November 30, 1993
PRIVATE & CONFIDENTIAL
Ms. Katherine M. Hudson
7436 East River Road
Rush, New York 14543
Dear Ms. Hudson:
This letter is to confirm our discussions regarding the
terms of W.H. Brady Co.'s (the "Company") offer of employment to
you. Subject to your acceptance, as set forth below, your
employment would be on the following terms:
1. Title and Term. You will be employed as President and Chief
Executive Officer of the Company, starting as of January 1,
1994 (the "Effective Date"). There would be no fixed term
of employment.
2. Compensation.
(a) Base Salary. The Company will pay you an initial base
salary at the rate of $300,000 per annum, payable
according to the regular payroll practices of the
Company. Beginning in 1994, the rate of your base
salary will be subject to review in accordance with the
Company's regular annual review process.
(b) Bonus. In addition to your base salary, you will also
become covered immediately on the Effective Date under
the Company's Incentive Compensation Plan, adopted
August 1, 1993, (and as amended from time to time)
which provides for a bonus opportunity based on certain
criteria.
(c) Stock Options. Within 10 days of the Effective Date,
the Company will grant to you a stock option for 25,000
shares of the Company's Class A non-voting common stock
under the Company's Non-Qualified Stock Option Plan
(the "Plan"). The exercise price will be the fair
market value on the date of grant, as determined under
the Plan and the option will become fully exercisable
and vested six months after the date of the grant.
3. Expenses and Benefits.
(a) Expenses and Club Dues. The Company will pay or
reimburse your reasonable moving expenses for your move
from the Rochester, New York area to Wisconsin.
Further, the Company will pay or reimburse you, up to a
maximum of $10,000 in the aggregate, for your
reasonable expenses incurred in searching for a home in
Wisconsin, your reasonable temporary housing expenses
in Wisconsin for up to 6 months, and reasonable
expenses incurred by you and your family for traveling
to and from Wisconsin during this period. The Company
will pay or reimburse you for all reasonable travel and
entertainment expenses connected with the Company's
business in accordance with the Company's policy.
Additionally, the Company will pay or reimburse you for
one club membership and dues fees, the club to be
located in southeastern Wisconsin and otherwise to be
selected by you. Finally, the Company will pay or
reimburse your reasonable attorneys' fees and
disbursements incurred in connection with evaluating
and negotiating the initial terms of your employment,
not to exceed $5,000.
(b) Benefits. You will be entitled to participate in all
life, health and disability benefit programs,
retirement, vacation and other similar fringe benefit
plans currently or at any time provided by the Company
to other senior executives, on a basis commensurate
with such other senior executives and consistent with
the terms of such plans, as amended, modified or
terminated from time to time. The Company will provide
you with a Company car.
4. Special Supplemental Retirement Payments. The Company
agrees to make special annual payments to you for a period
of 10 years, commencing on the first business day in
January, 2009. The first installment payment will be a lump
sum equal to 1/10th of the Stated Amount (as hereafter
defined). The second installment payment will be made on
the first business day in January, 2010, in a lump sum equal
to 1/9th of the then remaining unpaid Stated Amount, and on
the first business day in January of each succeeding year,
another annual lump sum payment will be made equal to the
product obtained by multiplying the then remaining unpaid
Stated Amount by a fraction, the numerator of which is one
and the denominator of which is 8 for the third installment
payment, 7 for the fourth, and continuing in a similar
fashion until the first business day in January, 2018, when
the then remaining balance of the Stated Amount shall be
paid. The Stated Amount is simply a bookkeeping account
maintained by the Company solely as a measuring device for
purposes of determining the amount of payments to be made to
you under this paragraph 4. The Stated Amount is $500,000,
until January 1, 1999. On that date, the Stated Amount
shall begin to be credited with an amount equal to interest
as of the end of each calendar quarter at the prime rate
(base rate on corporate loans) in effect at the end of such
quarter (an "Interest Equivalent Credit") as reported by the
principal bank or financial institution with which the
Company is doing business. All amounts credited to the
Stated Amount as of the end of each calendar year, starting
with December 31, 1999, including any prior Interest
Equivalent Credits, shall become entitled to receive
Interest Equivalent Credits in subsequent calendar years.
An example of the calculations contemplated by this
paragraph 4 is attached and made a part of this letter.
Further, the following special conditions apply to this
Special Supplemental Retirement Payments:
(a) Should you die before payments have started, the
Company will commence making the payments on the first
business day of the first January following your date
of death, to the beneficiary or beneficiaries
designated by you in a written notice to the Company,
or to your estate if no beneficiary is designated. The
payments will be as set forth above, with the
substitution of the accelerated starting date.
However, Interest Equivalent Credits shall not begin
prior to January 1, 1999 and shall apply only to the
then remaining unpaid Stated Amount, if payments have
begun under this subsection (a) prior to January 1,
1999.
(b) Should you die after payments have started, the Company
will continue making the payments as set forth above
until completion.
(c) You are not required to remain in the Company's employ
for any length of time in order to become entitled to
the Special Supplemental Retirement Payments, nor are
you required to separate from the service of the
Company at any particular time in order to receive such
payments. Such payments will not be taken into account
as compensation under any of the Company's retirement,
welfare benefit, or fringe benefit plans or programs.
(d) You or any beneficiary entitled to the payments may
request that the payments be made in a single lump sum
equal to the Stated Amount or in a shorter series of
payments and the Company in its sole discretion may
grant or deny such request.
5. Acceleration of Special Supplemental Retirement Payment
Under Certain Circumstances In the Event of a Change in
Control. For purposes of this paragraph, a Change in
Control of the Company shall occur if and when the members
of the family of William H. Brady, Jr. and their descendants
or the W.H. Brady Foundation, Inc. no longer, directly or
indirectly, controls in excess of 50% of the voting stock of
the Company. If such a Change in Control occurs before all
the payments contemplated by paragraph 4 have been made,
then the remaining balance of the Stated Amount will be paid
to you, your beneficiary or your estate in a single cash
payment within 30 days after the Change in Control unless
you are still the President and Chief Executive Officer, in
which case the remaining balance of the Stated Amount will
be paid to you, your beneficiary or your estate in a single
cash payment within 30 days after you cease to serve in such
capacity. However, if such single cash payment would result
in disallowance of any portion of the Company's deduction
therefor under Section 162(m) of the Internal Revenue Code,
the Company may limit its payment under this paragraph 5 to
only that amount which is deductible, with the balance of
the Stated Amount to be paid as soon as deductible by the
Company.
6. Severance. If your employment is terminated by the Company
at any time without Cause as defined herein, the Company
will make severance payments to you for one year, in an
amount equal to 100% of your then current base salary,
payable in accordance with the regular payroll practices of
the Company. If you should die before all payments
contemplated by the preceding sentence have been made to
you, any remaining payments will be made to the beneficiary
or beneficiaries designated by you in a written notice to
the Company, or to your estate if no beneficiary is
designated. Any severance payments under this paragraph 6
will be in lieu of any other regular severance payments and
will not be taken into account as compensation under any of
the Company's retirement, welfare benefit, or fringe benefit
plans or programs. For purposes hereof, Cause means (i)
your willful and continued failure to substantially perform
your duties with the Company (other than any such failure
resulting from physical or mental incapacity) after written
demand for performance is given to you by the Company which
specifically identifies the manner in which the Company
believes you have not substantially performed and a
reasonable time to cure has transpired, (ii) your conviction
of a felony, or (iii) your commission of an act of
dishonesty or of any willful act of misconduct which results
in or could reasonably be expected to result in significant
injury (monetarily or otherwise) to the Company, as
determined in good faith by the Board of Directors of the
Company.
7. Confidentiality/Non-Compete Agreement. You agree to sign
the standard form of Confidential Information Agreement
required of Company executives, a copy of which is attached.
8. Entire Understanding; Withholding. This letter supersedes
any and all prior agreements or discussions between the
Company and you relating to your employment by the Company.
The Company may withhold any and all applicable taxes it
deems necessary or appropriate on all payments made under
this letter agreement.
If this letter correctly sets forth your understanding and
you wish to accept our offer of employment, please sign the
duplicate of this letter in the space provided below and return
it in the enclosed envelope. This letter will then serve as the
agreement between us.
Very truly yours,
W.H. BRADY CO.
By: /S/ P.G. Gengler
President
/S/ P.J. Lettenberger
168/lw
Attachments
18-003-346-4
I hereby accept employment with
W.H. Brady Co. on the above terms
and conditions:
Dated December 2, 1993
/S/ Katherine M. Hudson
EXAMPLE
Assumptions: Stated Amount is $500,000. Special Supplemental
Retirement Payments become due because of the
executive's death in December, 2001. The Interest
Equivalent Credits which started January 1, 1999
have remained a constant 6%.
1) Stated Amount on 1/1/99 = $500,000
Interest Equivalent Credits
added 3/31, 6/30, 9/30 and
12/31 at $7,500 each $ 30,000
2) Stated Amount 12/31/99 $530,000
Add Interest Equivalent
credits during year
2000 on starting
balance of $530,000.
530,000 x 6% $ 31,800
3) Stated Amount 12/31/00 $561,800
Add Interest Equivalent
credits during year 2001
561,800 x 6% = $ 33,708
Stated Amount 12/31/01 $595,508
4) Payout to Executive's
Beneficiary Begins
January 1, 2002
1st payment, 1/10th x 595,508 = $ 59,550,80
Stated Amount 1/2/02 $595,508.00
Less payment (59,550.80)
$535,957.20
Add Interest Equivalent
credits during year 2002
535,957.20 x 6% = 32,157.43
Stated Amount 12/31/02 $568,114.63
5) 2nd payment, 1/9th x 568,114.63 = $ 63,123.85
on January 1, 2003
Stated Amount 1/2/03 $568,114.63
Less payment (63,123.85)
$504,990.78
Add Interest Equivalent
credits during year 2003
504,990.78 x 6% = 30,299.45
Stated Amount 12/31/03 $535,290.23
6) 3rd Payment, 1/8th x $535,290.23 = $ 66,911.28
Stated Amount 1/2/04 $535,290.23
Less payment (66,911.28)
$468,378.95
Add Interest Equivalent
credits during year 2004
468,378.95 x 6% = 28,102.74
Stated Amount 12/31/04 $496,481.69
7) 4th Payment, 1/7th x $496,481.69 = $ 70,925.96
(etc., until all of the funds credited to the Stated Amount
are paid.)
CONFIDENTIAL INFORMATION AGREEMENT
W.H. Brady Co. (the Company) is engaged in the development,
manufacture and sale of a variety of products based upon
experimental and inventive work and has accumulated substantial
information not generally known relating to existing and
contemplated products, manufacturing procedures, methods,
machines, compositions, technology, formulas, know how, research
and development programs and plans, sales methods, customer
lists, customer usages and requirements and other confidential
business information, trade secrets and data (hereinafter
referred to as Confidential Information) which represents in part
or has resulted from the composite knowledge and experience of
its personnel arising through their mutual efforts and
contributions to the conduct and success of the Company's
business.
I am now employed or am desirous of being employed by the Company
in a capacity which, by the nature of my duties I have or will
have or expect to learn, receive or have access to Confidential
Information as mutually acknowledged that such Confidential
Information is vital to the personal development, advancement and
economic security of each person who looks to the Company, as an
integral part of his employment relationship, as the principal
means for providing continuing opportunities for personal growth
and promotion, and that the acquisition of such Confidential
Information by a competitor would not only injure the Company but
also put in jeopardy the investment Company personnel have in
their jobs.
DEFINITION OF TERMS:
"Company" in addition to W.H. Brady Co. shall include its
subsidiaries.
"Subsidiaries" means any corporation of which 50% or more of the
common or ordinary shares entitled to vote for the election of
directors are now or hereafter owned directly or indirectly by
the Company.
"Competitor" means any corporation, person, firm or organization
(or division or part thereof) engaged in or about to become
engaged in research and development work on or the production
and/or sale of any product in the United States or Canada which
is directly competitive with one with respect to which I acquired
Confidential Information by reason of my work with the Company.
"Competitive Product" means a product, made by a Competitor,
which is the same as or is directly competitive with one with
respect to which I acquired Confidential Information by reason of
my work with the Company.
IN CONSIDERATION OF AND AS A CONDITION TO AND AS PART OF THE
TERMS OF MY EMPLOYMENT AND/OR CONTINUED EMPLOYMENT during such
time as may be mutually agreeable and the payment of compensation
by the Company:
1. I agree that:
A. Except as required by my duties to the Company, I will
not at any time directly or indirectly disclose to or
use for others, any Confidential Information without
first obtaining the written consent of the Company to
do so.
B. All records of Confidential Information prepared by me
or which come into my possession or to which I have
access during my employment by the Company are and
shall remain the property of the Company, and upon
termination of my employment, I will not remove any
such records or copies thereof but all thereof shall be
left with the Company.
2. In addition to and independent of the other provisions
hereof, I further agree that I will not, for a period of two
(2) years (or if employed by the Company less than two
years, then for such shorter period equivalent to the
duration of my employment but in no event less than twelve
months) from the date of termination of employment with the
Company:
A. Render services, directly or indirectly, to any
Competitor in connection with the development,
manufacture, and merchandising or promotion of
Competitive Products.
B. Render services, directly or indirectly, to any
Competitor except that I may accept employment with a
business entity which is diversified and made up of
separate divisions and which, as to part of its
business, is not a Competitor, provided the Company
shall be furnished prior to such employment definite
written assurances satisfactory to it, separately from
me and such business entity that I will not be
expected, required or permitted to and in fact do not
render services directly or indirectly to a division or
part of such business entity which division part is a
Competitor during such period.
C. Engage either directly or indirectly within the United
States or America or Canada for myself or as an
investor in the development, manufacture, purchase or
sale of any Competitive Product.
If I notify an officer of the Company of the occupation I
propose to take up after termination of employment with the
Company and furnish the Company such written or oral
information as it may reasonably request concerning such
proposed occupation, the Company shall notify me promptly
and in any event within 30 days after receipt of the
requested information whether or not it considers such
occupation based upon the information so furnished or
derived from its independent investigation, comes within the
provisions of this paragraph 2 or if it considers such
occupation to come within the provisions of this paragraph 2
whether it will waive any of the provisions thereof.
The validity of this paragraph 2 shall be determined by the
law of the forum in which enforcement is sought by the
Company. Paragraphs 1 and 2 hereof are separate and
divisible, one from the other.
3. If I am unable to obtain employment consistent with my
training and education solely because of the provisions of
paragraph 2, said provisions shall be binding only for so
long as the Company shall make payments to me equal to my
monthly base pay at the date of termination of my employment
with the Company (exclusive of extra compensation or other
employment benefits) for each month or portion thereof in
which I have been unable to obtain employment solely because
of the provisions of paragraph 2 and so notify the Company
in writing, setting forth my efforts to obtain such
employment and advising that although I have conscientiously
sought such employment, I have been unable to obtain the
same solely because of the provisions of said paragraph 2.
The Company's obligation to make the monthly payments shall
terminate (i) upon giving me a written release from all
obligations under paragraph 2 or (ii) upon my obtaining
employment. I agree to promptly give written notice to the
Company when I secure employment.
The Company's obligation to make the monthly payments shall
in no event continue for more than 24 months (or for such
shorter period not less than 12 months equivalent to the
duration of employment if employed less than two years)
immediately following the termination of my employment with
the Company, and in no event shall the Company be liable,
under this agreement, for any amount in excess thereof.
All payments due hereunder shall be made in accordance with
the Company's established procedures.
4. In the event I fail to observe any of the provisions of this
Agreement, I agree to pay the Company on demand all sums
expended by it in attempting to secure new employment for
me, including amounts paid to organizations engaged in such
business and the amount of any salary continuation payments
paid me following the effective date of the termination of
my employment, it being recognized that such amounts and
such payments will be expended or made by the Company in
reliance upon my full and faithful observance of the terms
hereof, such right of recoupment being in addition to all
other rights of the Company to enforce this Agreement.
5. I agree to notify any prospective employer of the existence
of this agreement.
IN WITNESS WHEREOF, I have hereunto sat my hand and seal this
second day of December, 1993, and hereby certify that I HAVE READ
AND FULLY UNDERSTAND THE MEANING AND IMPORT OF THIS AGREEMENT,
AND THAT I HAVE RECEIVED A COPY THEREOF.
/S/ Katherine M. Hudson
(seal)
Accepted for the Company
by
Title
Date