
Control Severance Period, the Executive shall be entitled to the benefits provided by Section 4(b)
unless such termination is the result of the occurrence of one or more of the following events:

(i) The Executive’s death;

(ii) If the Executive becomes permanently disabled within the meaning of, and begins
actually to receive disability benefits pursuant to, the long-term disability plan in effect
for, or applicable to, Executive immediately prior to his Termination Date;

(iii) A termination of Executive’s employment by the Company or any Affiliate of the
Company for Cause;

(iv) A termination of Executive’s employment by the Company or any Affiliate of the
Company for Gross Misconduct; or

(v) A termination of Executive’s employment by the Executive for any reason other than
as provided in Section 3(b) below.

(b) Notwithstanding the foregoing, the Executive may elect to terminate his employment with
the Company or any Affiliate of the Company with the right to severance compensation as provided in
Section 4(b) upon the occurrence of one or more of the following events (regardless of whether any
other reason, other than Cause or Gross Misconduct as hereinabove provided, for such termination
exists or has occurred, including without limitation other employment) (i) a reduction of the
Executive’s Base Pay without the Executive’s consent or (ii) a reduction in the percentage level of
the objective component of the Executive’s Incentive Pay or LTIP opportunity without the
Executive’s consent; provided, however, that (A) such a reduction in Base Pay,
Incentive Pay and/or LTIP opportunity is not part of a general reduction in executive officer
compensation opportunity and (B) the Executive’s right to severance compensation shall cease to
exist for such an event unless he terminates his employment with the Company or any Affiliate of
the Company prior to the close of business on the sixtieth (60th) day following the later of its
occurrence or the Executive’s knowledge thereof.

(c) A termination by the Company pursuant to Section 3(a) or by the Executive pursuant to
Section 3(b) will not affect any rights that the Executive may have pursuant to any agreement,
policy, plan, program or arrangement of the Company or an Affiliate of the Company providing
Employee Benefits, which rights shall be governed by the terms thereof.

4. Severance Compensation.

(a) If, following the occurrence of a Change in Control during the Special Severance Term, the
Company or an Affiliate of the Company terminates the Executive’s employment during the Change in
Control Severance Period other than pursuant to Section 2(a)(i), 2(a)(ii) or 2(a)(iii), or if the
Executive terminates his employment pursuant to Section 2(b) (if Section 2(b) is operative) or
Section 2(c), the Company will pay to the Executive the amounts described in Annex A within five
business days after the Termination Date and will continue to provide to the Executive the benefits
described in Annex A for the periods described therein.

(b) If the Company or an Affiliate of the Company terminates the Executive’s employment other
than during the Change in Control Severance Period and other than pursuant to Section 3(a)(i),
3(a)(ii), 3(a)(iii) or 3(a)(iv), or if the Executive terminates his employment pursuant to Section
3(b), the Company will pay to the Executive the amounts described in Annex B within five business
days after the Termination Date and will continue to provide to the Executive the benefits
described in Annex B for the periods described therein. In no event shall the Executive be
entitled to the amounts described in Annex A and Annex B, and there shall be no other
duplication of benefits payable pursuant to this Agreement.

(c) Without limiting the rights of the Executive at law or in equity, if the Company fails to
make any payment or provide any benefit required to be made or provided hereunder on a timely
basis, the Company will pay interest on the amount or value thereof at an annualized rate of
interest equal to the so-called composite “prime rate” as quoted from time to time during the
relevant period in the Midwest Edition of The Wall Street Journal, plus 4%. Such interest will be
payable as it accrues on demand. Any change in such prime rate will be effective on and as of the
date of such change.

(d) Notwithstanding any provision of this Agreement to the contrary, the parties’ respective
rights and obligations under this Section 4 and under Sections 2(g), 6, 7 and 11 will survive any
termination or expiration of this Agreement.

5. No Mitigation Obligation. The Company hereby acknowledges that it will be
difficult and may be impossible for the Executive to find reasonably comparable employment
following the Termination Date. Accordingly, the payment of the severance compensation by the
Company to the Executive in accordance with the terms of this Agreement is hereby acknowledged by
the Company to be reasonable, and the Executive will not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise, nor will any
profits, income, earnings or other benefits from any source whatsoever create any mitigation,
offset, reduction or any other obligation on the part of the Executive hereunder or otherwise,
except as expressly provided in the last sentence of Paragraph 3 set forth on Annex A and Annex B.

6. Competitive Activity; Confidentiality; Nonsolicitation.

(a) Acknowledgements and Agreements. The Executive hereby acknowledges and agrees
that in the performance of the Executive’s duties to the Company during the term of his employment,
the Executive will be brought into frequent contact, either in person, by telephone or through the
mails, with existing and potential customers of the Company throughout the United States. The
Executive also agrees that trade secrets and confidential information of the Company, more fully
described in Section 6(j) of this Agreement, gained by the Executive during the Executive’s
association with the Company, have been developed by the Company through substantial expenditures
of time, effort and money and constitute valuable and unique property of the Company. The
Executive further understands and agrees that the foregoing makes it necessary for the protection
of the business of the Company that the Executive not compete with the Company during the term of
his employment and not compete with the Company for a reasonable period thereafter, as further
provided in the following subsections.

(b) Covenants During the Term. During the term of the Executive’s employment and
prior to the Termination Date, the Executive will not compete with the Company anywhere within the
United States. In accordance with this restriction, but without limiting its terms, during the
term of the Executive’s employment, the Executive will not:

(i) enter into or engage in any business which competes with the business of the
Company;

(ii) solicit customers, business, patronage or orders for, or sell, any products and
services in competition with, or for any business that competes with, the business of the
Company;

(iii) divert, entice or otherwise take away any customers, business, patronage or
orders of the Company or attempt to do so; or

(iv) promote or assist, financially or otherwise, any person, firm, association,
partnership, corporation or other entity engaged in any business which competes with the
business of the Company.

(c) Covenants Following Termination. For a period of (i) two (2) years following an
Involuntary Termination or (ii) one (1) year following the Termination Date for any other reason,
if the Executive has received or is receiving benefits under this Agreement, the Executive will
not:

	 	(A)	 	enter into or engage in any business which
competes with the Company’s business within the Restricted Territory
(as defined in Section 6(g));

	 	(B)	 	solicit customers, business, patronage or
orders for, or sell, any products and services in competition with, or
for any business, wherever located, that competes with, the Company’s
business within the Restricted Territory;

	 	(C)	 	divert, entice or otherwise take away any
customers, business, patronage or orders of the Company within the
Restricted Territory, or attempt to do so; or

	 	(D)	 	promote or assist, financially or otherwise,
any person, firm, association, partnership, corporation or other entity
engaged in any business which competes with the Company’s business
within the Restricted Territory.

(d) Indirect Competition. For the purposes of Sections 6(b) and 6(c), inclusive, but
without limitation thereof, the Executive will be in violation thereof if the Executive engages in
any or all of the activities set forth therein directly as an individual on the Executive’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 Executive or the Executive’s spouse, child or parent
owns, directly or indirectly, individually or in the aggregate, more than five percent (5%) of the
outstanding stock.

(e) The Company. For the purposes of this Section 6, the Company shall include any
and all direct and indirect subsidiary, parent, affiliated, or related companies of the Company for
which the Executive worked or had responsibility at the time of termination of the Executive’s
employment and at any time during the two (2) year period prior to such termination.

(f) The Company’s Business. For the purposes of Sections 6(b), 6(c), 6(k) and 6(l),
inclusive, the Company’s business is defined to be the manufacture, marketing and sale of high
performance engineered materials serving global telecommunications, computer, automotive
electronics, industrial components and optical media markets, as further described in any and all
manufacturing, marketing and sales manuals and materials of the Company 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.

(g) Restricted Territory. For the purposes of Section 6(c), the Restricted Territory
shall be defined as and limited to:

(i) the geographic area(s) within a one hundred (100) mile radius of any and all
Company location(s) in, to, or for which the Executive worked, to which the Executive was
assigned or had any responsibility (either direct or supervisory) at the time of termination
of the Executive’s employment and at any time during the two (2) year period prior to such
termination; and

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

(h) Extension. If it shall be judicially determined that the Executive has violated
any of the Executive’s obligations under Section 6(c), then the period applicable to each
obligation that the Executive 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.

(i) Non-Solicitation. The Executive will not directly or indirectly at any time
solicit or induce or attempt to solicit or induce any employee(s), sales representative(s),
agent(s) or consultant(s) of the Company and/or of its parent, or its other subsidiary, affiliated
or related companies to terminate their employment, representation or other association with the
Company and/or its parent or its other subsidiary, affiliated or related companies.

(j) Further Covenants.

(i) The Executive will keep in strict confidence, and will not, directly or indirectly,
at any time during or after the Executive’s employment with the Company, disclose, furnish,
disseminate, make available or, except in the course of performing the Executive’s duties of
employment, use any trade secrets or confidential business and technical information of the
Company or its customers or vendors, including without limitation as to when or how the
Executive may have acquired such information. Such confidential information shall include,
without limitation, the Company’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 Executive specifically acknowledges that all such
confidential information, whether reduced to writing, maintained on any form of electronic
media, or maintained in the Executive’s mind or memory and whether compiled by the Company,
and/or the Executive, 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 Company to maintain the secrecy of such
information, that such information is the sole property of the Company and that any
retention and use of such information by the Executive during the Executive’s employment
with the Company (except in the course of performing the Executive’s duties and obligations
to the Company) or after the termination of the Executive’s employment shall constitute a
misappropriation of the Company’s trade secrets.

(ii) The Executive agrees that upon termination of the Executive’s employment with the
Company, for any reason, the Executive shall return to the Company, in good condition, all
property of the Company, 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 6(j)(i) of this Agreement. In the event that such
items are not so returned, the Company will have the right to charge the Executive for all
reasonable damages, costs, attorneys’ fees and other expenses incurred in searching for,
taking, removing and/or recovering such property.

(k) Discoveries and Inventions; Work Made for Hire.

(i) The Executive hereby assigns and agrees to assign to the Company, its successors,
assigns or nominees, all of the Executive’s rights to any discoveries, inventions and
improvements, whether patentable or not, made, conceived or suggested, either solely or
jointly with others, by the Executive while in the Company’s employ, whether in the course
of the Executive’s employment with the use of the Company’s time, material or facilities or
that is in any way within or related to the existing or contemplated scope of the Company’s
business. Any discovery, invention or improvement relating to any subject matter with which
the Company was concerned during the Executive’s employment and made, conceived or suggested
by the Executive, either solely or jointly with others, within one (1) year following
termination of the Executive’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 Company’s time, materials or facilities. Upon request
by the Company with respect to any such discoveries, inventions or improvements, the
Executive will execute and deliver to the Company, at any time during or after the
Executive’s employment, all appropriate documents for use in applying for, obtaining and
maintaining such domestic and foreign patents as the Company may desire, and all proper
assignments therefor, when so requested, at the expense of the Company, but without further
or additional consideration.

(ii) The Executive acknowledges that, to the extent permitted by law, 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 the
Executive during the Executive’s employment with the Company 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 Company. The item will recognize the Company as the copyright owner, will
contain all proper copyright notices , e.g., “(creation date) Brush Engineered Materials
Inc., 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.

(l) Communication of Contents of Agreement. During the Executive’s employment and for
a period of (i) two (2) years following an Involuntary Termination or (ii) one (1) year following
the Termination Date for any other reason, if the Executive has received or is receiving benefits
under this Agreement, the Executive will communicate the contents of this Section 6 of this
Agreement to any person, firm, association, partnership, corporation or other entity which the
Executive intends to be employed by, associated with, or represent and which is engaged in a
business that is competitive to the business of the Company.

(m) Relief. The Executive acknowledges and agrees that the remedy at law available to
the Company for breach of any of the Executive’s obligations under this Agreement would be
inadequate. The Executive therefore agrees that, in addition to any other rights or remedies that
the Company may have at law or in equity, temporary and permanent injunctive relief may be granted
in any proceeding which may be brought to enforce any provision contained in Sections 6(b), 6(c),
6(i), 6(j), 6(k) and 6(l), inclusive, of this Agreement, without the necessity of proof of actual
damage.

(n) Reasonableness. The Executive acknowledges that the Executive’s obligations under
this Section 6 are reasonable in the context of the nature of the Company’s business and the
competitive injuries likely to be sustained by the Company if the Executive was to violate such
obligations. The Executive further acknowledges that this Agreement is made in consideration of,
and is adequately supported by the agreement of the Company to perform its obligations under this
Agreement and by other consideration, which the Executive acknowledges constitutes good, valuable
and sufficient consideration.

7. Employment Rights. Nothing expressed or implied in this Agreement will create any
right or duty on the part of the Company or the Executive to have the Executive remain in the
employment of the Company or any Affiliate of the Company. Any termination of employment of the
Executive or the removal of the Executive from the office or position in the Company or any
Affiliate of the Company that occurs following the commencement of any discussion with a third
person that ultimately results in a Change in Control, shall be deemed to be a termination or
removal of the Executive after a Change in Control for purposes of this Agreement.

8. Withholding of Taxes. The Company may withhold from any amounts payable under this
Agreement all federal, state, city or other taxes as the Company is required to withhold pursuant
to any applicable law, regulation or ruling.

9. Successors and Binding Agreement.

(a) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or substantially all of the business or assets
of the Company, by agreement in form and substance reasonably satisfactory to the Executive,
expressly to assume and agree to perform this Agreement in the same manner and to the same extent
the Company would be required to perform if no such succession had taken place. This Agreement
will be binding upon and inure to the benefit of the Company and any successor to the Company,
including without limitation any persons acquiring directly or indirectly all or substantially all
of the business or assets of the Company whether by purchase, merger, consolidation, reorganization
or otherwise (and such successor shall thereafter be deemed the “Company” for the purposes of this
Agreement), but will not otherwise be assignable, transferable or delegable by the Company.

(b) This Agreement will inure to the benefit of and be enforceable by the Executive’s personal
or legal representatives, executors, administrators, successors, heirs, distributees and legatees.

(c) This Agreement is personal in nature and neither of the parties hereto shall, without the
consent of the other, assign, transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in Sections 9(a) and 9(b). Without limiting the generality
or effect of the foregoing, the Executive’s right to receive payments hereunder will not be
assignable, transferable or delegable, whether by pledge, creation of a security interest, or
otherwise, other than by a transfer by Executive’s will or by the laws of descent and distribution
and, in the event of any attempted assignment or transfer contrary to this Section 9(c), the
Company shall have no liability to pay any amount so attempted to be assigned, transferred or
delegated.

10. Notices. For all purposes of this Agreement, all communications, including
without limitation notices, consents, requests or approvals, required or permitted to be given
hereunder will be in writing and will be deemed to have been duly given when hand delivered or
dispatched by electronic facsimile transmission (with receipt thereof orally confirmed), or five
business days after having been mailed by United States registered or certified mail, return
receipt requested, postage prepaid, or three business days after having been sent by a nationally
recognized overnight courier service such as FedEx, UPS, or Purolator, addressed to the Company (to
the attention of the Secretary of the Company) at its principal executive office and to the
Executive at his principal residence, or to such other address as any party may have furnished to
the other in writing and in accordance herewith, except that notices of changes of address shall be
effective only upon receipt.

11. Compliance with Section 409A of the Code. To the extent applicable, it is
intended that this Agreement comply with the provisions of Section 409A of the Code. This
Agreement shall be administered in a manner consistent with this intent, and any provision that
would cause the Agreement to fail to satisfy Section 409A of the Code shall have no force and
effect until amended to comply with Section 409A of the Code (which amendment may be retroactive to
the extent permitted by Section 409A of the Code and may be made by the Company without the consent
of the Executive). In particular, to the extent the Executive becomes entitled to receive payment
subject to Section 409A upon an event that does not constitute a permitted distribution event under
Section 409A(a)(2) of the Code, then notwithstanding anything to the contrary in this Agreement,
payment will be made to the Executive on the earlier of (a) the Executive’s “separation from
service” with the Company (determined in accordance with Section 409A); provided,
however, that if the Executive is a “specified employee” (within the meaning of
Section 409A) and the payment of any amounts described in Annex A or Annex B, as applicable, would
not meet the “short-term deferral” exemption under Section 409A of the Code (or otherwise qualify
for exemption under Section 409A of the Code), then the Company will pay such amounts to the
Executive 6 months following the Executive’s “separation from service” (within the meaning of
Section 409A of the Code) or (b) the Executive’s death.

12. Governing Law. The validity, interpretation, construction and performance of this
Agreement will be governed by and construed in accordance with the substantive laws of the State of
Ohio, without giving effect to the principles of conflict of laws of such State.

13. Validity. If any provision of this Agreement or the application of any provision
hereof to any person or circumstance is held invalid, unenforceable or otherwise illegal, the
remainder of this Agreement and the application of such provision to any other person or
circumstance will not be affected, and the provision so held to be invalid, unenforceable or
otherwise illegal will be reformed to the extent (and only to the extent) necessary to make it
enforceable, valid or legal.

14. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing signed by the
Executive and the Company. No waiver by either party hereto at any time of any breach by the other
party hereto or compliance with any condition or provision of this Agreement to be performed by
such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or representations, oral or otherwise,
expressed or implied with respect to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement. References to Sections are to Sections of this
Agreement.

15. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will constitute one and the same
agreement.

16. Prior Agreement. This Agreement supersedes, as of the date first above written,
the Agreement, dated as of      , 200     (the “Prior Agreement”), between the Company and the
Executive. Executive agrees that he or she has no further rights under the Prior Agreement.

17. Termination of Agreement. If (i) a Change in Control occurs during the Special
Severance Term and the Executive’s employment terminates during the Change in Control Severance
Period, this Agreement shall terminate at the expiration of the Change in Control Continuation
Period (as defined in Annex A attached hereto); (ii) an Involuntary Termination occurs at any time
other than during the Change in Control Severance Period, this Agreement shall terminate at the
expiration of the Involuntary Termination Continuation Period (as defined in Annex B attached
hereto); and (iii) subject to the last sentence of Section 7, the Executive ceases to be an
employee of the Company and any Affiliate of the Company at any time other than during the Change
in Control Severance Period, for any reason other than an Involuntary Termination, thereupon
without further action this Agreement will immediately terminate and be of no further effect. For
purposes of this Section 17, the Executive shall not be deemed to have ceased to be an employee of
the Company and any Affiliate of the Company by reason of the transfer of Executive’s employment
between the Company and any Affiliate of the Company, or among any Affiliates of the Company.
Unless otherwise terminated in accordance with the foregoing, this Agreement shall continue in
effect.

1

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered
as of the date first above written.

BRUSH ENGINEERED MATERIALS INC.

By:

Name:

Title:

[Executive]

2

Annex A

CHANGE IN CONTROL

SEVERANCE COMPENSATION

(1) A lump sum payment in an amount equal to three times the sum of (A) Base Pay (at the
highest rate in effect for any period prior to the Termination Date), plus (B) Incentive Pay (in an
amount equal to not less than the higher of (1) the highest aggregate Incentive Pay earned in any
fiscal year ending after the Change in Control or in any of the three fiscal years immediately
preceding the year in which the Change in Control occurred or (2) the plan target for the year in
which the Change in Control occurred).

(2) A lump sum payment in an amount equal to the present value of the bonuses the Executive
would have received under any LTIP for performance periods in effect at the time of the termination
of the Executive’s employment had he continued to be employed through the period covered by any
such plan, assuming payout under such plans at the plan target rate, reduced by any amounts
actually paid to the Executive under the terms of any such plan. In determining present value for
this purpose, there shall be applied a discount factor equal to the coupon rate on general
full-faith-and-credit obligations of the U.S. Treasury having a maturity of five years and issued
on the date of the termination of the Executive’s employment.

(3) For a period of 36 months following the Termination Date (the “Change in Control
Continuation Period”), the Company will arrange to provide the Executive with Employee Benefits
that are welfare benefits including, without limitation, retiree medical and life insurance (but
not perquisites, stock option, performance share, performance unit, stock purchase, stock
appreciation or similar compensatory benefits or benefits covered by (4) below) substantially
similar to those that the Executive was receiving or entitled to receive immediately prior to the
Termination Date (or, if greater, immediately prior to the reduction, termination, or denial
described in Section 2(b)(ii)). If and to the extent that any benefit described in this Paragraph
3 is not or cannot be paid or provided under any policy, plan, program or arrangement of the
Company or any Affiliate of the Company, as the case may be, then the Company will itself pay or
provide for the payment to the Executive, his dependents and beneficiaries, of such Employee
Benefits along with, in the case of any benefit described in this Paragraph 3 which is subject to
tax because it is not or cannot be paid or provided under any such policy, plan, program or
arrangement of the Company or any Affiliate of the Company, an additional amount such that after
payment by the Executive, or his dependents or beneficiaries, as the case may be, of all taxes so
imposed, the recipient retains an amount equal to such taxes. Notwithstanding the foregoing, or
any other provision of the Agreement, for purposes of determining the period of continuation
coverage to which the Executive or any of his dependents is entitled pursuant to Section 4980B of
the Code (or any successor provision thereto) under the Company’s medical, dental and other group
health plans, or successor plans, the Executive’s “qualifying event” shall be the termination of
the Change in Control Continuation Period. Further, for purposes of the immediately preceding
sentence and for any other purpose including, without limitation, the calculation of service or age
to determine Executive’s eligibility for benefits under any retiree medical benefits or life
insurance plan or policy, the Executive shall be considered to have remained actively employed on a
full-time basis through the termination of the Change in Control Continuation Period. Without
otherwise limiting the purposes or effect of Section 5, Employee Benefits otherwise receivable by
the Executive pursuant to this Paragraph 3 will be reduced to the extent comparable welfare
benefits are actually received by the Executive from another employer during the Change in Control
Continuation Period following the Executive’s Termination Date, and any such benefits actually
received by the Executive shall be reported by the Executive to the Company.

(4) In addition to the retirement income and other benefits to which Executive is entitled
under the Company’s Retirement Plans with respect to Executive’s employment through the Termination
Date, a lump sum payment in an amount equal to the present value of the excess of (x) the
retirement income and other benefits that would be payable to the Executive under the Retirement
Plans if Executive had continued to be employed as an active participant in the Company’s
Retirement Plans through the Change in Control Continuation Period given the Executive’s Base Pay
and Incentive Pay (as determined in Paragraph 1) (without regard to any amendment to the Retirement
Plans made subsequent to a Change in Control which reduces the retirement income or other benefits
thereunder), over (y) the retirement income and other benefits that the Executive is entitled to
receive (either immediately or on a deferred basis) under the Retirement Plans. For purposes of
this Paragraph 4, present value shall be determined by applying a discount factor equal to the
annual rate of interest on 30-year U.S. Treasury securities issued on the date of the termination
of the Executive’s employment (or, if no such securities are issued on such date, on the most
recent date preceding the date of the termination of the Executive’s employment on which such
securities are issued), and by using the 1983 Group Annuity Mortality Table (50% male/50% female).

(5) Notwithstanding any provision to the contrary in any applicable plan, program or
agreement, upon the occurrence of a Change in Control, all equity incentive awards held by the
Executive shall become fully vested and all stock options held by the Executive shall become fully
exercisable.

(6) If the Executive is receiving or has been granted cash payments from the Company which
have been authorized by the Board to replace the benefit that would have accrued under the
Company’s former Supplemental Retirement Benefit Plan (whether or not designated as a “special
award”), a lump sum payment equal to three times the aggregate award authorized by the Board for
the year in which the Termination Date occurs.

(7) If the Executive is entitled to receive or has received, during the year in which the
Termination Date occurs, a credit of nonelective deferred compensation under the Company’s
Executive Deferred Compensation Plan II, a lump sum payment in an amount equal to three times the
aggregate amount of nonelective deferred compensation designated by the Organization and
Compensation Committee of the Board for the year in which the Termination Date occurs.

(8) A lump sum payment equal to the cash value of the club dues and financial counseling
benefits that the Executive would have been entitled to receive during the Change in Control
Continuation Period based on the annual value of such club dues and financial counseling benefits
immediately before the Termination Date or, if greater, immediately before the Change in Control;
provided that the Executive must have been receiving such benefits immediately prior to either the
Termination Date or the date of the Change in Control.

(9) Reasonable fees for outplacement services, by a firm selected by the Executive, at the
expense of the Company in an amount not in excess of $20,000.

3

Annex B

INVOLUNTARY TERMINATION

SEVERANCE COMPENSATION

(1) A lump sum payment in an amount equal to two times the sum of (A) Base Pay (at the highest
rate in effect for any period prior to the Termination Date), plus (B) Incentive Pay (in an amount
equal to not less than the highest aggregate Incentive Pay earned in the fiscal year in which the
Termination Date occurred or in any of the three fiscal years immediately preceding the year in
which the Termination Date occurred).

(2) An amount equal to the bonuses the Executive would have received under any LTIP for
performance periods in effect at the time of the termination of the Executive’s employment had he
continued to be employed through the period covered by any such plan, reduced by any amounts
actually paid to the Executive under the terms of any such plan. Notwithstanding the foregoing,
the Executive shall receive a lump sum payment in an amount equal to the present value of 50% of
such LTIP bonus amount, assuming payout under such plans at the plan target rate, upon the
termination of Executive’s employment. If, at the end of the applicable performance period, the
Executive would be entitled to receive an amount in excess of 50% of the LTIP bonus amount, such
excess amount shall be paid to the Executive in a lump sum at the end of the applicable performance
period. In determining present value for this purpose, there shall be applied a discount factor
equal to the coupon rate on general full-faith-and-credit obligations of the U.S. Treasury having a
maturity of five years and issued on the date of the termination of the Executive’s employment.

(3) For a period of 24 months following the Termination Date (the “Involuntary Termination
Continuation Period”), the Company will arrange to provide the Executive with Employee Benefits
that are welfare benefits including, without limitation, retiree medical and life insurance (but
not perquisites, stock option, performance share, performance unit, stock purchase, stock
appreciation or similar compensatory benefits or benefits covered by (4) below) substantially
similar to those that the Executive was receiving or entitled to receive immediately prior to the
Termination Date. If and to the extent that any benefit described in this Paragraph 3 is not or
cannot be paid or provided under any policy, plan, program or arrangement of the Company or any
Affiliate of the Company, as the case may be, then the Company will itself pay or provide for the
payment to the Executive, his dependents and beneficiaries, of such Employee Benefits along with,
in the case of any benefit described in this Paragraph 3 which is subject to tax because it is not
or cannot be paid or provided under any such policy, plan, program or arrangement of the Company or
any Affiliate of the Company, an additional amount such that after payment by the Executive, or his
dependents or beneficiaries, as the case may be, of all taxes so imposed, the recipient retains an
amount equal to such taxes. Notwithstanding the foregoing, or any other provision of the
Agreement, for purposes of determining the period of continuation coverage to which the Executive
or any of his dependents is entitled pursuant to Section 4980B of the Code (or any successor
provision thereto) under the Company’s medical, dental and other group health plans, or successor
plans, the Executive’s “qualifying event” shall be the termination of the Involuntary Termination
Continuation Period. Further, for purposes of the immediately preceding sentence and for any other
purpose including, without limitation, the calculation of service or age to determine Executive’s
eligibility for benefits under any retiree medical benefits or life insurance plan or policy, the
Executive shall be considered to have remained actively employed on a full-time basis through the
termination of the Involuntary Termination Continuation Period. Without otherwise limiting the
purposes or effect of Section 5, Employee Benefits otherwise receivable by the Executive pursuant
to this Paragraph 3 will be reduced to the extent comparable welfare benefits are actually received
by the Executive from another employer during the Involuntary Termination Continuation Period
following the Executive’s Termination Date, and any such benefits actually received by the
Executive shall be reported by the Executive to the Company.

(4) In addition to the retirement income and other benefits to which Executive is entitled
under the Company’s Retirement Plans with respect to Executive’s employment through the Termination
Date, a lump sum payment in an amount equal to the present value of the excess of (x) the
retirement income and other benefits that would be payable to the Executive under the Retirement
Plans if Executive had continued to be employed as an active participant in the Company’s
Retirement Plans through the Involuntary Termination Continuation Period given the Executive’s Base
Pay and Incentive Pay (as determined in Paragraph 1) (without regard to any amendment to the
Retirement Plans made subsequent to the Involuntary Termination which reduces the retirement income
or other benefits thereunder), over (y) the retirement income and other benefits that the Executive
is entitled to receive (either immediately or on a deferred basis) under the Retirement Plans. For
purposes of this Paragraph 4, present value shall be determined by applying a discount factor equal
to the annual rate of interest on 30-year U.S. Treasury securities issued on the date of the
termination of the Executive’s employment (or, if no such securities are issued on such date, on
the most recent date preceding the date of the termination of the Executive’s employment on which
such securities are issued), and by using the 1983 Group Annuity Mortality Table (50% male/50%
female).

(5) Notwithstanding any provision to the contrary in any applicable plan, program or
agreement, upon the occurrence of an Involuntary Termination, all equity incentive awards held by
the Executive shall become fully vested and all stock options held by the Executive shall become
fully exercisable.

(6) If the Executive is receiving or has been granted cash payments from the Company which
have been authorized by the Board to replace the benefit that would have accrued under the
Company’s former Supplemental Retirement Benefit Plan (whether or not designated as a “special
award”), a lump sum payment equal to two times the aggregate award authorized by the Board for the
year in which the Termination Date occurs.

(7) If the Executive is entitled to receive or has received, during the year in which the
Termination Date occurs, a credit of nonelective deferred compensation under the Company’s
Executive Deferred Compensation Plan II, a lump sum payment in an amount equal to two times the
aggregate amount of nonelective deferred compensation designated by the Organization and
Compensation Committee of the Board for the year in which the Termination Date occurs.

(8) Reasonable fees for outplacement services, by a firm selected by the Executive, at the
expense of the Company in an amount not in excess of $20,000.

4

Annex C

EXCISE TAX GROSS-UP PROCEDURAL PROVISIONS

(1) Subject to the provisions of Paragraph 5, all determinations required to be made under
Section 2(f)(i) and Annex C, including whether an Excise Tax is payable by the Executive and the
amount of such Excise Tax and whether a Gross-Up Payment is required to be paid by the Company to
the Executive and the amount of such Gross-Up Payment, if any, will be made by a nationally
recognized accounting firm or benefits consulting firm (the “National Firm”) selected by the
Executive in the Executive’s sole discretion. The Executive will direct the National Firm to
submit its determination and detailed supporting calculations to both the Company and the Executive
within 30 calendar days after the Termination Date, if applicable, and any such other time or times
as may be requested by the Company or the Executive. If the National Firm determines that any
Excise Tax is payable by the Executive, the Company will pay the required Gross-Up Payment to the
Executive within 5 business days after receipt of such determination and calculations with respect
to any Payment to the Executive. If the National Firm determines that no Excise Tax is payable by
the Executive with respect to any material benefit or amount (or portion thereof), it will, at the
same time as it makes such determination, furnish the Company and the Executive with an opinion
that the Executive has substantial authority not to report any Excise Tax on the Executive’s
federal, state or local income or other tax return with respect to such benefit or amount. As a
result of the uncertainty in the application of Section 4999 of the Code and the possibility of
similar uncertainty regarding applicable state or local tax law at the time of any determination by
the National Firm hereunder, it is possible that Gross-Up Payments that will not have been made by
the Company should have been made (an “Underpayment”), consistent with the calculations required to
be made hereunder. In the event that the Company exhausts or fails to pursue its remedies pursuant
to Paragraph 5 and the Executive thereafter is required to make a payment of any Excise Tax, the
Executive will direct the National Firm to determine the amount of the Underpayment that has
occurred and to submit its determination and detailed supporting calculations to both the Company
and the Executive as promptly as possible. Any such Underpayment will be promptly paid by the
Company to, or for the benefit of, the Executive within 5 business days after receipt of such
determination and calculations.

(2) The Company and the Executive will each provide the National Firm access to and copies of
any books, records and documents in the possession of the Company or the Executive, as the case may
be, reasonably requested by the National Firm, and otherwise cooperate with the National Firm in
connection with the preparation and issuance of the determinations and calculations contemplated by
Paragraph 1. Any determination by the National Firm as to the amount of the Gross-Up Payment will
be binding upon the Company and the Executive.

(3) The federal, state and local income or other tax returns filed by the Executive will be
prepared and filed on a consistent basis with the determination of the National Firm with respect
to the Excise Tax payable by the Executive. The Executive will report and make proper payment of
the amount of any Excise Tax, and at the request of the Company, provide to the Company true and
correct copies (with any amendments) of the Executive’s federal income tax return as filed with the
Internal Revenue Service and corresponding state and local tax returns, if relevant, as filed with
the applicable taxing authority, and such other documents reasonably requested by the Company,
evidencing such payment. If prior to the filing of the Executive’s federal income tax return, or
corresponding state or local tax return, if relevant, the National Firm determines that the amount
of the Gross-Up Payment should be reduced, the Executive will within 5 business days pay to the
Company the amount of such reduction.

(4) The fees and expenses of the National Firm for its services in connection with the
determinations and calculations contemplated by Paragraph 1 will be borne by the Company. If such
fees and expenses are initially paid by the Executive, the Company will reimburse the Executive the
full amount of such fees and expenses within 5 business days after receipt from the Executive of a
statement therefor and reasonable evidence of Executive’s payment thereof.

(5) The Executive will notify the Company in writing of any claim by the Internal Revenue
Service or any other taxing authority that, if successful, would require the payment by the Company
of a Gross-Up Payment. Such notification will be given as promptly as practicable but no later
than 10 business days after the Executive actually receives notice of such claim and the Executive
will further apprise the Company of the nature of such claim and the date on which such claim is
requested to be paid (in each case, to the extent known by the Executive). The Executive will not
pay such claim prior to the expiration of the 30-calendar-day period following the date on which
Executive gives such notice to the Company or, if earlier, the date that any payment of amount with
respect to such claim is due. If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive will:

(A) provide the Company with any written records or documents in the Executive’s
possession relating to such claim reasonably requested by the Company;

(B) take such action in connection with contesting such claim as the Company reasonably
requests in writing from time to time, including without limitation accepting legal
representation with respect to such claim by an attorney competent in respect of the subject
matter and reasonably selected by the Company;

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

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

provided, however, that the Company will bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such contest and will
indemnify and hold harmless the Executive, on an after-tax basis, for and against any Excise Tax or
income or other tax, including interest and penalties with respect thereto, imposed as a result of
such representation and payment of costs and expenses. Without limiting the foregoing provisions
of this Paragraph 5, the Company will control all proceedings taken in connection with the contest
of any claim contemplated by this Paragraph 5 and, at its sole option, may pursue or forego any and
all administrative appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim (provided, however, that the Executive may participate therein at Executive’s
own cost and expense) and may, at its option, 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 determines; provided,
however, that if the Company directs the Executive to pay the tax claimed and sue for a
refund, the Company will, as permitted by applicable law, advance the amount of such payment to the
Executive on an interest-free basis and will indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including interest or penalties with
respect thereto, imposed with respect to such advance; and provided further,
however, that any extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which the contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Company’s control of any such
contested claim will be limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive will 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.

(6) If, after the receipt by the Executive of an amount advanced by the Company pursuant to
Paragraph 5, the Executive receives any refund with respect to such claim, the Executive will
(subject to the Company’s complying with the requirements of Paragraph 5) promptly pay to the
Company the amount of such refund (together with any interest paid or credited thereon after any
taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Paragraph 5, a determination is made that the Executive is not 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 or refund prior to the expiration of 30 calendar days after such
determination, then such advance will be forgiven and will not be required to be repaid and the
amount of any such advance will offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid by the Company to the Executive pursuant to Section 2(f)(i) and this Annex C.

5

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