Document:

EX-10.1

Exhibit 10.1

AMENDED AND RESTATED

SEVERANCE AGREEMENT

     THIS AMENDED AND RESTATED SEVERANCE AGREEMENT (this “Agreement”), dated as of                      ___,
2008 is made and entered by and between Brush Engineered Materials Inc., an Ohio corporation (the
“Company”), and                                          (the “Executive”).

WITNESSETH:

     WHEREAS, the American Jobs Creation Act of 2004, P.L. 108-357 (the “AJCA”) added a new Section
409A to the Internal Revenue Code of 1986, as amended (the “Code”), which significantly changed the
Federal tax law applicable to “amounts deferred” under nonqualified deferred compensation plans
after December 31, 2004; and

     WHEREAS, pursuant to the AJCA, the Secretary of the Treasury and the Internal Revenue Service
has issued proposed and final regulations and other guidance with respect to the provisions of new
Section 409A of the Code and will issue additional guidance with respect to Section 409A of the
Code (collectively, the “AJCA Guidance”); and

     WHEREAS, the Company and the Executive desire for this Agreement to take into account the AJCA
Guidance issued to date and 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 pursuant to Section 3(a)(iii), Section 3(b)
or Section 3(c), 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 8;

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

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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

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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) “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.

     (g) “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.

     (h) “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.

     (i) “Retirement Plans” means the benefit plans (including the defined contribution and defined
benefit plans) of the Company that are intended to be qualified under Section 401(a)

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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.

     (j) “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 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
Severance Period is not to be so extended.

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

     (l) “Term” means the period
commencing as of the date hereof and expiring on the close of
business on December 31, 20___; provided, however, that (i) commencing on January 1, 20___ and each
January 1 thereafter, the 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 Term extended; (ii) if a Change in Control occurs during the Term, the Term shall expire
and this Agreement will terminate at the expiration of the Severance Period; and (iii) subject to
the last sentence of Section 9, if, prior to a Change in Control, the Executive ceases for any
reason to be an employee of the Company and any Affiliate of the Company, thereupon without further
action the Term shall be deemed to have expired and this Agreement will immediately terminate and
be of no further effect. For purposes of this Section 1(k), 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.

     (m) “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 3(b) or Section 3(c)), provided that in
each case such date constitutes a “separation from service,” as defined for purposes of Section
409A of the Code.

     2. Operation of Agreement. This Agreement will be effective and binding immediately
upon its execution, but, anything in this Agreement to the contrary notwithstanding, except as
provided in Section 9, this Agreement will not be operative unless and until a Change in Control
occurs. Upon the occurrence of a Change in Control at any time during the Term, without further
action, this Agreement shall become immediately operative.

     3. Termination Following a Change in Control.

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

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     (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, if (but only if) the Board
determines that this Section 3(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
Severance Period with the right to severance compensation as provided in Section 4 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 11(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

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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, 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.

     (d) A termination by the Company pursuant to Section 3(a) or by the Executive pursuant to
Section 3(b) or Section 3(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 (except as provided in Section 4(a) and Annex A), which rights shall be
governed by the terms thereof.

     4. Severance Compensation.

     (a) If, following the occurrence of a Change in Control, the Company or an Affiliate of the
Company terminates the Executive’s employment during the Severance Period other than pursuant to
Section 3(a)(i), 3(a)(ii) or 3(a)(iii), or if the Executive terminates his employment pursuant to
Section 3(b) (if Section 3(b) is operative) or Section 3(c), the Company (subject to Section 4(e))
will pay to the Executive the lump sum payment amounts described in Annex A within five business
days after the Termination Date (the “Payment Date”) and will continue to provide to the Executive
the benefits described in Annex A for the periods described therein.

     (b) 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.

     (c) Notwithstanding any provision of this Agreement to the contrary, the parties’ respective
rights and obligations under this Section 4 and under Sections 5, 7, 8, 9 and 13 will survive any
termination or expiration of this Agreement or the termination of the Executive’s employment
following a Change in Control for any reason whatsoever.

     (d) Unless otherwise expressly provided by the applicable plan, program or agreement, after
the occurrence of a Change in Control, the Company shall pay in cash to the Executive a lump sum
amount equal to the value of any annual bonus (including, without

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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 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. Such payment shall take into account service rendered through the payment date
and shall be made on the Payment Date.

     (e) Notwithstanding the foregoing provisions of this Section 4 and Annex A, if the Executive
is a “specified employee,” determined pursuant to procedures adopted by the Company in compliance
with Section 409A of the Code, on his Termination Date, amounts that would otherwise be payable
pursuant to this Agreement during the six-month period immediately following the Executive’s
Termination Date (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to
this Agreement (except for the benefits described in Paragraph 9 of Annex A) (the “Delayed
Benefits”) during the six-month period immediately following the Executive’s Termination Date (such
period, the “Delay Period”) will instead be paid or made available on the earlier of (i) the first
business day of the seventh month after Executive’s Termination Date, or (ii) the Executive’s death
(the applicable date, the “Permissible Payment Date”). The Company shall pay interest on the
Delayed Payments and the value of the Delayed Benefits at the rate specified in Section 4(b).

     (f) Each payment to be made to the Executive under the provisions of this Section 4 and Annex
A shall be considered to be a separate payment and not one of a series of payments for purposes of
Section 409A of the Code. Further, coverages provided during one taxable year shall not affect the
degree to which coverages will be provided in any other taxable year.

     5. Limitation on Payments and Benefits. Notwithstanding any provision of this
Agreement to the contrary, if any amount or benefit to be paid or provided under 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 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 imposed pursuant to Section 4999 of the Code, or any successor
provision thereto, any tax imposed by any comparable provision of state law, and any applicable
federal, state and local income taxes). The determination of whether any reduction in such
payments or benefits to be provided under 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 5 shall
not of itself limit or otherwise affect any other rights of the Executive other than pursuant to
this Agreement. In the event that any payment or benefit intended to be provided under this
Agreement or otherwise is required to be reduced pursuant to this Section 5, the Company shall
reduce the Executive’s payments and/or benefits, to the extent required, in the

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following order: (i) the lump sum payment described in paragraph (1) of Annex A; (ii) the
lump sum payment described in Section 4(d) of this Agreement; (iii) the lump sum payment described
in Paragraph (2) of Annex A; (iv) the lump sum payment described in Paragraph (4) of Annex A; (v)
the lump sum payment described in Paragraph (6) of Annex A; (vi) the lump sum payment described in
Paragraph (7) of Annex A; (vii) the lump sum payment described in Paragraph (8) of Annex A; (viii)
the benefits described in Paragraph (9) of Annex A; (ix) the benefits described in Paragraph (3) of
Annex A; and (x) the accelerated vesting of equity awards described in Paragraph (5) of Annex A.

     6. 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(a) set forth on Annex A.

     7. Legal Fees and Expenses.

     (a) 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 Executive’s
rights under 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 hereunder.
Accordingly, if it should appear to the Executive that the Company has failed to comply with any of
its obligations under this Agreement or in the event that the Company or any other person takes or
threatens to take any action to declare 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 hereunder, 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. Such payments
shall be made no later than December 31 of the year following the year in the which the Executive
incurs the expenses, provided that in no event will the amount of expenses eligible for
reimbursement in one year

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affect the amount of expenses to be reimbursed, or in-kind benefits to be provided, in any
other taxable year.

     (b) Without limiting the obligations of the Company pursuant to Section 7(a) hereof, in the
event a Change in Control occurs, the performance of the Company’s obligations under this
Agreement, including, without limitation, this Section 7 and Annex A, 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 7(a) 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 7(b) 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.
Notwithstanding anything contained in this Agreement to the contrary, in no event shall any amount
be transferred to a trust described in this Section 7(b) if, pursuant to Section 409A(b)(3)(A) of
the Code, such amount would, for purposes of Section 83 of the Code, be treated as property
transferred in connection with the performance of services.

     8. 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, 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 8(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 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 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;

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     (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 one (1) year following the
Termination Date, if the Executive has received or is receiving benefits under this Agreement, the
Executive will not:

     (i) enter into or engage in any business which competes with the Company’s business
within the Restricted Territory (as defined in Section 8(g));

     (ii) 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;

     (iii) 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

     (iv) 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 8(b) and 8(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 8, 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 8(b), 8(c), 8(k) and 8(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.

11

 

     (g) Restricted Territory. For the purposes of Section 8(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 8(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

12

 

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 8(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.

13

 

     (l) Communication of Contents of Agreement. During the Executive’s employment and for
one (1) year thereafter, the Executive will communicate the contents of this Section 8 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 8(b), 8(c),
8(i), 8(j), 8(k) and 8(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 8 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.

     9. 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 prior to or following any Change in
Control. 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.

     10. 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.

     11. 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

14

 

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 11(a) and 11(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 11(c), the
Company shall have no liability to pay any amount so attempted to be assigned, transferred or
delegated.

     12. 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.

     13. 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. References to Section
409A shall include any proposed, temporary or final regulation, or any other formal guidance,
promulgated with respect to such section by the U.S. Department of Treasury or the Internal Revenue
Service.

     14. 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.

     15. 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.

15

 

     16. 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.

     17. 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.

     18. 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.

16

 

     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]	 	 

17

 

Annex A

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 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 of the Company 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. 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) (a) For a period of 24 months following the Termination Date (the “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 Paragraph (4) below) substantially similar (except
with respect to the cost of health care benefits) 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 3(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. Without
otherwise limiting the purposes or effect of Section 6, 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 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.

A-1

 

               (b) The Executive will pay the full cost for health care continuation coverage (including
medical, dental and vision coverage) described in Paragraph 3(a) on an after-tax basis. On the
Payment Date and on January 2 of the following year, the Company will make a payment (the “Health
Plans Premium Reimbursement”) to the Executive equal to the difference between (i) the amount the
Executive will be required to pay during the calendar year of payment for such health care
continuation coverage, and (ii) the amount the Executive would have been required to pay if the
Executive were only required to pay the amount a similarly situation active employee would pay for
such coverage, provided that the Company will not provide any payment pursuant to this Paragraph
3(b) after the date on which the Executive becomes employed (other than on a part-time or temporary
basis) by any other person or entity that makes health care coverage available to the Executive and
his eligible dependents. The Company shall reimburse the amount of any federal, state and local
taxes imposed on the Executive as a result of the Health Plans Premium Reimbursement or the receipt
of benefits under the health care continuation coverage, such reimbursement to be made subject to
Section 4(e) and no later than December 31 of the year following the year in which the Executive
remits the applicable taxes.

               (c) 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 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 Continuation Period.

          (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 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).

A-2

 

          (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 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) 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 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; provided that Executive incurs such
outplacement services no later than December 31 of the second year following the year in which
Executive’s Termination Date occurs, and provided further that the payment of fees for outplacement
services will not be made any later than the last day of the third year following the year in which
Executive’s Date of Termination occurs.

A-3EX-10.2

Exhibit 10.2

AMENDED AND RESTATED

SEVERANCE AGREEMENT

     THIS AMENDED AND RESTATED SEVERANCE AGREEMENT (this “Agreement”), dated as of                      ___,
2008 is made and entered by and between Brush Engineered Materials Inc., an Ohio corporation (the
“Company”), and                                   (the “Executive”).

WITNESSETH:

     WHEREAS, the American Jobs Creation Act of 2004, P.L. 108-357 (the “AJCA”) added a new Section
409A to the Internal Revenue Code of 1986, as amended (the “Code”), which significantly changed the
Federal tax law applicable to “amounts deferred” under nonqualified deferred compensation plans
after December 31, 2004; and

     WHEREAS, pursuant to the AJCA, the Secretary of the Treasury and the Internal Revenue Service
has issued proposed and final regulations and other guidance with respect to the provisions of new
Section 409A of the Code and will issue additional guidance with respect to Section 409A of the
Code (collectively, the “AJCA Guidance”); and

     WHEREAS, the Company and the Executive desire for this Agreement to take into account the AJCA
Guidance issued to date and 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

2

 

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

3

 

(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

4

 

(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
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, 20___; provided, however, that (i) commencing on January 1,
20___ 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)),
provided that in each case such date constitutes a “separation from service,” as defined for
purposes of Section 409A of the Code.

     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;

5

 

     (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

6

 

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 (except as provided in Section 4(a) and Annex A), 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 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. Such payment shall take into account service rendered through the payment date
and shall be made within five business days after the Termination Date (the “Payment 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

7

 

	 	 	 	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 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
                     ___, 20___ (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,”

8

 

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 Company shall reduce the Executive’s payments and/or benefits, to the
extent required, in the following order: (i) the lump sum payment described in Paragraph
(1) of Annex A; (ii) the lump sum payment described in Section 2(e) of this Agreement; (iii)
the lump sum payment described in Paragraph (2) of Annex A; (iv) the lump sum payment
described in Paragraph (4) of Annex A; (v) the lump sum payment described in Paragraph (6)
of Annex A; (vi) the lump sum payment described in Paragraph (7) of Annex A; (vii) the lump
sum payment described in Paragraph (8) of Annex A; (viii) the benefits described in
Paragraph (9) of Annex A; (ix) the benefits described in Paragraph (3) of Annex A; and (x)
the accelerated vesting of equity awards described in Paragraph (5) of Annex A.

     (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

9

 

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. Such payments shall be made no later
than December 31 of the year following the year in the which the Executive incurs the
expenses, provided that in no event will the amount of expenses eligible for reimbursement
in one year affect the amount of expenses to be reimbursed, or in-kind benefits to be
provided, in any other taxable year.

     (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. Notwithstanding anything
contained in this Agreement to the contrary, in no event shall any amount be transferred to
a trust described in this Section 2(g)(ii) if, pursuant to Section 409A(b)(3)(A) of the
Code, such amount would, for purposes of Section 83 of the Code, be treated as property
transferred in connection with the performance of services.

     (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;

10

 

     (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 (except as provided in Section 4(b) and Annex B), 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 (subject to Section 4(e)) will pay to the Executive the lump sum payment
amounts described in Annex A on the Payment 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 (subject to Section 4(e)) will pay to the Executive the lump sum payment amounts
described in Annex B on the Payment Date (or such other date as

11

 

specified in Annex B) 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.

     (e) Notwithstanding the foregoing provisions of this Section 4, Annex A, Annex B, and Annex C,
if the Executive is a “specified employee,” determined pursuant to procedures adopted by the
Company in compliance with Section 409A of the Code, on his Termination Date, amounts that would
otherwise be payable pursuant to this Agreement during the six-month period immediately following
the Executive’s Termination Date (the “Delayed Payments”) and benefits that would otherwise be
provided pursuant to this Agreement (except for the benefits described in Paragraph 9 of Annex A
and Paragraph 8 of Annex B) (the “Delayed Benefits”) during the six-month period immediately
following the Executive’s Termination Date (such period, the “Delay Period”) will instead be paid
or made available on the earlier of (i) the first business day of the seventh month after
Executive’s Termination Date, or (ii) the Executive’s death (the applicable date, the “Permissible
Payment Date”). The Company shall pay interest on the Delayed Payments and the value of the
Delayed Benefits at the rate specified in Section 4(c).

     (f) Each payment to be made to the Executive under the provisions of this Section 4, Annex A,
Annex B, or Annex C shall be considered to be a separate payment and not one of a series of
payments for purposes of Section 409A of the Code. Further, coverages provided during one taxable
year shall not affect the degree to which coverages will be provided in any other taxable year.

12

 

     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(a) 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,

13

 

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:

14

 

     (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

15

 

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.

16

 

     (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,

17

 

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. References to Section
409A shall include any proposed, temporary or final regulation, or any other formal guidance,
promulgated with respect to such section by the U.S. Department of Treasury or the Internal Revenue
Service.

     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.

18

 

     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.

19

 

     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]	 	 

20

 

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. 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) (a) 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 Paragraph (4) below)
substantially similar (except with respect to the cost of health care benefits) 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. 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.

A-1

 

               (b) The Executive will pay the full cost for health care continuation coverage (including
medical, dental and vision coverage) described in Paragraph 3(a) on an after-tax basis. On the
Payment Date and on January 2 of the following two years, the Company will make a payment (the
“Health Plans Premium Reimbursement”) to the Executive equal to the difference between (i) the
amount the Executive will be required to pay during the calendar year of payment for such health
care continuation coverage, and (ii) the amount the Executive would have been required to pay if
the Executive were only required to pay the amount a similarly situation active employee would pay
for such coverage, provided that the Company will not provide any payment pursuant to this
Paragraph 3(b) after the date on which the Executive becomes employed (other than on a part-time or
temporary basis) by any other person or entity that makes health care coverage available to the
Executive and his eligible dependents. The Company shall reimburse the amount of any federal,
state and local taxes imposed on the Executive as a result of the Health Plans Premium
Reimbursement or the receipt of benefits under the health care continuation coverage, such
reimbursement to be made subject to Section 4(e) and no later than December 31 of the year
following the year in which the Executive remits the applicable taxes.

               (c) 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.

          (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).

A-2

 

          (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; provided that Executive incurs such
outplacement services no later than December 31 of the second year following the year in which
Executive’s Termination Date occurs, and provided further that the payment of fees for outplacement
services will not be made any later than the last day of the third year following the year in which
Executive’s Date of Termination occurs.

A-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. 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, on the
Payment Date. 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 in the calendar year immediately following 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) (a) 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 Paragraph (4) below)
substantially similar (except with respect to the cost of health care benefits) 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. 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

B-1

 

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.

               (b) The Executive will pay the full cost for health care continuation coverage (including
medical, dental and vision coverage) described in Paragraph 3(a) on an after-tax basis. On the
Payment Date and on January 2 of the following year, the Company will make a Health Plans Premium
Reimbursement to the Executive equal to the difference between (i) the amount the Executive will be
required to pay during the calendar year of payment for such health care continuation coverage, and
(ii) the amount the Executive would have been required to pay if the Executive were only required
to pay the amount a similarly situation active employee would pay for such coverage, provided that
the Company will not provide any payment pursuant to this Paragraph 3(b) after the date on which
the Executive becomes employed (other than on a part-time or temporary basis) by any other person
or entity that makes health care coverage available to the Executive and his eligible dependents.
The Company shall reimburse the amount of any federal, state and local taxes imposed on the
Executive as a result of the Health Plans Premium Reimbursement or the receipt of benefits under
the health care continuation coverage, such reimbursement to be made subject to Section 4(e) and no
later than December 31 of the year following the year in which the Executive remits the applicable
taxes. Each cash payment made by the Company pursuant to this Paragraph 3(b) shall be considered a
separate payment and not one of a series of payments for purposes of Section 409A.

               (c) 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.

          (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

B-2

 

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; provided that Executive incurs such
outplacement services no later than December 31 of the second year following the year in which
Executive’s Termination Date occurs, and provided further that the payment of fees for outplacement
services will not be made any later than the last day of the third year following the year in which
Executive’s Date of Termination occurs.

B-3

 

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 as provided in Paragraph 7. 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 after receipt of such
determination and calculations as provided in Paragraph 7.

     (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

C-1

 

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 after receipt from the Executive of a statement therefor and
reasonable evidence of Executive’s payment thereof as provided in Paragraph 7.

     (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

C-2

 

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.

     (7) Notwithstanding any other provision of this Annex C to the contrary, but subject to
Section 4(e), all taxes and expenses described in Section 2(f)(i) and this Annex C shall be paid or
reimbursed within 5 business days after the Executive submits evidence of incurrence of such taxes
and/or expenses, provided that in all events such reimbursement shall be made on or before the last
day of the year following (a) the year in which the applicable taxes are remitted or expenses are
incurred or, (b) in the case of reimbursement of expenses incurred due to a tax audit or litigation
in which there is no remittance of taxes, the year in which the audit is completed or there is a
final and nonappealable settlement or other resolution of the litigation, in accordance with
Treasury Regulation §1.409A-3(i)(1)(v). The Executive shall be required to submit all requests for
reimbursements no later than 30 days prior to the last day for reimbursement described in the prior
sentence. Each provision of reimbursements pursuant to this Annex C shall be considered a separate
payment and not one of a series of payments for purposes of Section 409A. Any expense reimbursed
by the Company in one taxable year in no event will affect the amount of expenses required to be
reimbursed by the Company in any other taxable year.

C-3

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