Exhibit 10.4
BRUSH ENGINEERED
MATERIALS INC.
Agreement Relating
to
Performance Restricted Shares and Performance
Shares
WHEREAS,
(the “Grantee”)
is an employee of Brush Engineered Materials Inc., an Ohio
corporation (the “Corporation”), or a Subsidiary;
and
WHEREAS, the execution of an
agreement in the form hereof (this “Agreement”) has
been authorized by resolution of the Compensation Committee (the
“Committee”) of the Board of Directors of the
Corporation that was duly adopted on February
, 2007;
NOW, THEREFORE, pursuant to the
Corporation’s 2006 Stock Incentive Plan (the
“Plan”), the Corporation hereby confirms to the Grantee
the grant of, Performance
Restricted Shares and one-half that number of Performance Shares,
effective on February , 2007
(the “Date of Grant”), subject to the terms and
conditions of the Plan and the following additional terms,
conditions, limitations and restrictions:
ARTICLE I
DEFINITIONS
All terms used herein with initial
capital letters that are defined in the Plan shall have the
meanings assigned to them in the Plan, and the following additional
terms, when used herein with initial capital letters, shall have
the following meanings:
1. “Change in
Control” has the meaning set forth in Section 4(b) of
Article II of this Agreement.
2. “Cumulative Operating
Profit” means the sum of earnings (net of any losses) before
tax and interest during the Performance Period for the business
unit specified to the Grantee in the notice accompanying this
Agreement.
3. “Management
Objective” means the threshold, target and maximum Cumulative
Operating Profit goals established by the Committee for the
Performance Period as set forth on Exhibit [
] to the resolution of the
Committee adopted on February
, 2007. No adjustment of the Management Objective or the stock
prices performance criteria set forth in Section 3(b) of
Article II shall be permitted in respect of any Performance
Restricted Shares or Performance Shares granted to any Participant
who is, or is determined by the Committee to be likely to become, a
“covered employee” within the meaning of Section 162(m)
of the Code (or any successor provision) if such adjustment would
result in the loss of an otherwise available deduction.
4. “Market Value per
Share” means, as of any particular date, the per share
closing price of a Common Share on the New York Stock Exchange on
the day such determination is being made (as reported in The
Wall Street Journal ) or, if there was no closing price
reported on such day, on the next day on which such a closing price
was reported; or if the Common Shares are not listed or admitted to
trading on the New York Stock Exchange on the day as of which the
determination is being made, the amount determined by the Committee
to be the fair market value of a Common Share on such day.
5. “Performance
Period” means the three-year period commencing
January 1, 2007 and ending on December 31, 2009.
ARTICLE II
CERTAIN TERMS OF
PERFORMANCE RESTRICTED SHARES
1. Issuance of Performance
Restricted Shares . The Performance Restricted Shares covered
by this Agreement shall be issued to the Grantee, effective on the
Date of Grant. The Common Shares subject to this grant of
Performance Restricted Shares, when issued, shall be fully paid and
nonassessable.
2. Restrictions on Transfer
of Shares . The Common Shares subject to this grant of
Performance Restricted Shares may not be sold, exchanged, assigned,
transferred, pledged, encumbered or otherwise disposed of by the
Grantee except to the Corporation until the Performance Restricted
Shares have become nonforfeitable as provided in Section 3
hereof, provided , however , that the Grantee’s
rights with respect to such Common Shares may be transferred by
will or pursuant to the laws of descent and distribution. Any
purported transfer or encumbrance in violation of the provisions of
this Section 2 of this Article II shall be void, and the
other party to any such purported transaction shall not obtain any
rights to or interest in such Common Shares. The Corporation in its
sole discretion, when and as permitted by the Plan, may waive the
restrictions on transferability with respect to all or a portion of
the Common Shares subject to this grant of Performance Restricted
Shares.
3. Vesting of Performance
Restricted Shares .
(a) Except as provided in
paragraph 6 of this Section 3 of Article II, no
Performance Restricted Shares shall become nonforfeitable if actual
achievement falls below the threshold level of the Management
Objective. If the Management Objective shall have been attained at
the threshold level and if the Grantee shall have remained in the
continuous employ of the Corporation or a Subsidiary throughout the
Performance Period, 25% of the number of Performance Restricted
Shares specified on the first page of this Agreement shall be
earned.
(b) If actual achievement falls
below the threshold level of the Management Objective, but the
performance of the Common Shares during the Performance Period
falls within the top quartile of the Russell 2000 and the Grantee
shall have remained in the continuous employ of the Corporation or
a Subsidiary throughout the Performance Period, 25% of the number
of Performance Restricted Shares specified on the first page of
this Agreement shall be earned, unless a lesser percentage is
determined by the Commitee. The top quartile stock performance
shall be measured by comparing the appreciation, if any, in the
average of the daily closing prices during 2006 to the average of
the daily closing prices during 2009.
(c) If the Management Objective
shall have been attained at the target level and if the Grantee
shall have remained in the continuous employ of the Corporation or
a Subsidiary throughout the Performance Period, 100% of the number
of Performance Restricted Shares specified on the first page of
this Agreement shall be earned. If the Management Objective shall
have been attained over the threshold level, but less than the
target level, and the Grantee has remained so continuously
employed, a proportionate number of the Performance Restricted
Shares specified on the first page of this Agreement shall be
earned, as determined by mathematical interpolation.
(d) Any fraction of a
Performance Restricted Share resulting from the foregoing
calculations shall be rounded to the nearest 1/100 th of
a share.
4. Effect of Death,
Disability, Change in Control .
(a) Notwithstanding the
provisions of Section 3 of this Article II, all of the
Performance Restricted Shares covered by this Agreement shall
immediately become nonforfeitable (i) if the Grantee dies or
becomes permanently disabled while in the employ of the Corporation
or a Subsidiary during the Performance Period, or (ii) if a
Change in Control occurs during the Performance Period.
(b) For purposes of this
Agreement, “Change in Control” means
(i) The
acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) (a
“Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of voting
securities of the Corporation where such acquisition causes such
Person to own (X) 20% or more of the combined voting power of
the then outstanding voting securities of the Corporation entitled
to vote generally in the election of directors (the
“Outstanding Corporation Voting Securities”) without
the approval of the Incumbent Board as defined in (ii) below
or (Y) 35% or more of the Outstanding Voting Securities of the
Corporation with the approval of the Incumbent Board; provided,
however , that for purposes of this subsection (i), the
following acquisitions shall not be deemed to result in a Change of
Control: (A) any acquisition directly from the Corporation
that is approved by the Incumbent Board (as defined in subsection
(ii), below), (B) any acquisition by the Corporation or a
subsidiary of the Corporation, (C) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by
the Corporation or any corporation controlled by the Corporation,
(D) any acquisition by any Person pursuant to a transaction
described in clauses (A), (B) and (C) of subsection
(iii) below, or (E) any acquisition by, or other Business
Combination (as defined in (iii) below) with, a person or
group of which employees of the Corporation or any subsidiary of
the Corporation control a greater than 25% interest (a
“MBO”) but only if the Executive is one of those
employees of the Corporation or any subsidiary of the Corporation
that are participating in the MBO; provided, further , that
if any Person’s beneficial ownership of the Outstanding
Corporation Voting Securities reaches or exceeds 20% or 35%, as the
case may be, as a result of a transaction described in clause
(A) or (B) above, and such Person subsequently acquires
beneficial ownership of additional voting securities of the
Corporation, such subsequent acquisition shall be treated as an
acquisition that causes such Person to own 20% or 35% or more, as
the case may be, of the Outstanding Corporation Voting Securities;
and provided, further , that if at least a majority of the
members of the Incumbent Board determines in good faith that a
Person has acquired beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20% or more
of the Outstanding Corporation Voting Securities inadvertently, and
such Person divests as promptly as practicable a sufficient number
of shares so that such Person beneficially owns (within the
meanings of Rule 13d-3 promulgated under the Exchange Act)
less than 20% of the Outstanding Corporation Voting Securities,
then no Change of Control shall have occurred as a result of such
Person’s acquisition; or
(ii) individuals who, as of the date hereof, constitute the
Board (the “Incumbent Board” (as modified by this
clause (ii)) cease for any reason to constitute at least a majority
of the Board; provided, however , that any individual
becoming a director subsequent to the date hereof whose election,
or nomination for election by the Corporation’s shareholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Corporation in which such
person is named as a nominee for director, without objection to
such nomination) shall be considered as though such individual were
a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(iii) the
consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of
the Corporation or the acquisition of assets of another
corporation, or other transaction (“Business
Combination”) excluding, however, such a Business Combination
pursuant to which (A) the individuals and entities who were
the ultimate beneficial owners of voting securities of the
Corporation immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 65% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the entity resulting from such Business Combination
(including, without limitation, an entity that as a result of such
transaction owns the Corporation or all or substantially all of the
Corporation’s assets either directly or through one or more
subsidiaries), (B) no Person (excluding any employee benefit
plan (or related trust) of the Corporation, the Corporation or such
entity resulting from such Business Combination) beneficially owns,
directly or indirectly (X) 20% or more, if such Business
Combination is approved by the Incumbent Board or (Y) 35% or
more, if such Business Combination is not approved by the Incumbent
Board, of the combined voting power of the then outstanding
securities entitled to vote generally in the election of directors
of the entity resulting from such Business Combination and
(C) at least a majority of the members of the board of
directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(iv) approval by the shareholders of the Corporation of a
complete liquidation or dissolution of the Corporation except
pursuant to a Business Combination described in clauses (A),
(B) and (C) of subsection (iii), above.
5. Effect of Retirement
. Notwithstanding the provisions of Section 3 of this Article
II, if the Grantee terminates employment with the Corporation or a
Subsidiary after June 30, 2008 and the Grantee is at the time
of such termination (a) at least age 65 or (b) at least
age 55 and has completed at least 10 years continuous
employment with the Corporation or a Subsidiary, a portion of the
Performance Restricted Shares covered by this Agreement shall
become nonforfeitable after the end of the Performance Period if
the Committee then determines that the Management Objective have
been attained at the threshold level of achievement. The number of
Performance Restricted Shares that shall become nonforfeitable
shall be determined by multiplying the number of Performance
Restricted Shares that would have become nonforfeitable if the
Grantee had remained in the continuous employment of the
Corporation throughout the Performance Period, multiplied by the
fraction of the Performance Period that is equal to the number of
months the Grantee remained in the continuous employ of the
Corporation and its Subsidiaries between the Date of Grant and the
effective date of such retirement, divided by 36.
6. Effect of Detrimental
Activity . Notwithstanding anything herein to the contrary, if
the Grantee, either during employment by the Corporation or a
Subsidiary or within one year after termination of such employment,
shall engage in any Detrimental Activity (as defined in
Section 7 below) and the Board shall so find:
(a) Return to the Corporation
any all Performance Restricted Shares that the Grantee has not
disposed of that became nonforfeitable pursuant to this
Agreement.
(b) With respect to any
Performance Restricted Shares that the Grantee has disposed of that
became nonforefeitable pursuant to this Agreement within a period
of one year prior to the date of the commencement of such
Detrimental Activity, the Grantee shall pay to the Corporation in
the cash value of such Performance Restricted Shares on the date
such Performance Restricted Shares became nonforfeitable. To the
extent that such amounts are not paid to the Corporation, the
Corporation may, to the extent permitted by law, set off the
amounts so payable to it against any amounts that may be owing from
time to time by the Corporation or a Subsidiary to the Grantee,
whether as wages, deferred compensation or vacation pay or in the
form of any other benefit or for any other reason.
7. Definition of Detrimental
Activity . For purposes of this Agreement, the term
“Detrimental Activity” shall include:
(a)
(i) Engaging in any activity in violation of the Section
entitled “Competitive Activity; Confidentiality;
Nonsolicitation” in the Severance Agreement between the
Corporation and the Grantee, if such agreement is in effect at the
date hereof, or in violation of any corresponding provision in any
other agreement between the Corporation and the Grantee in effect
on the date hereof provi
