BRUSH ENGINEERED MATERIALS
INC.
2005 DEFERRED COMPENSATION PLAN
FOR NONEMPLOYEE DIRECTORS
(AS AMENDED AND RESTATED EFFECTIVE SEPTEMBER 10,
2008)
1. Brush
Engineered Materials Inc. (the “Company”) has suspended
the 1992 Brush Engineered Materials Inc. Deferred Compensation Plan
for Nonemployee Directors (As Amended as of May 16, 2000) and
as further amended by Amendments No. 1, No. 2, and
No. 3; and
2. 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
3. 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
4. The
Company previously adopted the 2005 Deferred Compensation Plan for
Nonemployee Directors, effective January 1, 2005 (the
“Plan”), which was replaced by the Company’s 2006
Non-employee Director Equity Plan, which was effective May 2,
2006 (the “2006 Plan”), effective beginning with
deferrals made for the 2006 calendar year; and
5. Under the
terms of the 2006 Plan, as amended and restated as of
September 10, 2008 (the “Effective Restatement
Date”), as of the Effective Restatement Date, any account
balances held by a Participant under the Plan will be treated as
deferred stock units, which shall be administered under the terms
of the 2006 Plan; and
6. The
Company now desires to amend and restate the Plan, effective
September 10, 2008, to take into account the AJCA Guidance
issued to date.
1.1. Purpose of
the Plan . The purpose of the Brush Engineered Materials Inc.
2005 Deferred Compensation Plan for Nonemployee Directors is to
provide the nonemployee Directors of the Company with the
opportunity to defer receipt of compensation payable for services
as a Director and to help solidify the common interest of Directors
and shareholders in enhancing the value of the Company’s
Common Shares. Notwithstanding the foregoing, all benefits
hereunder (other than income, earnings, gains or losses credited to
a Director’s Deferred Compensation Account) were frozen
effective as of December 31, 2005. In addition, effective as
of the Effective Restatement Date, all amounts deferred under the
terms of the Plan shall be treated as deferred stock units
administered under the terms of the 2006 Plan. In furtherance
of,
but without
limiting the foregoing, no new participants may join the Plan after
December 31, 2005, no amounts may be deferred under the Plan
beginning with the calendar year 2006, the only amounts that shall
be allocated to a Director’s Trust Account and Deferred
Compensation Account under the Plan between January 1, 2006
and the Effective Restatement Date shall be income, earnings, gains
or losses credited on Trust Account balances during that period,
and effective as of the Effective Restatement Date, all amounts
remaining in a Director’s Deferred Compensation Account under
the Plan as of the Effective Restatement Date shall be administered
as deferred stock units under the terms of the 2006
Plan.
1.2. American
Jobs Creation Act (AJCA) .
(a) It
is intended that the Plan (including any amendments thereto) comply
with the provisions of Section 409A of the Code, as enacted by
the AJCA, and the AJCA Guidance so as to prevent the inclusion in
gross income of any amount credited to a Director’s Deferred
Compensation Account hereunder in a taxable year that is prior to
the taxable year or years in which such amounts would otherwise be
actually distributed or made available to the Director. The Plan
shall be administered in a manner that effects such
intent.
(b) The
original effective date of the Plan was January 1, 2005 and
this amended and restated version of the Plan is effective
September 10, 2008.
As used herein,
the following words shall have the meanings stated after them
unless otherwise specifically provided:
2.1. “
Change in Control ” shall have the meaning assigned
thereto in Section 5.5 hereof.
2.2. “
Committee ” shall mean the Governance Committee of the
Board of Directors.
2.3. “
Common Shares ” shall mean the Common Shares, without
par value, of the Company.
2.4. “
Company ” shall mean Brush Engineered Materials
Inc.
2.5. “
Deferred Compensation Account ” shall have the meaning
assigned thereto in Section 3.1 hereof.
2.6. “
Director ” shall mean any nonemployee director of the
Company.
2.7. “
Insolvent ” shall have the meaning assigned thereto in
Section 6.2 hereof.
2.8. “Key
Employee” shall mean a “specified employee”
with respect to the Company (or a controlled group member of the
Company) determined pursuant to procedures adopted by the Company
in compliance with Section 409A of the Code and the AJCA
Guidance.
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2.9. “
Plan ” shall mean the 2005 Brush Engineered Materials
Inc. Deferred Compensation Plan for Nonemployee Directors, as
amended from time to time.
2.10.
“Termination of Service” shall mean a
termination of service with the Company that constitutes a
separation from service within the meaning of Treas. Reg.
§ 1.409A-1(h), or any successor provision.
2.11. “
Trust ” shall have the meaning assigned thereto in
Section 4.1 hereof.
2.12. “
Trust Account ” shall have the meaning assigned
thereto in Section 4.2 hereof.
2.13. “
Trust Agreement ” shall mean the Trust Agreement
entered into between the Company and the Trustee in connection with
the Plan.
2.14. “
Trust Fund ” shall have the meaning assigned thereto
in Section 4.2 hereof.
2.15. “
Trustee ” shall mean such person or entity as may be
chosen by the Company from time to time to act as the trustee under
the Trust Agreement, together with the successors of such person or
entity as may be provided in the Trust Agreement.
3.1.
Compensation Reduction for 2005 and Later Years . Not later
than December 31 of any calendar year, beginning with
December 31, 2004 for the calendar year 2005, a Director may,
by filing an annual written election with the Committee, direct the
Company (a) to reduce the compensation payable to him or her
(determined without regard to the provisions of this Section) for
services as a Director during the next calendar year in such amount
as elected by the Director and (b) to credit the amount of
such reduction to the Director’s Deferred Compensation
Account.
3.2. Partial
Years . If a Director first becomes a Director after January
1st of any calendar year, the Director may, by filing a written
election with the Committee, direct the Company (a) to reduce
the compensation payable to him or her for future services as a
Director during the year in such amount as elected by the Director
and (b) to credit the amount of such reduction to the
Director’s Deferred Compensation Account. Any such election
shall be made within 30 days after an individual becomes a
Director, and shall apply only to compensation for services as a
Director performed after the date of such election.
3.3. Elections
Irrevocable . All elections described in this Article shall be
made on an election form specified by the Committee and filed with
the Committee. Once an election becomes effective pursuant to this
Article, such election shall be irrevocable and shall remain in
effect until the end of the calendar year to which it
relates.
3.4. Deferred
Compensation Accounts . Each Director who has elected to have
his or her compensation reduced pursuant to this Article shall have
a nonforfeitable right to the balance from time to time of his or
her Deferred Compensation Account. Each Director’s
Deferred
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Compensation
Account shall be subdivided into separate subaccounts for each year
of participation. In addition to the credits to a Director’s
Deferred Compensation Account described in Sections 3.1, 3.2,
and 3.3 hereof, a Director’s Deferred Compensation Account
(and the appropriate subaccounts) shall be credited or debited
with, amounts equal to the income, earnings, gains or losses on the
Trust Account maintained with respect to the Director under the
Trust Agreement at such times as such items are credited to or
debited from such Trust Account and shall be debited for any
distributions to the Director under Article V.
3.5.
Notwithstanding the foregoing provisions of Article III, no
Director shall become a participant in the Plan after
December 31, 2005, no amounts may be deferred under the Plan
beginning with the calendar year 2006, the only amounts that shall
be allocated to a Director’s Deferred Compensation Account
under the Plan between January 1, 2006 and the Effective
Restatement Date shall be income, earnings, gains or losses
credited on the Trust Account balances during that period, and all
amounts remaining in a Director’s Deferred Compensation
Account under the Plan as of the Effective Restatement Date shall
be administered as deferred stock units under the terms of the 2006
Plan.
4.1.
Contribution . (a) The Company shall from time to time
transfer to the Trustee to be held under the Trust Agreement in a
trust (the “Trust”) cash funds equal to the amounts by
which Directors elect to have their compensation reduced pursuant
to this Plan. All such transfers shall be made within 30 days
after such compensation would have been paid to the Director but
for the Director’s compensation reduction
election.
(b) Except
as provided with respect to the creditors of the Company in
Article VI hereof, all contributions and other transfers by
the Company to the Trust pursuant to Section 4.1(a) hereof
shall be irrevocable, and (except as so provided) the Company shall
have no right to the return of any funds so contributed or
transferred to the Trust or any earnings thereon.
(c) Notwithstanding
the foregoing, in no event shall any amount be transferred to the
Trust 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.
4.2.
Establishment and Adjustment of Accounts . The Trustee
shall
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