Exhibit 10
MEMORANDUM
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BRUSH ENGINEERED MATERIALS INC.
DEFERRED COMPENSATION PLAN FOR NONEMPLOYEE DIRECTORS
(AS AMENDED THROUGH SEPTEMBER 11, 2001)
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This Memorandum relates to the Common Shares of Brush Engineered Materials
Inc that have been reserved for sale under the plan named above. Company
may supplement this memorandum from time to time.
- The purpose of this Memorandum is to summarize certain features of the
Plan. You should refer to the plans if you have additional questions.
If there is an inconsistency between the information in this Memorandum
and the Plan, the Plan will govern.
- This Memorandum supersedes in its entirety, and takes the place of,
the Memoranda dated June 29, 1992 and September 11, 1998.
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The Securities and Exchange Commission wants you to know that:
- This document constitutes part of a prospectus covering securities
that have been registered under the Securities Act of 1933.
- Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities
or determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
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The date of this Memorandum is October 24, 2001.
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TABLE OF CONTENTS
PAGE
GENERAL ...................................................................1
DESCRIPTION OF PLAN.........................................................1
Purpose and Adoption...............................................1
Operation of Plan..................................................1
Election to Participate............................................2
Conversion from the Directors' Retirement Plan.....................2
Investment of Trust Accounts.......................................3
Distribution of Company Accounts...................................3
Special Distribution of Company Accounts...........................4
Change in Control..................................................4
Consequence of Company's Insolvency................................5
Trust Assets Subject to Claims of Company's Creditors;
Unfunded and Unsecured Nature of Company's Obligations...........5
Voting of Common Shares Held in Trust..............................6
Designation of Beneficiaries.......................................6
Payment or Withholding of Taxes....................................6
Assignment of Nonemployee Director's Rights
or Beneficial Interest under Plan.................................6
No Right to Continued Service......................................7
Nonqualified Status of Plan........................................7
Administration of Plan.............................................7
Amendment and Termination of Plan and Trust........................7
RESALES OF COMMON SHARES....................................................8
TAX CONSEQUENCES............................................................8
DESCRIPTION OF SECURITIES...................................................8
INCORPORATION OF DOCUMENTS BY REFERENCE....................................10
ADDITIONAL INFORMATION.....................................................11
-i-
GENERAL
This Memorandum does not constitute an offer to sell or a solicitation of
an offer to buy any securities other than the registered securities to which it
relates or an offer to sell or a solicitation of an offer to buy any securities
in any jurisdiction to any person to whom it is unlawful to make such an offer
or solicitation.
Under no circumstances shall the delivery of this Memorandum or any sale
made hereunder create any implication that there has been no change in the
affairs of Brush Engineered Materials Inc. or in any of the information included
herein or in any supplement hereto or in any document incorporated herein by
reference since the date hereof or thereof.
DESCRIPTION OF PLAN
PURPOSE AND ADOPTION
The purpose of the Plan is to help solidify the common interest of
directors and shareholders in enhancing the value of the Brush Engineered
Materials Inc. Common Shares. The Plan was originally adopted by the Board of
Directors of Brush Engineered Materials Inc. on December 17, 1991, and was
approved by the shareholders of the Company on April 28, 1992.
On December 2, 1997, the Board amended the Plan to:
- Effect the transfer of accrued benefits from the Brush ▇▇▇▇▇▇▇
Inc. Directors' Retirement Plan As Amended January 26, 1993 to
the Plan.
- Make deferral of fees available immediately to any new Nonemployee
Director who came on the Board during the first half of the
calendar year.
- Specify that Nonemployee Directors may not transfer existing
account balances into or out of the Brush Stock fund.
On September 11, 2001, the Board amended the Plan to:
- Permit Directors who are age 55 or older to transfer investment
funds from the Brush Stock Fund to one of the other funds and vice
versa.
- Add new investment choices.
- Authorize special distributions at a discount.
OPERATION OF PLAN
The Plan is designed to provide any member of the Board who is not an
employee of Brush Engineered Materials Inc. with the opportunity to defer
receipt (and therefore recognition as income for federal income tax purposes) of
all or any portion of his compensation for services as a Nonemployee Director.
(See "Intended Tax Effect of Plan Participation" below.) The Plan provides for
this deferral by giving a Nonemployee Director the right to elect to reduce his
current compensation. (See "Election to Participate" below.)
The Plan provides that Brush Engineered Materials Inc. will
- credit the amount of the reduction to a Trust Account in the name of
the Nonemployee Director on the books of the Company and
- contribute an amount equal to the amount of the reduction to a Trust
maintained by National City Bank N.A., a Trustee, which will establish
a corresponding Trust Account in the name of the Nonemployee Director
under the Trust.
The Plan further provides that any compensation that was previously
deferred pursuant to preexisting arrangements between a Nonemployee Director and
the Company may also be transferred to the Trust. The Plan also provides for the
transfer of accrued benefits from the Directors' Retirement Plan (See
"Conversion from the Directors' Retirement Plan" below). The balance of a
Nonemployee Director's Company Account will be adjusted from time to time to
reflect income, earnings, losses and expenses credited or charged to his Trust
Account.
At the time of distribution, the amount payable to a Nonemployee Director
is based on the value of his Company Account. (See "Distribution of Company
Accounts" and "Special Distribution of Company Accounts" below.) The Company's
obligation to make payment to a Nonemployee Director will be satisfied from the
Trust if the Company is not insolvent (as defined below) at the time. (See
"Consequences of Company's Insolvency" below.)
ELECTION TO PARTICIPATE
Any Nonemployee Director may participate in the Plan during any fiscal year
by electing to defer receipt of all or a portion of his annual retainer, meeting
fees and any other compensation that may be payable to him by the Company for
his services as a Nonemployee Director. The election must be in writing on the
form prescribed by the Company. It must be filed with the Administrative
Committee appointed by the Board to administer the Plan prior to the beginning
of any fiscal year during which a Nonemployee Director wishes to participate in
the Plan. For example, a Nonemployee Director must file his election on or
before December 31, 2001 if he wishes to participate in the Plan during 2002.
If a person becomes a Nonemployee Director for the first time after January
1 of any calendar year, he may file an election to participate in the Plan for
that year if he files within 30 days after he becomes a Nonemployee Director
during that year. His election will apply only to compensation for services
rendered as a Nonemployee Director after the date on which it is filed. Once an
election is made, it is irrevocable with respect to compensation for services
rendered as a Nonemployee Director during the fiscal year to which it relates.
CONVERSION FROM THE DIRECTORS' RETIREMENT PLAN
Not later than December 31, 1997, each Nonemployee Director was provided
the opportunity to make an election to credit the present value as of December
31, 1997 of his vested benefit under the Directors' Retirement Plan (which was
terminated as of December 31, 1997) to the Nonemployee Directors' Company
Account. Following the filing of the written election with
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the Committee, the Company transferred to the Trustee to be held in the Trust
for the account of such Nonemployee Director the cash funds equal to the amount
which each such Nonemployee Director elected to be converted from the Directors'
Retirement Plan. Payment will be made as described below under "Distribution of
Company Accounts." In no event will a Nonemployee Director be entitled to
payment prior to termination of service as a Director.
INVESTMENT OF TRUST ACCOUNTS
The accounts credited to a Nonemployee Director's Trust Account will be
invested by the Trustee as directed by the Nonemployee Director in his written
election to participate in the Plan. The authorized investment choices are as
follows:
- Brush Common Shares Fund
- In accordance with the Investment Policy
- ▇▇▇▇▇▇▇▇▇ Foreign Fund
- Vanguard Asset Allocation Fund
- Vanguard Index Trust 500 Portfolio
A brief description of these funds and a table setting forth financial data of
the past 3 years with respect to each of the investment funds is attached as
APPENDIX A.
A Nonemployee Director may direct that the assets of his Trust Account be
invested in part Common Shares and in part in any other authorized investment or
investments in increments of five percent. A Nonemployee Director may change his
election from time to time with respect to future additions to the Nonemployee
Director Company Account, but may not change such election with respect to
amounts previously credited at any time, except that a Director who is 55 years
of age or older may change his or her election. [The form of election prescribed
by the Committee provides that the election is irrevocable for the fiscal year
to which it relates.] Any earnings with respect to the assets of a Nonemployee
Director's Trust Account will be credited thereto and invested from time to time
by the Trustee in accordance with the Nonemployee Director's most recent
investment election.
If a Nonemployee Director elects to have the assets of his Trust Account
invested by the Trustee in Common Shares, the Plan provides that the Trustee may
purchase the Common Shares on the open market or from the Company. However, open
market shares have also been used in the past and the Company intends to
continue that practice. If this practice should be changed in the future, the
Trustee will not pay more for Common Shares purchased from the Company than it
would have paid on the open market.
DISTRIBUTION OF COMPANY ACCOUNTS
Except in the case of a Special Distribution (described below), the amounts
credited to a Nonemployee Director's Company Account will be distributed to him
in either a lump sum or not more than 10 annual installments, as directed by the
Nonemployee Director in
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his initial election to participate in the Plan and at the time his or her
vested benefits were converted from the Directors' Retirement Plan, within 10
days after the earliest to occur of
- the date on which the Nonemployee Director attains the age of 70,
- the date on which the Nonemployee Director ceases to be a member of
the Board or
- the date on which a change in control (as defined below) of the
Company occurs.
A Nonemployee Director cannot later change his distribution election.
However, if the amount credited to any Nonemployee Director's Company Account is
less than one year's retainer, the distribution will be in a lump sum on the
date of termination. Also, if any Nonemployee Director electing to credit
amounts to such Nonemployee Director's Company Account upon termination of the
Director's Retirement Plan, ceases to be a Director within one year after
signing such election other than by reason of death, disability or failure to be
re-elected as a Nonemployee Director, the applicable portion of the distribution
will be a lump sum.
If the Company is not insolvent at the time of any distribution, the
distribution will be made from the Trust and charged to the Nonemployee
Director's Trust Account. (See "Consequences of Company's Insolvency" below.)
All distributions (whether from the Trust or directly from the Company) will be
charged to the Nonemployee Director's Company Account. To the extent that the
amounts credited to a Nonemployee Director's Company Account are invested in
Common Shares at the time of distribution, the Common Shares will be distributed
in kind. If a Nonemployee Director elects to receive a distribution in annual
installments, the amount of each installment payment will be calculated by
dividing the amount credited to his Company Account at the time of the payment
(as determined by the Committee) by the number of remaining installments,
including the then-current installment.
SPECIAL DISTRIBUTION OF COMPANY ACCOUNTS
A Nonemployee Director may elect to receive a distribution of part or all
of his or her Company Account in one or more distribution if (and only if) the
amount in the Nonemployee Director's Company Account is reduced by 10%.
A Nonemployee Director may elect to receive such special distribution in
cash or in Common Shares. The special distribution will be made within 30 days
after the election is submitted to the Committee. The remaining 10% of the
portion of the Director's Company Account subject to such distribution shall be
forfeited to Brush Engineered Materials Inc. A Nonemployee Director who is
currently serving as a Director and elects a special distribution must
immediately terminate his or her deferrals under the Plan for the balance of the
year in which the election is submitted and for the following 2 years.
CHANGE IN CONTROL
The Plan defines the term "change in control" to mean the occurrence of any
of the following events:
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(a) The Board 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, 1992. An
Approved Director is a director who, after such date, is elected, 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 17601.01(Z) of
the Ohio Revised Code) of the Common Shares without having first complied
with Section 1701.831 of the Ohio Revised Code (dealing with control share
acquisitions); or
(c) The Board shall at any time determine in the good faith exercise
of its judgment that (i) any particular actual or proposed accumulation of
the Common Shares, tender offer for the Common Shares, 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 (a) or (b) above and (ii) it
is in the best interests of the Company and its shareholders, and will
serve the intended purposes of the Plan and the Trust, for distributions of
Company Accounts to commence immediately in accordance with the Plan.
CONSEQUENCE OF COMPANY'S INSOLVENCY
In the event that the Company becomes insolvent, the Board and the
President of the Company will immediately notify the Trustee of that fact. After
the Trustee has been so notified of the Company's insolvency or otherwise
acquires knowledge thereof, the Trustee:
- will not make any payment or distribution to any Nonemployee Director
or beneficiary and
- will transfer or deliver the assets of the Trust only as a court of
competent jurisdiction may direct.
The Plan defines the term "insolvent" to mean that the Company is:
- subject to a pending voluntary or involuntary proceeding as a debtor
under the United States Bankruptcy Code or
- unable to pay its debts as they mature.
TRUST ASSETS SUBJECT TO CLAIMS OF COMPANY'S CREDITORS;
UNFUNDED AND UNSECURED NATURE OF COMPANY'S OBLIGATIONS
All of the assets of the Trust, and any payment or distribution to be made
by the Trustee to a Nonemployee Director, are subject to the claims of the
Company's general creditors, including judgment creditors and bankruptcy
creditors. The Company's obligation under the Plan is merely an unfunded and
unsecured promise to pay money in the future. Neither a Nonemployee Director nor
his beneficiaries, heirs, successors or assigns have any secured
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interest in or claim against any of the assets of the Company or the Trust. The
rights of Nonemployee Directors and their beneficiaries to the assets of the
Trust are no greater than those of other unsecured creditors of the Company.
VOTING OF COMMON SHARES HELD IN TRUST
All Common Shares credited to a Nonemployee Director's Trust Account will
be voted by the Trustee in accordance with the Nonemployee Director's
instructions. In the absence of any such instructions, the Trustee will vote the
Common Shares credited to a Nonemployee Director's Trust Account in proportion
to the votes of all other shareholders of the Company.
DESIGNATION OF BENEFICIARIES
Each Nonemployee Director who elects to participate in the Plan may
designate one or more beneficiaries to whom distributions will be made in the
event that the Nonemployee Director dies before all distributions have been made
to him. If a Nonemployee Director does not designate any beneficiaries or there
is no designated beneficiary surviving at the time of the Nonemployee Director's
death, the Nonemployee Director's sole beneficiary will automatically be his
estate. Designations of beneficiaries must be made in writing and may be changed
at any time by filing a new election with the Committee.
PAYMENT OR WITHHOLDING OF TAXES
In the event that any taxes are required by law to be paid or withheld from
any payments or distributions to be made by the Company or the Trustee pursuant
to the Plan or the Trust, the Company or the Trustee, as the case may be, will
deduct the amount of any such taxes from the payment or distribution and deliver
to the appropriate taxing authority any amount so deducted.
ASSIGNMENT OF NONEMPLOYEE DIRECTOR'S
RIGHTS OR BENEFICIAL INTEREST UNDER PLAN
No right or interest of any Nonemployee Director or beneficiary (or any
person claiming through or under a Nonemployee Director or beneficiary) in any
benefit or payment under the Plan may be:
- assigned or transferred in any manner,
- subject to alienation, anticipation, encumbrance, pledge, sale or
other legal process or
- liable in any manner for or subject to the debts or liabilities of the
Nonemployee Director.
If any Nonemployee Director or other such person (other than the surviving
spouse of a deceased Nonemployee Director) attempts to or does alienate,
anticipate, assign, pledge, sell, transfer or otherwise encumber all or any part
of his benefits under the Plan, or if by
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reason of his bankruptcy or other circumstance any or all of his benefits under
the Plan would devolve upon someone else or would otherwise not be enjoyed by
him, the Committee may terminate his interest in all or any part of his benefits
under the Plan to the extent that the Committee considers necessary or advisable
in order to prevent or limit the effects of any such occurrence. Any such action
by the Committee must be evidenced by a written "termination declaration", which
must be filed with the records of the Committee, and the Committee must make
reasonable efforts to deliver a copy to the Nonemployee Director or other such
person whose interests are adversely affected thereby.
As long as any terminated participant is alive, any benefits affected by
the termination declaration will be retained by the Trust and, at the discretion
of the Committee, may be paid to or expended for the benefit of the terminated
participant or his spouse, children or other persons who are in fact dependent
upon him in whatever manner the Committee may deem appropriate. Upon the death
of any terminated participant, all benefits that were withheld from him pursuant
to a termination declaration and were not theretofore distributed at the
discretion of the Committee will be distributed to his estate or his creditors,
and if he has living descendants, the distribution will be made to those
descendants PER STIRPES. All payments or distributions described in this
paragraph will be made from the Trust if the Company is not insolvent at the
time.
NO RIGHT TO CONTINUED SERVICE
Nothing in the Plan will be construed as conferring upon any Nonemployee
Director the right to continue to serve the Company as a member of the Board or
otherwise.
NONQUALIFIED STATUS OF PLAN
The Plan is not qualified under Section 401(a) of the Code and is not
subject to the Employee Retirement Income Security Act of 1974.
ADMINISTRATION OF PLAN
The Committee will consist of not less than three persons who (i) serve at
the pleasure of the Board and may be dismissed at any time with or without cause
and (ii) need not be members of the Board. The Committee will administer the
Plan and resolve all questions of interpretation that may arise under the Plan.
Any elections, directions, designations or other notices to be made or given by
a Nonemployee Director pursuant to the Plan must be filed with the Committee.
Except as discussed under "Assignment of Nonemployee Director's Rights or
Beneficial Interest under Plan" above, the Committee has no discretion with
respect to contributions or distributions pursuant to the Pan.
AMENDMENT AND TERMINATION OF PLAN AND TRUST
The Company reserves the right to amend the Plan and the terms of the Trust
or terminate the Plan at any time, except that no amendment or termination may
affect the rights of Nonemployee Directors to:
- amounts previously credited to their Company Accounts or
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- additional amounts credited thereto for earnings on the assets thereof
following termination.
The Trust will remain in effect until its entire corpus has been
distributed. The Plan will remain in effect until all amounts credited to
Company Accounts have been distributed, in accordance with the Plan.
RESALES OF COMMON SHARES
Nonemployee Directors who are "affiliates" of the Company may resell Common
Stock acquired under the Plan in brokerage transactions on the New York Stock
Exchange without registration under the Securities Act of 1933 under compliance
with Rule 144 of the Securities and Exchange Commission, except that the
one-year holding period requirement of Rule 144 will not apply. For this
purpose, the term "affiliate" includes any Nonemployee Director who directly, or
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the Company. Nonemployee Directors who are not "affiliates"
may make resales in such brokerage transactions or otherwise without the need to
comply with Rule 144.
TAX CONSEQUENCES
The Plan is intended to be treated as an unfunded deferred compensation
plan under the Internal Revenue Code of 1986 (the "Code"). It is the Company's
intention that the amounts by which Nonemployee Directors elect to have their
compensation reduced pursuant to the Plan will not be included in the gross
income of the Nonemployee Directors or their beneficiaries until such time as
distributions are made pursuant to the Plan. If at any time the Company
determines that amounts attributable to either the Nonemployee Directors' of
their compensation-reduction elections or their Company Accounts are includible
in the gross income of the Nonemployee Directors or their beneficiaries prior to
distribution pursuant to the Plan, all such amounts will immediately be paid or
distributed to the Nonemployee Directors or their beneficiaries or estates, as
the case may be; these payments or distributions will be made from the Trust if
the Company is not insolvent at the time.
BECAUSE THE TAX CONSEQUENCES TO A PARTICIPANT MAY VARY DEPENDING ON HIS
INDIVIDUAL CIRCUMSTANCES, EACH PARTICIPANT SHOULD CONSULT HIS PERSONAL TAX
ADVISOR REGARDING THE FEDERAL AND ANY STATE, LOCAL OR FOREIGN TAX CONSEQUENCES
TO HIM.
DESCRIPTION OF SECURITIES
Brush Engineered Materials Inc. has authority to issue up to 60,000,000
shares of common stock and 5,000,000 shares of serial preferred stock. Neither
the common stock nor the preferred stock has par value. The board of directors
may cause Brush Engineered Materials to issue shares of serial preferred stock
in series with rights and privileges that may be superior to those of the
holders of common stock. No serial preferred stock is outstanding.
Each share of common stock is entitled to one vote. Ohio law permits
cumulative voting for the election of directors, if specified statutory
procedures are followed. The board of
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directors consists of two classes of three directors and one class of four
directors. The shareholders elect each director to a three-year term.
All shares of common stock have an equal right to participate in dividends
declared and, in the event of liquidation, in the net assets of Brush Engineered
Materials Inc. Holders of shares of common stock have no preemptive rights to
purchase presently authorized and unissued shares. The outstanding shares of
common stock are, and the shares to be sold under the 1995 plan and the 1997
plan will be, when issued, fully paid and non-assessable.
If Brush Engineered Materials Inc. plans to engage in a transaction
involving an owner of 10% or more (but less than 90%) of its voting stock, that
transaction must be approved by both of the following:
- Holders of a majority of Brush Engineered Materials Inc.'s voting
stock; and
- Holders of a majority of Brush Engineered Materials Inc.'s
disinterested shares (meaning the outstanding voting stock of Brush
Engineered Materials Inc., excluding the shares owned by the party who
owns 10% or more of the voting stock).
However, approval is not required if "fair price" criteria are satisfied or
the transaction is approved by a majority of the "continuing directors" (as
defined in Brush Engineered Materials Inc.'s articles of incorporation).
Among other things, the shareholder approval provision described above
requires the second step of a "two-step" takeover to be approved by both a
majority of Brush Engineered Materials Inc.'s outstanding voting power and a
majority of the disinterested shares, unless either:
- The consideration offered for shares to be acquired in the second step
is equal to, or greater than, that paid in the first step; or
- The transaction is approved by a majority of the continuing directors.
Brush Engineered Materials Inc.'s board of directors has adopted a
defensive mechanism commonly referred to as a "poison pill." To do so, it
adopted a rights agreement and declared a dividend of one preferred stock
purchase right for each outstanding share of common stock. Each right entitles
the shareholder to buy one one-hundredth of a share of Series A Serial Preferred
Stock at an initial exercise price of $110. The rights are not exercisable and
will not be evidenced by separate right certificates until a specified time
after any person or group acquires beneficial ownership of 20% or more (or
announces a tender offer for 20% or more) of Brush Engineered Materials Inc.'s
common stock.
After the rights become exercisable, if Brush Engineered Materials Inc. is
a party to certain merger or business combination transactions or transfers 50%
or more of its assets or earning power, or if the acquirer engages in certain
self-dealing practices, or if (under certain circumstances) a person or group
becomes the beneficial owner of 20% or more of Brush
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Engineered Materials Inc.'s common stock, each right (except those held by the
acquirer) will entitle its holder to purchase shares of common stock (or, under
certain circumstances, the acquirer's common stock) worth twice the exercise
price. Brush Engineered Materials Inc. can redeem the rights for one cent per
right under some circumstances.
INCORPORATION OF DOCUMENTS
BY REFERENCE
The U.S. Securities and Exchange Commission or SEC allows Brush Engineered
Materials Inc. to "incorporate by reference" the information filed with the SEC.
This means:
- Incorporated documents are considered part of this Memorandum;
- Brush Engineered Materials Inc. can disclose important
information to you by referring to those documents; and
- Information that Brush Engineered Materials Inc. files with the
SEC will automatically update this Memorandum.
The following documents heretofore or hereafter filed by Brush Engineered
Materials Inc. with the Commission are incorporated herein by reference:
- Annual Report on Form 10-K for the year ended December 31, 2000;
- Quarterly Reports on Form 10-Q for the quarters ended March 31,
2001 and June 29, 2001;
- Current Reports on Form 8-K, dated July 26, 2001, August 28, 2001
and September 12, 2001;
- The description of Brush Engineered Materials Inc.'s Common
Shares contained in Brush Engineered Materials Inc.'s
Registration Statement filed pursuant to Section 12 of the
Exchange Act, including all amendments and reports filed for the
purpose of updating that description;
- Rights Agreement dated May 10, 2000 between Brush Engineered
Materials Inc. and National City Bank, N.A., as Rights Agreement
(filed as Exhibit 4(a) to Current Report on Form 8-K filed on May
16, 2000; and
- All reports filed pursuant to Sections 13(a), 13(c), 14 and 15(d)
of the Exchange Act prior to the filing of a post-effective
amendment indicating that all of the securities offered under the
Plan have been sold or deregistering all securities then
remaining unsold thereunder.
Any statement contained in any document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Memorandum to the extent that a statement contained herein
or in any other subsequently filed document that is also incorporated or deemed
to be incorporated herein by reference modifies or
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supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Memorandum.
ADDITIONAL INFORMATION
Additional information about the Plan and the administrator may be obtained
from, and copies of the following documents or reports will be furnished without
charge upon oral or written request to, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Secretary and
Treasurer, Brush ▇▇▇▇▇▇▇ Inc., ▇▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
(telephone number ▇▇▇-▇▇▇-▇▇▇▇):
- Documents or reports incorporated by reference into this
Memorandum, excluding exhibits to such documents or reports
unless such exhibits are specifically incorporated by reference
into such documents or reports;
- Brush Engineered Materials Inc.'s annual report to shareholders
for the latest fiscal year; and
- All reports, proxy statements and other communications
distributed to Brush Engineered Materials Inc. shareholders.
All directors, officers and other key employees of Brush Engineered
Materials Inc. and its subsidiaries who participate in the Plan will receive
copies of all reports, proxy statements and other communications distributed to
Brush Engineered Materials Inc.'s shareholders in general. Such materials will
be delivered to participants not later than the time at which they are sent to
Brush Engineered Materials Inc.'s shareholders.
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APPENDIX A
INVESTMENT FUNDS
Brush Common Stock Fund
The investment goal of this Fund is to invest in Common Shares of Brush
Engineered Materials Inc. YOU SHOULD READ THE "DESCRIPTION OF SECURITIES"
INCLUDED IN THE MEMORANDUM, CAREFULLY IN ITS ENTIRETY. The Fund's annual rates
of return for each of the last three years ending December 31 (and the period
through September 30, 2001) were as follows:
1998................................................. -25.64%
1999................................................. -.67%
2000................................................. 22.53%
Period ended 9/30/01................................. -33.12%
Investment Policy
The investment goal of this Fund is to invest in accordance with the
Investment Policy set forth in Appendix B. There is no historical data available
for investing in accordance with the Investment Policy.
▇▇▇▇▇▇▇▇▇ Foreign Fund
The investment goal of this Fund is long-term capital growth. The Fund
tries to achieve its investment goal by a flexible policy of investing in the
equity and debt securities of companies and governments outside the U.S. YOU
SHOULD READ THE PROSPECTUS FOR THIS FUND, WHICH HAS BEEN PROVIDED TO YOU WITH
THIS MEMORANDUM, CAREFULLY IN ITS ENTIRETY. The Fund's annual rates of return
for each of the last three years ending December 31 (and the period through
September 30, 2001) were as follows:
1998................................................. -4.89%
1999................................................. 39.21%
2000.................................... -2.80%
Period ended 9/30/01................................. -17.31%
A-1
Vanguard Asset Allocation Fund, Inc.
Vanguard Asset Allocation Fund, Inc. is an open-end diversified investment
company that seeks to maximize total return (i.e., capital change plus income).
The Fund invests in common stocks, bonds and money market instruments in
proportions consistent with their expected returns and risks as evaluated by the
Fund's adviser. YOU SHOULD READ THE PROSPECTUS FOR THIS FUND, WHICH HAS BEEN
PROVIDED TO YOU WITH THIS MEMORANDUM, CAREFULLY IN ITS ENTIRETY. The Fund's
annual rates of return for each of the last three years ending December 31 (and
the period through September 30, 2001) were as follows:
1998................................................. 25.40%
1999................................................. 5.21%
2000................................................. 4.91%
Period ended 9/30/01................................. -12.45%
Vanguard Index Trust, 500 Portfolio
The Vanguard Index Trust, 500 Portfolio is a portfolio in an open-end
investment company, which seeks to match, as closely as possible, the
performance of the Standard & Poor's 500 Composite Stock Price Index, which
emphasizes stocks of large U.S. companies. YOU SHOULD READ THE PROSPECTUS FOR
THIS FUND, WHICH HAS BEEN PROVIDED TO YOU WITH THIS MEMORANDUM, CAREFULLY IN ITS
ENTIRETY. The Fund's annual rates of return for each of the last three years
ending December 31 (and the period through September 30, 2001) were as follows:
1998................................................. 28.61%
1999................................................. 21.06%
2000................................................. -9.06%
Period ended 9/30/01................................. -20.50%
Historical results of the various Funds do not necessarily indicate what
future performance will be. Brush Engineered Materials Inc. cannot, and does
not, guarantee the performance of any of the Funds and has no obligation to make
up any losses suffered by participants.
Information about the Funds (other than the Brush Stock Fund) was derived
from prospectuses and other reports provided by the investment companies in
which they are invested, and Brush Engineered Materials Inc. makes no
representation as to the accuracy of such information or the more detailed
information set forth in such documents.
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Appendix B
BRUSH ENGINEERED MATERIALS INC.
INVESTMENT POLICY
I PURPOSE
The purpose of this document is to state Brush Engineered Materials
Inc.'s Investment Policy. The primary criteria for investments made
under the Policy shall be preservation of principal and liquidity. The
rate of return on investments while important shall not take precedence
over safety of capital.
II. POLICY
A. ACCEPTABLE SECURITIES
1. With the exception of original issue discount securities
such at T-Bills, federal agency securities, bankers
acceptances and commercial paper, only money market tax
free, tax advantaged and taxable securities purchased and
sold/put at par (100) are allowable portfolio holdings.
Securities are not to be sold if a loss would be incurred.
Investments which by nature fluctuate in price and do not
have a 1 year or less maturity or put at 100 are not
acceptable. Examples of acceptable securities are Lower
Floaters, unit priced demand adjustable tax exempt
securities, put bonds, certificates of deposit, repurchase
agreements, eurodollar time deposits and money market
instruments.
a. TAX EXEMPT ISSUES
Tax Free Variable Rate Demand Obligations and put bonds
issued prior to 1986 should be given preference. Issues
dated on or within three months before August 7, 1986
should be given extra scrutiny with regard to actual
dated date as to insure federally tax free status.
2. Brush Engineered Materials Inc. receives an Ohio corporate
franchise tax benefit for all federally tax exempt
purchases. In addition, Arizona, Pennsylvania, Michigan and
Rhode Island state and local tax exempt issues would
generate an additional benefit in those respective states.
B. INVESTMENT LIMITS AND LIQUIDITY REQUIREMENTS
1. A minimum of 30% of portfolio par value shall be invested in
securities saleable with a 7 day or less settlement at price of par.
No more than 20% may be invested in securities with actual or
effective maturities between 6 months and 1 year.
2. Securities subject to alternative minimum tax are disallowed.
3. No more than 30% of the total market portfolio shall be invested in
securities with the same entity supplying the underlying credit or
same issuer except the federal government.
4. The total par value of each security shall be considered in
determining each of the preceding II. B. Subsections 1 and 3.
Repurchase agreements and eurodollar time deposits shall not be
aggregated in the total par value for Brush Engineered Materials cash
management designated banks.
C. CREDIT STANDARDS
Securities purchased should have a credit rating by Moodys of AA or the
equivalent by Standard & Poor's or alternatively:
1. The issue is backed by a credit enhancer of a bank rated AA or better
and/or insurance company which provides for payment of principal and
interest to cover a put and issuer default.
2. If the issue is unrated, have never applied, it must have an AA
equivalent rating.
3. Commercial Paper must be rated A1/P1.
III. SAFEKEEPING
National City Bank will provide safe housing of all securities purchased
for Brush Engineered Materials Inc. Exceptions to the safe housing
arrangement shall be approved by the Treasury function.
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IV. GENERAL POLICY AND PROCEDURE
Any changes or exceptions to the policies and procedures as described
in this document shall require written approval of the Treasurer of
Brush Engineered Materials Inc.
BRUSH ENGINEERED MATERIALS INC.
Dated: _________________________ By:____________________________
Its:____________________________
_____________________________________hereby acknowledges it has received and
reviewed this investment policy and will act within the parameters established
by said policy.
Dated:__________________________ By:_____________________________
Its:_____________________________
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