Document:

EX-10.5

Exhibit 10.5

SEVERANCE AGREEMENT

THIS SEVERANCE AGREEMENT (this “Agreement”), dated as of      , 2006 is made and entered by
and between Brush Engineered Materials Inc., an Ohio corporation (the “Company”), and
     (the “Executive”).

WITNESSETH:

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

WHEREAS, the Company recognizes that, as is the case for most companies, the possibility of a
Change in Control (as defined below) exists;

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

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

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

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

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

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

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

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

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

(d) “Cause” means that, prior to any termination 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 subsection (ii), below), (B) any acquisition by the Company or a
subsidiary of the Company, (C) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by the Company,
(D) any acquisition by any Person pursuant to a transaction described in clauses (A), (B)
and (C) of subsection (iii) below, or (E) any acquisition by, or other Business Combination
(as defined in (iii) below) with, a person or group of which employees of the Company or any
subsidiary of the Company control a greater than 25% interest (a “MBO”) but only if the
Executive is one of those employees of the Company or any subsidiary of the Company that are
participating in the MBO; provided, further, that if any Person’s beneficial ownership of
the Outstanding Company Voting Securities reaches or exceeds 20% or 35%, as the case may be,
as a result of a transaction described in clause (A) or (B) above, and such Person
subsequently acquires beneficial ownership of additional voting securities of the Company,
such subsequent acquisition shall be treated as an acquisition that causes such Person to
own 20% or 35% or more, as the case may be, of the Outstanding Company Voting Securities;
and provided, further, that if at least a majority of the members of the Incumbent Board
determines in good faith that a Person has acquired beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the Outstanding Company
Voting Securities inadvertently, and such Person divests as promptly as practicable a
sufficient number of shares so that such Person beneficially owns (within the meanings of
Rule 13d-3 promulgated under the Exchange Act) less than 20% of the Outstanding Company
Voting Securities, then no Change of Control shall have occurred as a result of such
Person’s acquisition; or

(ii) individuals who, as of the date hereof, constitute the Board (the “Incumbent
Board” (as modified by this clause (ii)) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a director subsequent
to the date hereof whose election, or nomination for election by the Company’s shareholders,
was approved by a vote of at least a majority of the directors then comprising the Incumbent
Board (either by a specific vote or by approval of the proxy statement of the Company in
which such person is named as a nominee for director, without objection to such nomination)
shall be considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of office occurs
as a result of an actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of proxies or consents by or
on behalf of a Person other than the Board; or

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

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

(f) “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) 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, 2007; provided, however, that (i) commencing on January 1, 2008 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)).

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:

(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 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, 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 will pay to the Executive
the amounts described in Annex A within five business days after the Termination Date and will
continue to provide to the Executive the benefits described in Annex A for the periods described
therein.

(b) 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 limitation, incentive-based
annual cash bonuses and performance units, but not including any equity-based compensation or
compensation provided under a qualified plan) earned or accrued with respect to the Executive’s
service during the performance period or periods that includes the date on which the Change in
Control occurred, disregarding any applicable vesting requirements; provided that (i) such amount
shall be calculated at the plan target or payout rate, but prorated to base payment only on the
portion of the Executive’s service that had elapsed during the applicable performance period; and
(ii) such amount shall be reduced by any amount actually paid to the Executive under the terms of
such Plan. Such payment shall take into account service rendered through the payment date and
shall be made at the earlier of (i) the date prescribed for payment pursuant to the applicable
plan, program or agreement, or (ii) within five business days after the Termination Date.

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 Internal Revenue
Code of 1986, as amended (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 Executive
shall be entitled to designate the payments and/or benefits to be so reduced in order to give
effect to this Section 5. The Company shall provide the Executive with all information reasonably
requested by the Executive to permit the Executive to make such designation. In the event that the
Executive fails to make such designation within 10 business days of the Termination Date, the
Company may effect such reduction in any manner it deems appropriate.

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 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.

(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.

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;

(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.

(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 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.

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

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.

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.

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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]

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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, reduced by any
amounts actually paid to the Executive under the terms of any such plan. In determining present
value for this purpose, there shall be applied a discount factor equal to the coupon rate on
general full-faith-and-credit obligations of the U.S. Treasury having a maturity of five years and
issued on the date of the termination of the Executive’s employment.

(3) For a period of 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 (4) below) substantially similar to those that the
Executive was receiving or entitled to receive immediately prior to the Termination Date (or, if
greater, immediately prior to the reduction, termination, or denial described in Section 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. 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. 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.

(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).

(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.

3EX-10.6

Exhibit 10.6

BRUSH ENGINEERED MATERIALS INC.

2006 Non-employee Director Equity Plan

1. Purposes. The purpose of this 2006 Non-employee Director Equity Plan (the “Director
Plan”) is to provide ownership in the Common

Shares of Brush Engineered Materials Inc. (the “Company”) to members of the Board of Directors
(the “Board”) who are not employees in order to align their interests more closely with the
interests of the Company’s other shareholders and to provide financial incentives and

rewards that will help attract and retain the most qualified non-employee directors. This Plan
replaces the Company’s 1997 Stock Incentive

Plan for Non-employee Directors (As amended and restated as of May 1, 2001), as further amended by
Amendment No. 1 (the “1997 Director

Plan”) and the 2005 Deferred Compensation Plan for Non-employee Directors (the “2005 Director
Plan”).

2. Administration.

(a) This Plan will be administered by the Governance Committee of the Board (the
“Committee”), which will have full power and authority, subject to the provisions of this Plan,
to supervise administration and to interpret the provisions of this Plan and to authorize and
supervise any grant of any award, any issuance or payment of Common Shares and any crediting or
payment of Deferred Stock Units (as defined in Section 6 below). No Participant (as defined in
Section 3 below) in this Director Plan will participate in the making of any

decision with respect to any question relating to grants made or Common Shares issued under this
Plan to that Participant only.

(b) The interpretation and construction by the Committee of any provision of this Plan or
any agreement, notification or document evidencing the grant of Awards and any determination
by the Committee pursuant to any provision of this Plan or any such agreement, notification or
document, shall be final and conclusive. No member of the Committee shall be liable for any
such action taken or determination made in good faith.

3. Eligibility. Each member of the Board who is not an employee of the Company will be
eligible to receive awards and Common Shares

in accordance with this Plan (each, a “Participant”), provided that shares remain available for
issuance hereunder in accordance with Section 4.

4. Shares Subject to this Plan. The shares that may be issued or credited to accounts
pursuant to Section 6 of this Plan will be 150,000

Common Shares, subject to adjustment in accordance with Section 11 of this Plan.

5. Compensation in General. The amount of the director retainer fee, any director fees
that may be payable for attendance at meetings of

the Board and/or committees thereof and any other compensation paid to the directors for services
as a director (collectively, the “Director

Compensation”) will be determined from time to time in accordance with the Company’s Code of
Regulations and applicable law.

6. Equity Awards.

(a) The Committee may grant to Participants under this Director Plan the following types of
awards (each, an “Award”): stock options, stock appreciation rights (“SARs”), restricted stock,
restricted stock units, other stock awards and deferred stock units, as described herein.

(b) Each Award granted under this Plan will be subject to such terms and conditions as shall
be established by the Committee, and the

Committee will determine the number of Common Shares underlying each Award. Notwithstanding the
foregoing:

(i) Stock Options. The exercise price of each option will be determined by the Committee
but will not be less than 100% of the

Fair Market Value of a Common Share on the date the option is granted. Each option will
expire and will be exercisable at such time and subject to such terms and conditions as the
Committee shall determine, provided that no option will be exercisable later than

1

the tenth anniversary of its grant. In no event will the Committee cancel any outstanding
stock option for the purpose of reissuing the

stock option to the Participant at a lower exercise price or reduce the exercise price of an
outstanding stock option.

(ii) SARs. SARs may be granted in tandem with a stock option granted under this Director
Plan or on a free-standing basis. The

grant price of a tandem SAR will be equal to the exercise price of the related option and the
grant price of a free-standing SAR will be

at least equal to 100% of the Fair Market Value of a Common Share on the date of its grant. A
SAR may be exercised upon such terms and conditions and for such term as the Committee in its
sole discretion determines, provided that the term will not exceed the option

term in the case of a tandem SAR or ten years in the case of a free-standing SAR. Payment for
an SAR may be made in cash or stock,

as determined by the Committee.

(iii) Restricted Stock and Restricted Stock Units. Restricted stock and restricted
stock units may be subject to such restrictions and conditions as the Committee determines
and all restrictions will expire at such times as the Committee shall specify.

(iv) Stock Awards. The Committee may award to Participants, on a quarterly or other
basis, a specified number of Common Shares

or a number of Common Shares equal to a dollar value as determined by the Committee from time
to time.

(v) Deferred Stock Units. Each Participant may elect to have restricted stock units or
other stock awards under this Director Plan

paid in the form of deferred stock units (“Deferred Stock Units”) upon vesting or payment of
such Award, which Deferred Stock Units

will be credited to a book-keeping account in the name of the Participant in accordance with
this Director Plan.

(c) Unless otherwise determined by the Committee, the following Awards shall be made
automatically:

(i) On the business day following the day a Participant is first elected or appointed
to the Board, such Participant shall be granted Common Shares equal to $100,000 divided by
the Fair Market Value of a Common Share on the day the Participant is elected or appointed
to the Board, which shall be unrestricted except as may otherwise be required by law.

(ii) On the business day following the annual meeting of shareholders beginning with the
2006 annual meeting, each Participant

shall be granted the number of restricted stock units equal to $45,000 divided by the Fair
Market Value of a Common Share on the day

of the annual meeting. Such restricted stock units shall be paid-out in Common Shares at the
end of a one-year restriction period unless

the Participant elects to be paid in Deferred Stock Units. Notwithstanding the foregoing, if
a Participant incurs a termination of service before the end of such one-year restriction
period, such Participant shall be entitled to receive a pro-rata payment of Common Shares
based on the number of full months of service since the date of grant. Such pro-rata
payments, if any, that were deferred pursuant to elections made under Sections 7 and 8 shall
remain subject to such elections.

7. Further Elections.

(a) Any Participant may elect to have all or any portion of the cash portion of his or her
Director Compensation paid in Common

Shares and may further elect to have all or any portion of any Director Compensation that the
Participant has elected to receive in Common

Shares and any Awards granted as Director Compensation paid in the form of Deferred Stock Units,
which will be credited to the

Participant’s account. For the portion of a Participant’s cash Director Compensation that he or
she elects to receive in Common Shares, the

number of Common Shares to be issued will equal the cash amount that would have been paid
divided by the Fair Market Value of one

Common Share on the first business day immediately preceding the date on which such cash amount
would have been paid. Awards that

are deferred pursuant to this Section 7(a) will be credited to the Deferred Stock Units account
on a one for one basis.

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2

(b) An election pursuant Sections 6(b)(v) and/or 7(a) must be made in writing and delivered
to the Company prior to the first day of the

calendar year for which the Director Compensation would be earned; provided that elections with
respect to awards made under Section 6

(c)(ii) on the first business day following the 2006 annual shareholders’ meeting must be made
prior to the date of such meeting. To elect

to defer Director Compensation earned during the first calendar year in which a director becomes
eligible to participate in this Director

Plan, the new director must make an election pursuant to Section 6(b)(v) and/or 7(a) within 30
days after becoming eligible to participate

in this Director Plan and such election shall be effective only with regard to Director
Compensation earned subsequent to the filing of the election. All elections to defer Director
Compensation under the 2005 Director Plan that were made prior to the start of the 2006
calendar year shall be treated as elections to defer Director Compensation under this Director
Plan for the 2006 calendar year.

(c) If a director does not file an election form by the specified date, he or she will
receive any Director Compensation for the year that

is payable in Common Shares on a current basis and will be deemed to have elected to receive the
remainder of the Director Compensation

in cash.

8. Deferral .

(a) If a Participant elects to receive Deferred Stock Units, there will be credited to the
Participant’s account as of the day such Director Compensation would have been paid, the number
of Deferred Stock Units which is equal to the number of Common Shares that would otherwise have
been delivered to the Participant pursuant to Section 6 and/or Section 7(a) on such date. The
Deferred Stock Units credited

to the Participant’s account (plus any additional shares credited pursuant to Section 8(c)
below) will represent the number of Common

Shares that the Company will issue to the Participant at the end of the deferral period. Unless
otherwise provided herein or pursuant to the

terms of any Award hereunder, all Deferred Stock Units awarded under this Director Plan will
vest 100% upon the award of such Deferred

Stock Units.

(b) The Deferred Stock Units will be subject to a deferral period beginning on the date of
crediting to the Participant’s account and

ending upon termination of service as a director or such other period as the Participant may
have elected. The period of deferral will be for

a minimum period of one year, except in the case where the Participant elects a deferral
period determined by reference to his or her termination of service as a director. The
Participant may elect payment in a lump sum or payment in equal installments over five or ten

years. Elections with respect to the time and method (i.e., lump sum or installments) of
payment must be made at the same time as the participant’s election to defer as described in
Section 7(b). If the Participant does not specify a time for payment, the Participant will
receive payment upon termination of service as a director and if no method of payment is
specified by the Participant, he or she will

receive payment in a lump sum. A Participant may change the time and method of payment he or she
previously elected (or was deemed to elect) by filing a subsequent election with the Company at
least twelve months before the date of the previously elected payment date or commencement date,
and the newly elected payment date (or payment commencement date) must be at least five years
after the previously elected payment date (or the previously elected payment commencement date);
provided, however, that such modification will not be

effective unless the Participant remains a Director for at least twelve months after the date on
which such modification was made. During

the deferral period, the Participant will have no right to transfer any rights under his or
her Deferred Stock Units and will have no other rights of ownership therein.

(c) A Participant’s account will be credited as of the last day of each calendar quarter with
that number of additional Deferred Stock

Units equal to the amount of cash dividends paid by the Company during such quarter on the
number of Common Shares equivalent to the

number of Deferred Stock Units in the Participant’s account from time to time during such
quarter divided by the Fair Market Value of one Common Share on the day immediately preceding
the last business day of such calendar quarter. Such dividend equivalents, which will likewise
be credited with dividend equivalents, will be deferred until the end of the deferral period for
the Deferred Stock Units with

respect to which the dividend equivalents were credited.

3

3

(d) Notwithstanding the foregoing provisions, (i) if, upon the Participant’s termination of
service as a director, the value of the

Participant’s account is less than $10,000 the amount of such Participant’s account will be
immediately paid to the Participant in cash or Common Shares, (ii) if a Change in Control (as
defined in Section 9(c) below) of the Company occurs, the amount of each Participant’s
account will immediately be paid to the Participant in full and (iii) in the event of an
unforeseeable emergency, as defined under

Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), that is caused by an
event beyond the control of the

Participant and that would result in severe financial hardship to the individual if
acceleration were not permitted, the Committee will accelerate the payment to the Participant
of the Participant’s account, but only up to the amount necessary to meet the emergency.

(e) To the extent a Participant is entitled to a lump sum payment following a Change in
Control under Section 8(d) above and such Change in Control does not constitute a “change in
the ownership or effective control” or a “change in the ownership of a substantial portion of
the assets” of the Company within the meaning of Section 409A(a)(2)(A)(v) of the Code, then
notwithstanding Section 8(d),

payment will be made, to the extent necessary to comply with the provisions of Section 409A of
the Code, to the Participant on the earliest

of (i) the Participant’s termination of service with the Company (determined in accordance with
Section 409A); (ii) the date payment

otherwise would have been made in the absence of Section 8(d) (provided such date is a
permissible distribution date under Section 409A),

or (iii) the Participant’s death.

9. Definitions, etc .

(a) For purposes of this Director Plan, Common Shares means (i) Common Shares without par
value of the Company and (ii) any security into which Common Shares may be converted by reason
of any transaction or even of the type referred to in Section 11 of this Director Plan.

(b) For purposes of this Director Plan, the Fair Market Value means, as of any particular
date, the fair market value of the Common

Shares as determined by the Committee.

(c) For purposes of this Director Plan, Change in Control of the Company shall have the
meaning determined by the Committee from time to time.

(d) Notwithstanding anything to the contrary contained in this Director Plan, it is a
condition to the issuance of Common Shares or Deferred Stock Units that the transaction be
registered under applicable securities laws and no Participant will be able to receive Common
Shares or Deferred Stock Units in payment of all or part of his or her Director Compensation
unless and until such registration has been effected.

(e) For purposes of this Director Plan, “termination of service” means a separation from
service as defined under Section 409A of the

Code.

10. Delivery of Shares . The Company will make delivery of certificates representing
the Common Shares which a Participant is entitled to receive 60 days following the Participant’s
right to receive such Common Shares.

11. Adjustments . In the event that, after the Effective Date of this Director Plan (as
defined in Section 16), the number of outstanding

Common Shares is increased or decreased or such shares are exchanged for a different number or
kind of shares or other securities by reason of

a stock dividend, stock split, recapitalization, reclassification, combination of shares or other
change in the capital structure of the Company or

by reason of a merger, consolidation, spin off, split off, spin out, split up, reorganization,
partial or complete liquidation or other distribution of assets, issuance of rights or warrants to
purchase securities or any other corporate transaction or event having an effect similar to any of
the foregoing, adjustments will be made by the Board in the number and kind of shares or other
securities that are underlying Awards and/or

credited to accounts hereunder (and in the exercise price or other price of shares subject to
outstanding Awards) and that may be issued under

this Director Plan as it deems to be appropriate. Moreover, in the event of any such transaction
or event, the Committee, in its discretion, may provide in substitution for any or

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all outstanding Awards under this Director Plan such alternative consideration (if any) as it, in
good faith may determine to be equitable in the circumstances and may require in connection
therewith the surrender of all Awards so replaced.

12. Termination or Amendment of this Director Plan . To the extent permitted under 409A
of the Code, the Committee may at any time

and from time to time terminate, amend or suspend this Director Plan; provided, however, that the
Committee may not materially alter this

Director Plan without shareholder approval, including by increasing the benefits accrued to
Participants under this Director Plan; increasing the number of securities which may be issued
under this Director Plan; modifying the requirements for participation in this Director Plan; or
by

including a provision allowing the Board or the Committee to lapse or waive restrictions at its
discretion. An amendment or the termination of

this Director Plan will not adversely affect the right of a Participant to receive Common Shares
issuable or cash payable at the effective date of

the amendment or termination. No grant will be made under this Director Plan more than 10 years
after the date of which it is first approved by

shareholders, but all grants made on or prior to such date will continue in effect thereunder
subject to the terms thereof and of this Director

Plan.

13. Transferability .

(a) Except as provided in Section 13(c) below, no option right or SAR or other derivative
security granted under this Director Plan may

be transferred by a Participant except by will or the laws of descent and distribution. Except
as otherwise determined by the Committee, option rights and SARs granted under this Director
Plan may not be exercised during a Participant’s lifetime except by the Participant or,

in the event of the Participant’s legal incapacity, by his guardian or legal representative
acting in a fiduciary capacity on behalf of the

Participant under state law and court supervision.

(b) The Committee may specify at the date of grant, that all or any part of the Common Shares
that are (i) to be issued or transferred by

the Company upon the exercise of option rights or upon the termination of the restriction period
applicable to restricted stock units, or

(ii) no longer subject to the substantial risk of forfeiture and restrictions on transfer
applicable to restricted stock, shall be subject to further restrictions upon transfer.

(c) The Committee may determine that option rights and SARs may be transferable by a
Participant, without payment of consideration therefor by the transferee, only to any one or
more members of the Participant’s immediate family; provided, however, that (i) no such transfer
shall be effective unless reasonable prior notice thereof is delivered to the Corporation and
such transfer is thereafter effected in

accordance with any terms and conditions that shall have been made applicable thereto by the
Company or the Committee and (ii) any such transferee shall be subject to the same terms and
conditions hereunder as the Participant. For the purposes of this Section 16(c), the term

“immediate family” means any child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, sibling, mother-in -law, father-in -law,

son-in -law, daughter-in -law, brother-in -law, or sister-in -law, including adoptive
relationships, any person sharing the Participant’s household (other than a tenant or
employee), a trust in which these persons have more than fifty percent of the beneficial
interest, a

foundation in which these persons (or the Participant) control the management of assets, and any
other entity in which these persons (or the

Participant) own more than fifty percent of the voting interests.

14. Miscellaneous .

(a) To the extent that the application of any formula described in this Director Plan does
not result in a whole number of Common

Shares, the result will be rounded upwards to the next whole number.

(b) The adoption and maintenance of this Director Plan will not be deemed to be a contract
between the Company and the Participant to retain his or her position as a director of the
Company.

15. Compliance with Section 409A of the Code . To the extent applicable, it is intended
that this Director Plan comply with the provisions

of Section 409A of the Code. This Director Plan will be administered in a manner consistent
with this intent, and any provision that would cause this Director Plan to fail to satisfy
Section 409A of the Code will have no force and effect until amended to comply with

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Section 409A (which amendment may be retroactive to the extent permitted by Section 409A of the
Code and may be made by the Company without the consent of the Participants in this Director
Plan). Any reference to Section 409A of the Code will include any proposed, temporary

or final regulations or any other guidance promulgated with respect to such Section by the U.S.
Department of the Treasury or the Internal

Revenue Service.

16. Effective Date of this Director Plan . This Director Plan will be effective
immediately on May 2, 2006, the date of its approval by the shareholders of the Company (the
“Effective Date”). On the Effective Date, any account balances held by a Participant under the
2005 Director Plan in the form of Deferred Shares shall be treated as Deferred Stock Units, which
shall be payable under this Director Plan, but without any change in the time or method of payment
provided for in the 2005 Director Plan or any election currently in effect thereunder.

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