Document:

EX-10.1

Exhibit 10.1

BRUSH ENGINEERED MATERIALS INC.

2006 Non-employee Director Equity Plan

(As Amended and Restated Effective September 10, 2008)

     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 Director 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 Director 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 Director Plan, to supervise administration and to interpret the provisions of this
Director 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 Director Plan to that Participant only.

     (b) The interpretation and construction by the Committee of any provision of this
Director Plan or any agreement, notification or document evidencing the grant of Awards and
any determination by the Committee pursuant to any provision of this Director 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 Director Plan (each, a
“Participant”), provided that shares remain available for issuance hereunder in accordance with
Section 4.

     4. Shares Subject to this Director Plan. The shares that may be issued or credited to
accounts pursuant to Section 6 of this Director Plan will be 150,000 Common Shares, subject to
adjustment in accordance with Section 11 of this Director 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 Director 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 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
freestanding 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 make an annual election 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

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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, 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 on the last day 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, which shall be paid-out on the
date of the Participant’s Termination of Service. 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 may make an annual election
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.

     (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. 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

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subsequent to the filing of the election. All elections to defer Director Compensation
under the 2005 Director Plan that were made in 2005 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. Notwithstanding the foregoing, in no event shall any amount be
transferred to a trust maintained in connection with the Director Plan 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.

     (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 the earlier of (i) the date of the
Participant’s Termination of Service as a director or (ii) a date specified by the
Participant. 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) if all of the following requirements are
met: (i) such subsequent payment election may not take effect until at least twelve months
after the date on which the subsequent payment election is made; (ii) in the case of a
subsequent payment election related to a payment not being made as a result of death or an
Unforeseeable Emergency, the payment date shall in all cases be deferred for a period of not
less than five years from the date such payment would otherwise have been made (or in the
case of installment payments, which are treated as a single payment for purposes of this
Section 8(b), five years from the date

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the first installment payment was scheduled to be paid); and (iii) any subsequent
payment election related to a distribution that is to be made at a specified time or
pursuant to a fixed schedule must be made not less than twelve months prior to the date the
payment was scheduled to be made under the original payment election (or, in the case of
installment payments, which are treated as a single payment for purposes of this Section
8(b), twelve months prior to the date the first installment payment was scheduled to be
paid). 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.

     (d) Notwithstanding the foregoing provisions, (i) if, upon the applicable distribution
date the total value of the account balance(s) held by a Participant under this Director
Plan and any other agreements, methods, programs, plans or other arrangements with respect
to which deferrals of compensation are treated as having been deferred under a single
nonqualified deferred compensation plan with the account balances under the Director Plan
under Treas. Reg. § 1.409A-1(c)(2) (the “Aggregate Account Balance”) does not exceed the
applicable dollar amount under Section 402(g)(1)(B) of Internal Revenue Code of 1986, as
amended (the “Code”), the amount of the Participant’s Aggregate Account Balance will be
immediately paid to the Participant in cash or Common Shares, as applicable, (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, accelerated payment shall be made to the
Participant of all or a part of the Participant’s account, but only up to the amount
necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes
reasonably anticipated as a result of the distribution(s), after taking into account the
extent to which the hardship is or may be relieved through reimbursement or compensation by
insurance or otherwise or by liquidation of the Participant’s assets (to the extent the
liquidation of such assets would not itself cause severe financial hardship).

     (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 and Treas. Reg. § 1.409A-3(i)(5), or any successor provision, 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; (ii) the

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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 of the Code), or (iii) the
Participant’s death.

     (f) Notwithstanding the foregoing provisions of this Section 8, if a Participant is a
Key Employee at the time of his or her Termination of Service, then payment of Deferred
Stock Units on account of Termination of Service shall be made or commence on the first
business day of seventh month following such Termination of Service (or, if earlier, the
date of 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) “Fair Market Value” means, as of any particular date, unless otherwise determined
by the Committee, 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.

     (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, “Key Employee” means 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.

     (f) For purposes of this Director Plan, “Termination of Service” means 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.

     (g) For purposes of this Director Plan, “Unforeseeable Emergency” means an event that
results in a severe financial hardship to a Participant resulting from (i) an illness or
accident of the Participant or his or her spouse, dependent (as defined in Section 152(a) of
the Code), or beneficiary, (b) loss of the Participant’s property due to casualty,

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or (c) other similar extraordinary circumstances arising as a result of events beyond
the control of the Participant.

     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 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. 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.

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     (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
Company 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.

     (a) To the extent applicable, it is intended that this Director Plan and any Awards
made hereunder comply with the provisions of Section 409A of the Code, so that the income
inclusion provisions of Section 409A(a)(1) of the Code do not apply to the Participant.
This Director Plan and any Awards made hereunder shall be administered in a manner
consistent with this intent. Any reference in this Director Plan to Section 409A of the
Code will also include any regulations or any other formal guidance promulgated with respect
to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.

     (b) Neither a Participant nor any of a Participant’s creditors or beneficiaries shall
have the right to subject any deferred compensation (within the meaning of Section 409A of
the Code) payable under this Director Plan and Awards hereunder to any

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anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment
or garnishment. Except as permitted under Section 409A of the Code, any deferred
compensation (within the meaning of Section 409A of the Code) payable to a Participant or
for a Participant’s benefit under this Plan and grants hereunder may not be reduced by, or
offset against, any amount owing by a Participant to the Company or any of its affiliates.

     (c) Notwithstanding any provision of this Director Plan and Awards hereunder to the
contrary, in light of the uncertainty with respect to the proper application of Section 409A
of the Code, the Company reserves the right to make amendments to this Director Plan and
Awards hereunder as the Company deems necessary or desirable to avoid the imposition of
taxes or penalties under Section 409A of the Code. In any case, a Participant shall be
solely responsible and liable for the satisfaction of all taxes and penalties that may be
imposed on a Participant or for a Participant’s account in connection with this Director
Plan and Awards hereunder (including any taxes and penalties under Section 409A of the
Code), and neither the Company nor any of its affiliates shall have any obligation to
indemnify or otherwise hold a Participant harmless from any or all of such taxes or
penalties.

     16. Effective Date of this Director Plan. This Director Plan was originally effective
immediately on May 2, 2006, the date of its approval by the shareholders of the Company (the
“Effective Date”), and this amendment and restatement is effective September 20, 2008 (the
“Effective Restatement Date”). As of the Effective Restatement Date, any account balances held by
a Participant under the 2005 Director Plan shall be treated as Deferred Stock Units, which shall be
administered under the terms of this Director Plan.

     IN WITNESS WHEREOF, Brush Engineered Materials Inc. has executive this Plan this
10th day of September, 2008.

	 	 	 	 	 
	 	BRUSH ENGINEERED MATERIALS INC.

 	 
	 	By:  	/s/ Michael C. Hasychak
 	 
	 	Name:  	Michael C. Hasychak 	 
	 	Title:  	Vice President, Treasurer and Secretary 	 

9EX-10.2

	 	 	 	 	 

Exhibit 10.2

BRUSH ENGINEERED MATERIALS INC.

2005 DEFERRED COMPENSATION PLAN FOR NONEMPLOYEE DIRECTORS

(AS AMENDED AND RESTATED EFFECTIVE SEPTEMBER 10, 2008)

Recitals

     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.

ARTICLE I

INTRODUCTION

     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.

ARTICLE II

DEFINITIONS

     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.

ARTICLE III

ELECTIONS BY DIRECTORS

     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.

ARTICLE IV

ACCOUNTS AND INVESTMENTS

     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 establish a separate account
under the Trust (a “Trust Account”) for any Director who defers compensation pursuant to the Plan.
As of December 31 of each year and on such other dates as the Committee may direct, the fair market
value of the assets of the Trust allocated to all Trust Accounts (the “Trust Fund”) shall be
determined by the Trustee.

     4.3. Investment of Assets. The assets of the Trust Fund shall be held by the Trustee in the
name of the Trust. As amounts are received by the Trustee, it shall invest the funds pursuant to
the Trust Agreement, which shall authorize the Trustee to invest the funds contained in each Trust
Account in Common Shares.

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     4.4. Assets Held in Cash. The Trustee may, in its sole discretion, maintain in cash such
amounts as it deems necessary to meet the needs of the Trust from time to time. Amounts maintained
in cash by the Trustee shall be kept to a minimum consistent with the duties and obligations of the
Trustee as set forth in the Trust Agreement and shall not be required to be invested at interest.

     4.5. Trustee’s Fees. The fees and expenses of the Trustee under the Trust Agreement shall be
paid by the Company.

     4.6. Notwithstanding the foregoing provisions of this Article IV, the only amounts that shall
be allocated to a Director’s Trust 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
under the Plan during that period, and no amounts shall be credited on Trust Account balances on or
after the Effective Restatement Date.

ARTICLE V

PAYMENT OF ACCOUNTS

     5.1. Time of Payment. Distribution of each subaccount included in a Director’s Deferred
Compensation Account shall commence or be made in the manner described in Section 5.2 hereof on the
earliest to occur of: (i) the date of Termination of Service as a Director on account of
resignation, retirement, death or otherwise, (ii) if so specified on the Director’s election form
for the particular year (or on the 2005 election form for all current Directors), the date the
Director reaches the age of 70 or older, or (iii) the occurrence of a Change in Control of the
Company. Notwithstanding the foregoing, if, upon the applicable distribution date the total value
of the account balance(s) held by a Director under this Plan, the 2006 Plan, and any other
agreements, methods, programs, plans or other arrangements with respect to which deferrals of
compensation are treated as having been deferred under a single nonqualified deferred compensation
plan with the account balances under this Plan and the 2006 Plan under Treas. Reg. § 1.409A-1(c)(2)
(the “Aggregate Account Balance”) does not exceed the applicable dollar amount under Section
402(g)(1)(B) of the Code, the amount of the Director’s Aggregate Account Balance will be
immediately paid in a lump sum to the Director on the applicable date. Further, notwithstanding
the foregoing, effective as of the Effective Restatement Date the time of distribution of amounts
remaining in a Director’s Deferred Compensation Account as of the Effective Date shall be governed
by the terms of the 2006 Plan.

     5.2. Method of Distribution. Prior to December 31 of each year, beginning with December 31,
2004, a Director shall file an annual election with the Committee to specify whether amounts
credited to his Deferred Compensation Account for the following year shall be distributed to him or
her (or his or her beneficiary) in a single lump sum payment at the time described in Section 5.1,
or in not more than ten annual installments commencing at such time. The amounts credited to the
Director’s Deferred Compensation Account for such year shall be distributed or commence to be
distributed to the Director or the Director’s beneficiary at the time described in Section 5.1 in
the manner so specified. The amount of each installment payment shall be calculated by dividing
the amount credited to the applicable subaccount in the Director’s Deferred Compensation Account at
the time of each such payment (as determined by the Committee) by the number of remaining
installments (including the current installment). If the

5

 

Company is not Insolvent at the time of
any payment, the payment shall be made from the Trust and charged to the Director’s Trust Account.
The Common Shares shall be distributed in kind. Notwithstanding the foregoing, no method of
distribution elections shall be made effective beginning with deferrals for the 2006 calendar year.
Further, notwithstanding the foregoing, effective as of the Effective Restatement Date the method
of distribution (i.e., lump sum or
installments) of amounts remaining in a Director’s Deferred Compensation Account as of the
Effective Date shall be governed by the terms of the 2006 Plan.

     5.3. Designation of Beneficiary. Each Director participating in this Plan shall designate a
beneficiary or beneficiaries to whom distribution shall be made pursuant to Section 5.2 in the
event of the death of the Director before his or her entire Deferred Compensation Account is
distributed. If there is no designated beneficiary, or no designated beneficiary surviving at a
Director’s death the Director’s beneficiary shall be his or her estate. Beneficiary designations
shall be made in writing. A Director may designate a new beneficiary or beneficiaries at any time
by filing a new election with the Committee.

     5.4. Taxes. In the event any taxes are required by law to be withheld or paid from any
distributions made pursuant to the Plan, the Company or Trustee (as applicable) shall deduct such
amounts from such distributions and shall transmit the withheld amounts to the appropriate taxing
authority.

     5.5. Definition of Change in Control. A “Change in Control” of the Company shall have
occurred if at any time any of the following events shall occur:

     (a) The Board of Directors of the Company at any time shall fail to include a majority
of directors who are either “Original Directors” or “Approved Directors”. An Original
Director is a director who is serving on January 1, 1995. An Approved Director is a
director who, after such date, is elected to the Board of Directors of Brush Wellman Inc. or
the Board of Directors of the Company, or is nominated for election by the shareholders, by
a vote of at least two-thirds of the Original Directors and the previously elected Approved
Directors, if any;

     (b) Any person (as the term “person” is defined in Section 1701.01(G) of the Ohio
Revised Code) shall have made a “control share acquisition” (as the term “control share
acquisition” is defined in Section 1701.01(Z) of the Ohio Revised Code) of shares of the
Company without having first complied with Section 1701.831 of the Ohio Revised Code
(dealing with control share acquisitions); or

     (c) The Board of Directors shall at any time determine in the good faith exercise of
its judgment that (i) any particular actual or proposed accumulation of shares of the
Company, tender offer for shares of the Company, merger, consolidation, sale of assets,
proxy contest, or other transaction or event or series of transactions or events will, or is
likely to, if carried out, result in a Change in Control falling within Sections 5.5(a) or
5.5(b) hereof and (ii) it is in the best interests of the Company and its shareholders, and
will serve the intended purposes of this Plan and the Trust, for distributions of Deferred
Compensation Accounts to commence immediately as herein provided.

     5.6. Notwithstanding the foregoing provisions of this Article V:

6

 

     (a) If a Director is a Key Employee at the time of his or her Termination of Service,
then payment on account of Termination of Service (including under the circumstances
described in the last sentence of Section 5.1 hereof) shall be made or
commence on the first business day of seventh month following such Termination of
Service (or, if earlier, the date of death).

     (b) To the extent that a Director is entitled to payment following a Change in Control
of the Company under Section 5.1 hereof and such Change in Control does not constitute a
“change in 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 and Treas. Reg. § 1.409A-3(i)(5), or any successor provision, then notwithstanding
Section 5.1, payment shall be made or commence, to the extent necessary to comply with
Section 409A of the Code and the AJCA Guidance, to the Director on the earliest of (i) the
date of the Director’s Termination of Service, (ii) the date payment otherwise would have
been made in the absence Section 5.1 hereof (provided such date is a permissible
distribution date under Section 409A of the Code), or (ii) the date of the Director’s death.

ARTICLE VI

CREDITORS AND INSOLVENCY

     6.1. Claims of the Company’s Creditors. All assets held in the Trust pursuant to the Plan,
and any payment to be made by the Trustee pursuant to the Plan and Trust Agreement, shall be
subject to the claims of the general creditors of the Company, including judgment creditors and
bankruptcy creditors. The rights of a Director or his or her beneficiaries to any assets of the
Trust Fund shall be no greater than the rights of an unsecured creditor of the Company.

     6.2. Notification of Insolvency. In the event the Company becomes Insolvent (as hereinafter
defined), the Board of Directors of the Company and the chief executive officer of the Company
shall immediately notify the Trustee of that fact. The Trustee shall not make any payments from
the Trust Fund to any Director or any beneficiary under the Plan after such notification is
received or at any time after the Trustee has knowledge of such Insolvency. Under any such
circumstance, the Trustee shall deliver any property held in the Trust Fund only as a court of
competent jurisdiction may direct to satisfy the claims of the Company’s creditors. For purposes
of this Plan, the Company shall be deemed to be “Insolvent” if the Company is subject to a pending
voluntary or involuntary proceeding as a debtor under the United States Bankruptcy Code, as
amended, or is unable to pay its debts as they mature.

ARTICLE VII

ADMINISTRATION

     7.1. Powers of the Committee. The Committee shall administer the Plan and resolve all
questions of interpretation arising under the Plan. Whenever elections, directions, designations,
applications, requests or other notices are to be given or made by a Director under the Plan, they
shall be filed with the Committee. Except as provided in Section 8.3 hereof, the

7

 

Committee shall
have no discretion with respect to Plan contributions or distributions, but shall act in an
administrative capacity only.

     7.2. Indemnity of Committee. The Company shall indemnify the members of the Committee against
all claims, losses, damages, expenses and liabilities arising from any action or failure to act
with respect to the Plan to the extent provided in the Regulations of the Company and any
applicable indemnification agreement between the Company and such member.

ARTICLE VIII

MISCELLANEOUS

     8.1. Funding. Neither any Director, nor his or her beneficiaries, nor his or her heirs,
successors or assigns, shall have any secured interest in or, claim on any property or assets of
the Company or the Trust. The Company’s obligation under the Plan shall be merely that of an
unfunded and unsecured promise of the Company to pay money in the future. The Company shall create
the Trust to hold funds to be used in payment of its obligations under the Plan and to provide a
measure of the benefits payable to the Director hereunder, and shall fund such Trust in accordance
with the terms of the Plan, but all funds contained therein shall remain subject to the claims of
the Company’s general creditors as provided in Article VI hereof.

     8.2. Term of Plan. The Company reserves the right to amend the Plan or Trust Agreement or
terminate the Plan at any time; except that no amendment or termination shall affect the rights of
Directors to amounts previously credited to their Deferred Compensation Accounts or to additional
credits to their Deferred Compensation Accounts pursuant to Section 3.4 hereof for additional
earnings of the Trust following such termination (provided, however that this limitation on certain
actions shall not apply to any amendment that is deemed necessary by the Company to ensure
compliance with Section 409A of the Code and/or the AJCA Guidance); and provided further, that the
Company, in its sole discretion, may terminate this Plan to the extent and in circumstances
described in Treas. Reg. § 1.409A-3(j)(4)(ix), or any successor provision. The Trust shall remain
in effect until such time as the entire corpus of the Trust Fund has been distributed pursuant to
the terms of the Plan, and, subject to the preceding sentence, the Plan shall remain in effect
until such time as all amounts credited to Directors’ Deferred Compensation Accounts are
distributed pursuant to Article V hereof.

     8.3. Assignment. No right or interest of any Director or his or her beneficiary (or any
person claiming through or under such Director or his or her beneficiary) in any benefit or payment
herefrom shall be assignable or transferable in any manner or be subject to alienation,
anticipation, sale, pledge, encumbrance or other legal process or in any manner be liable for or
subject to the debts or liabilities of such Director.

     8.4. Tax Effect. This Plan is intended to be treated as an unfunded deferred compensation
plan under the Internal Revenue Code. It is the intention of the Company that the amounts by which
Directors elect to have their compensation reduced pursuant to this Plan shall not be included in
the gross income of the Directors or their beneficiaries until such time as the amounts credited to
Directors’ Deferred Compensation Accounts hereunder are distributed from the Plan. If, at any
time, it is determined by the Company that amounts attributable to Directors’ compensation
reduction elections or Deferred Compensation Accounts are includible in the gross

8

 

income of the
Directors or their beneficiaries before distribution pursuant to Article V hereof because the Plan
fails to meet the requirements of Section 409A of the Code and/or the AJCA
Guidance, such amounts credited to Directors’ Deferred Compensation Accounts shall be
immediately distributed to the respective Directors or, in the case of deceased Directors, their
beneficiaries in accordance with Treas. Reg. § 1.409A-3(j)(4)(vii), or any successor provision.
Distributions described in the preceding sentence shall be made from the Trust if the Company is
not Insolvent at the time for such distribution.

     8.5. Governing Law. This Plan shall be governed by and construed in accordance with the
internal substantive laws of the State of Ohio.

     8.6. Successors. The provisions of this Plan shall bind and inure to the benefit of the
Company and its successors and assigns. The term “successors” as used herein shall include any
corporate or other business entity which shall, whether by merger, consolidation, purchase or
otherwise, acquire all or substantially all of the business and assets of the Company and
successors of any such corporation or other business entity.

     8.7. No Right to Continued Service. Nothing contained herein shall be construed to confer
upon any Director the right to continue to serve as a Director of the Company or in any other
capacity.

     IN WITNESS WHEREOF, Brush Engineered Materials Inc. has executed this Plan his 10th day of
September, 2008.

	 	 	 	 	 
	 	BRUSH ENGINEERED MATERIALS INC.

 	 
	 	By:  	/s/ Michael C. Hasychak
 	 
	 	Name:  	Michael C. Hasychak 	 
	 	Title:  	Vice President, Treasurer and Secretary 	 

9

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