AEARO COMPANY
NONQUALIFIED DEFERRED COMPENSATION PLAN
(Effective August 5, 1999)
AEARO COMPANY
NONQUALIFIED DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
Article Section Page
I. Purpose and Effective Date...........................................1
1.01 Title.................................................1
1.02 Purpose...............................................1
1.03 Effective Date........................................1
II. Definitions and Construction of the Plan Document....................2
2.01 Base Pay..............................................2
2.02 Beneficiary...........................................2
2.03 Board.................................................2
2.04 Board Member..........................................2
2.05 Board Member Fees.....................................2
2.06 Bonus.................................................2
2.07 Bookkeeping Account...................................2
2.08 Change in Control.....................................2
2.09 Code..................................................2
2.10 Company...............................................3
2.11 Deferral Agreement....................................3
2.12 Deferral Amount.......................................3
2.13 Deferred Compensation.................................3
2.14 Election Date.........................................3
2.15 Executive.............................................3
2.16 Matching Contributions................................3
2.17 Operating Board.......................................3
2.18 Participant...........................................4
2.19 Plan..................................................4
2.20 Plan Administrator....................................4
2.21 Plan Year.............................................4
2.22 Salary Deferral.......................................4
2.23 Savings Plan..........................................4
2.24 Valuation Date........................................4
2.25 Gender and Number.....................................4
2.26 Titles................................................4
III. Eligibility and Participation........................................5
3.01 Eligibility...........................................5
3.02 Participation.........................................5
IV. Annual Deferrals.....................................................6
4.01 Deferred Amounts......................................6
4.02 Deferral Agreement....................................6
4.03 No Deferral Without Agreement.........................7
4.04 Duration of Deferral Agreement........................7
4.05 Effect of Election....................................7
V. Additional Deferrals.................................................8
5.01 Deferred Compensation.................................8
5.02 Deferral Agreement....................................8
5.03 No Deferral Without Agreement.........................8
5.04 Duration of Deferral Agreement........................8
5.05 Effect of Election....................................8
VI. Deferral Account and Crediting.......................................9
6.01 Bookkeeping Account...................................9
6.02 Earnings..............................................9
VII. Distribution........................................................10
7.01 Amount of Benefits...................................10
7.02 Method of Payment....................................10
7.03 Time of Payment......................................10
7.04 Participant's Death..................................11
7.05 Form of Payment......................................11
VIII. Vesting.............................................................12
8.01 Vesting..............................................12
8.02 Misconduct...........................................12
IX. Accelerated Distributions...........................................13
9.01 Hardship Distribution................................13
9.02 Elective Accelerated Distribution....................13
X. Beneficiary.........................................................14
10.01 Beneficiary Designation..............................14
10.02 Proper Beneficiary...................................14
10.03 Minor or Incompetent Beneficiary.....................14
XI. Administration of the Plan..........................................15
11.01 Finality of Determination............................15
11.02 Certificates and Reports.............................15
11.03 Indemnification and Exculpation......................15
11.04 Expenses.............................................15
XII. Claims Procedure....................................................16
12.01 WrittenClaim.........................................16
12.02 Denied Claim.........................................16
12.03 Review Procedure.....................................16
12.04 Plan Administrator Review............................16
XIII. Nature of Company's Obligations.....................................17
13.01 Company's Obligation.................................17
13.02 Creditor s Status....................................17
13.03 Change of Control....................................17
XIV. Miscellaneous......................................................18
14.01 Written Notice.......................................18
14.02 Change of Address....................................18
14.03 Merger, Consolidation or Acquisition.................18
14.04 Amendment and Termination............................18
14.05 Employment...........................................18
14.06 Nontransferability...................................18
14.07 Legal Fees...........................................19
14.08 Tax Withholding......................................19
14.09 Applicable Law.......................................19
14.10 Remedies.............................................19
14.11 Beneficial Interest..................................19
14.12 Construction.........................................19
ARTICLE I
PURPOSE AND EFFECTIVE DATE
1.01 Title This Plan shall be known as the Aearo Company Nonqualified
Deferred Compensation Plan (hereinafter referred to as the "Plan").
1.02 Purpose The purpose of the Plan is to permit eligible members of the
Operating Board and Board of Directors of the Company to defer current
Base Pay and annual Bonus or directors fees, and to provide benefits
to such employees who, due to the application of United States
Internal Revenue Code Sections 402(g) and 401(a)(17), are precluded
from receiving full benefits from the Aearo Company Employees' 401(k)
Savings Plan.
1.03 Effective Date The Effective Date of the Plan shall be the date this
Plan is adopted by the Board of -------------- Directors and executed.
ARTICLE II
DEFINITIONS AND CONSTRUCTION OF THE PLAN DOCUMENT
2.01 Base Pay "Base Pay" shall mean regular salary payable to an Executive,
exclusive of any Bonus or special payments and exclusive of
reimbursements or other expense allowances, fringe benefits (cash and
non-cash), moving expenses and welfare benefits. Base Pay does include
any amount deferred under this Plan pursuant to Article IV or Article
V, any elective deferral as defined in Section 402(g)(3) of the Code
and amounts excludible from an Executive's gross income under Code
Section 125.
2.02 Beneficiary "Beneficiary" shall mean the natural person or persons,
trust or the estate of a Participant designated by the Participant to
receive any benefits under this Plan.
2.03 Board "Board" shall mean the Board of Directors of Aearo Company.
2.04 Board Member "Board Member" shall mean any member of the Board who is
not an employee of the Company.
2.05 Board Member Fees "Board Member Fees" shall mean the annual
remuneration paid to a Board Member and any fees paid to a Board
Member for attending Board meetings.
2.06 Bonus "Bonus" shall mean the annual bonus paid to an Executive under
the Aearo Company Annual Incentive Plan.
2.07 Bookkeeping Account "Bookkeeping Account" shall mean the hypothetical
account established as a bookkeeping record for each Participant under
this Plan and shall include one (1) or more subaccounts to reflect
amounts credited to a Participant under each Deferral Agreement
pursuant to the terms of this Plan.
2.08 Change in Control "Change in Control" shall mean, prior to the time
the Company has publicly traded common securities, (a) the occurrence
of (1) the sale of more than fifty percent (50%) of the voting
securities in the Company to a third party (other than Vestar Capital
Partners, L.P. ("Vestar") or an affiliate of Vestar or an entity under
the control of Vestar); (2) the sale of all or substantially all of
the assets of the Company to a third party (other than Vestar or an
affiliate of Vestar or an entity under the control of Vestar); or (3)
a merger, recapitalization, reorganization or other corporate
restructuring (any of the foregoing referred to a "Transaction") and
(b) following such Transaction, Vestar or an affiliate of Vestar no
longer has the authority (by virtue of voting securities ownership or
by agreement with other voting securities owners) to elect or to
designate the election of members of the Board (or of the governing
board of the entity resulting from such Transaction) or the entity
controlling the Company (or such resulting entity).
2.09 Code "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
2.10 Company "Company" shall mean Aearo Company, a Delaware corporation.
2.11 Deferral Agreement "Deferral Agreement" shall mean the written form
which is submitted to the Plan Administrator before the relevant
Election Date which indicates whether the Executive wishes to defer a
portion of his Base Pay and/or Bonus and indicates the portion of Base
Pay and/or Bonus to be deferred. The Deferral Agreement shall also
state that the Executive will automatically defer into this Plan any
amounts he cannot defer into the Savings Plan due to the application
of Code Sections 401(k), 401(m), 402(g), and 401(a)(17). A Deferral
Agreement shall also mean the written form which is submitted to the
Plan Administrator before the relevant Election Date which indicates
whether the Board Member wishes to defer a portion of his Board Member
Fees and indicates the portion of Board Member Fees to be deferred. No
Deferral Agreement shall be effective until acknowledged, in writing,
by the Company.
2.12 Deferred Amount "Deferred Amount" shall mean the portion of a
Participant's Base Pay or Bonus and, in the case of a Board Member,
Board Member Fees that has been deferred pursuant to the Plan for any
Plan Year of part thereof.
2.13 Deferred Compensation "Deferred Compensation" shall mean such amount
that is credited to an Executive Bookkeeping Account pursuant to
Section 5.01 of the Plan.
2.14 Election Date "Election Date" shall mean the date established by this
Plan as the date before which an Executive or Board Member must submit
a valid Deferral Agreement to the Plan Administrator. The applicable
Election Dates are as follows:
(a) thirty (30) days after adoption of the Plan for Executives
and Board Members who are eligible to participate at the time the Plan
is adopted;
(b) thirty (30) days after a newly eligible Executive or Board
Member first becomes eligible to participate in the Plan; or
(c) if (a) or (b) do not apply, September 30 preceding the
beginning of a Plan Year or such earlier date as determined by the
Plan Administrator.
2.15 Executive "Executive" shall mean any member of the Operating Board of
the Company.
2.16 Matching Contributions "Matching Contributions" shall mean the
contributions made by the Company on behalf of any Participant
pursuant to the Savings Plan.
2.17 Operating Board "Operating Board" shall mean the group of senior
management employees of the Company as designated by the Board to be
the Operating Board.
2.18 Participant "Participant" means an Executive or Board Member who has
deferred a portion of his Base Pay or Bonus or, in the case of a Board
Member, Board Member Fees pursuant to the terms of this Plan and whose
benefits hereunder have not yet been paid in full. Participant shall
also mean any Executive who participates in the plan pursuant to
Section 5.01 of the Plan.
2.19 Plan "Plan" shall mean the Aearo Company Nonqualified Deferred
Compensation Plan as described in this instrument and as amended from
time to time.
2.20 Plan Administrator "Plan Administrator" shall mean the Compensation
Committee of the Board or such person or persons designated by such
Committee from time to time.
2.21 Plan Year "Plan Year" shall mean the 12-month period beginning on
October 1 of each calendar year; provided, however, that the first
Plan Year shall be from date of adoption of this Plan by the Company
to September 30, 1999.
2.22 Salary Deferral "Salary Deferral" shall mean the amount elected by an
Executive as pre-tax contributions to the Savings Plan
2.23 Savings Plan "Savings Plan" means the Aearo Company Employees' 401(k)
Savings Plan, as amended from time to time.
2.24 Valuation Date "Valuation Date" shall mean, for purposes of
determining the value of any Participant's Bookkeeping Account, the
last day of any Plan Year or such other date or dates as determined by
the Plan Administrator.
2.25 Gender and Number Wherever the context so requires, masculine pronouns
include the feminine and singular words shall include the plural.
2.26 Titles Titles of the Articles of this Plan are included for ease of
reference only and are not to be used for the purpose of construing
any portion or provision of this Plan document.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.01 Eligibility Any Executive or Board Member is eligible for
participation in this Plan; provided, however, that no Executive shall
be eligible for participation in this Plan unless he qualifies as a
member of a select group of management or as a highly compensated
employee of the Company as those terms are defined or interpreted
under Title I of the Employee Retirement Security Act of 1974 (ERISA).
3.02 Participation An Executive or Board Member shall become a Participant
in the plan upon completion and submission to the Plan Administrator
of a duly executed Deferral Agreement. Notwithstanding the above, an
Executive may become a Participant in the Plan pursuant to Section
5.01 of the Plan regardless of whether he executes a Deferral
Agreement for any Plan Year in cases where Matching Contributions
cannot be made to the Savings Plan due to the application of Code
Section 401(a)(17).
ARTICLE IV
ANNUAL DEFERRALS
4.01 Deferred Amounts Each Participant in the Plan may have a percentage of
his Base Pay or Bonus or, in the case of a Board Member, Board Member
Fees, deferred in accordance with the following limits:
(a) The amount of Base Pay deferred must be at least ten
percent (10%) and not more than fifty percent of (50%) of the
Executive's current Base Pay.
(b) The amount of Bonus deferred must be at least twenty
five percent (25%) and not more than one hundred percent of (100%) of
the Executive's Bonus for such Plan Year.
(c) The amount of Board Member Fees deferred must be at
least twenty five percent (25%) and not more than one hundred percent
of (100%) of the Board Member's Fees for such Plan Year.
4.02 Deferral Agreement
(a) An eligible Executive or Board Member electing to
participate in the Plan must submit his written Deferral Agreement to
the Plan Administrator on or before the applicable Election Date.
Valid Deferral Agreements entered into under the conditions of Section
2.14(a) or 2.14(b) of the Plan filed by the applicable Election Date
shall cause Base Pay, or in the case of a Board Member, Board Member
Fees, earned in the remainder of the Plan Year such Deferral Agreement
is made to be deferred. Deferral Agreements entered into under the
conditions of Section 2.14(c) of the Plan filed by September 30 shall
cause Base Pay or in the case of a Board Member, Board Member Fees, to
be deferred beginning with Base Pay or Board Member Fees earned on and
after October 1 of the next Plan Year. Once a Deferral Agreement has
been signed and approved by the Company, the Deferred Amount may not
be reduced, except as provided in Article VIII.
(b) In the case of Bonuses, the following rules shall apply:
(i) In the case of a valid Deferral Agreement entered into
under the conditions of Section 2.14(a), the deferral shall
relate to bonuses earned in the Plan Year ending September
30, 1999
(ii) In the case of valid Deferral Agreements entered into
under the conditions of Section 2.14(b), the deferral shall
relate to bonuses earned in the Plan Year which includes the
Election Date
(iii) In the case of a valid Deferral Agreement entered into
under the conditions of Section 2.14(c), the deferral shall
relate to Bonuses earned in the Plan Year beginning after
the Election Date
(c) Each Deferral Agreement shall prescribe the date of
distribution and form of payment applicable to amounts deferred under
that Deferral Agreement. If the Deferral Agreement does not specify a
date of distribution, then the date of distribution shall be the
earlier of the Executive's termination of employment or death.
4.03 No Deferral Without Agreement A Participant who has not submitted a
valid Deferral Agreement to the Plan Administrator before the relevant
Election Date may not defer any amounts under this Article IV for the
applicable Plan Year.
4.04 Duration of Deferral Agreement Deferral Agreements are irrevocable and
remain in effect for the Plan Year for which they apply. A Participant
must file a new Deferral Agreement for any subsequent Plan Year. The
terms of any Deferral Agreement may, but need not be, similar to the
terms of any prior Deferral Agreement.
4.05 Effect of Election An election under this Article IV shall in no way
affect any election made by the Executive under Article V.
ARTICLE V
ADDITIONAL DEFERRALS
5.01 Deferred Compensation With respect to any Executive in the Savings
Plan, a portion of the Executive's compensation shall be deferred
which shall be in addition to any deferral that the Executive may have
elected to defer pursuant to Article IV. The amount of such additional
deferral shall be an amount that is determined by crediting on a
monthly basis the amount of Matching Contributions and Salary
Deferrals that cannot be made to an Executive's account in the Savings
Plan as a result of (a) application to that Executive of Code Sections
401(k), 401(m), 402(g) and 401(a)(17) and (b) the deferral to this
Plan. For purposes of this Section 5.02, "compensation" shall have the
same meaning as such term is defined in the Savings Plan.
5.02 Deferral Agreement For purposes of this Article V, the amount credited
on behalf of any Executive to take into account Salary Deferrals that
cannot be made to the Savings Plan because of the limitation under
Code Section 402(g) and/or 401(a)(17) must be made pursuant to a
Deferral Agreement which conforms with the requirements described in
Section 4.02 of this Plan. In order to receive credits pursuant to
such Deferral Agreement, an Executive shall be required to make the
maximum employee pre-tax contribution to the Executive's accounts
under the Savings Plan as permitted by the Code and the Savings Plan.
5.03 No Deferral Without Agreement An Executive who has not submitted a
valid Deferral Agreement to the Plan Administrator before the relevant
Election Date may not defer any amounts under this Article V for the
applicable Plan Year.
5.04 Duration of Deferral Agreement Deferral Agreements are irrevocable and
remain in effect for the Plan Year for which they apply. An Executive
must file a new Deferral Agreement for any subsequent Plan Year. The
terms of any Deferral Agreement may, but need not be, similar to the
terms of any prior Deferral Agreement.
5.05 Effect of Election An election under this Article V shall in no way
affect any election made by the Executive under Article IV
ARTICLE VI
DEFERRAL ACCOUNT AND CREDITING
6.01 Bookkeeping Account The Deferred Amount pursuant to a written Deferral
Agreement or Deferred Compensation under Section 5.01 of the Plan
shall be credited to a separate Bookkeeping Account for each
Participant. Deferred Amounts under subsequent written Deferral
Agreements by a Participant or Deferred Compensation under Section
5.01 of the Plan shall be credited to separate subaccounts within the
Participant's Bookkeeping Account. Matching Contributions credited
under Section 5.021 shall always be credited to a separate subaccount
to reflect vesting..
6.02 Earnings On each Valuation Date each Participant's Bookkeeping Account
shall be credited with an amount equal to the earnings that would have
been realized if the amount in such Participant's Bookkeeping Account
at the beginning of the Plan Year, plus fifty percent (50%) of a
Participant's Deferred Amounts or Deferred Compensation credited in
the Plan Year, less any distributions made in the Plan Year, had
earned one hundred twenty percent (120%) of the total return of the
Lehman Brothers Long-Term Treasury Bond Index (Index) for the twelve
(12) month period ending on the Valuation Date. Where a distribution
occurs during the Plan Year, the Participant's Bookkeeping Account
shall be credited with additional earnings equal to one hundred twenty
percent (120%) of the total return of the Index based upon the period
from the last Valuation Date to the date of distribution.
ARTICLE VII
DISTRIBUTION
7.01 Amount of Benefits The Company's liability to any Participant
hereunder shall be an amount equal to the Participant's Deferred
Amounts and vested Deferred Compensation under Section 5.01 of the
Plan plus the deemed earnings under Section 6.02 of the Plan, less any
payments to the Participant pursuant to this Plan, and such amount
shall be the amount credited to each Participant's Bookkeeping
Account.
7.02 Method of Payment Payment of benefits attributable to Deferred Amounts
or Deferred Compensation under Section 5.01 of the Plan shall be made
either (a) in a single lump sum payment or (b) in annual installments
over a two (2) to ten (10) year period in accordance with the method
of payment elected in the Deferral Agreement for each Plan Year.
Installment payments may be elected only if they are to be paid at
termination of employment. Where there is a voluntary termination of
employment, and there exist multiple prior Deferral Agreements with
different forms of payment elected, then the most recent Deferral
Agreement shall govern the form of payment. In the case of an
involuntary termination of employment, the Participant may make a one
time irrevocable election within 30 days after termination occurs and
before benefits are paid of the method of payment. Where installment
payouts are made, the unpaid balance shall be credited with earnings
as prescribed in Section 6.02. The second and subsequent annual
installments shall equal the then unpaid balance divided by the
remaining number of annual installment payments. In all cases, the
election as to form of payment shall be made before the applicable
Election Date; provided, however, that a Participant may change the
method of payment one time per Deferral Agreement as long as the
Participant notifies the Plan Administrator of his election to change
the method of payment at least six (6) months prior to the date on
which payments are otherwise scheduled to commence. In the event an
Executive does not elect a method of payment, payment of benefits
shall be made in a single lump sum immediately following the
Executive's termination of employment with the Company or as soon as
reasonably practicable thereafter.
7.03 Time of Payment Payment of benefits attributable to Deferred Amounts
or Deferred Compensation under Section 5.01 of the Plan shall commence
in accordance with the commencement date elected in the Deferral
Agreement for each Plan Year but in no event later than termination of
employment. Deferrals must remain in the Plan for at least 2 years
before they can be distributed, except in the case of a distribution
specified in 9.01. In all cases, the election as to time of payment
shall be made before the applicable Election Date; provided, however,
that a Participant may again defer the commencement of benefit
payments subsequent to the date elected in the Deferral Agreement
(second election) one time per Deferral Agreement as long as the
Participant notifies the Plan Administrator of his election to defer
commencement of benefit payment at least six (6) months prior to the
date on which payments are otherwise scheduled to commence, and
further provided, that the deferral has lasted at least two (2) years
at the time
of his second election. In the event an Executive does not elect a
commencement date, payment of benefits shall be made in a single lump
sum immediately following the Executive's termination of employment
with the Company or as soon as reasonably practicable thereafter.
7.04 Participant's Death Notwithstanding Sections 7.02 and 7.03 above, in
the event of the Participant's death prior to the complete payment of
an amount equal to the sum credited to the Participant's Bookkeeping
Account, payment of any remaining amount shall be made to the
Participant's Beneficiary as soon as administratively practicable
after the Participant's death.
7.05 Form of Payment All payments hereunder shall be made in cash.
ARTICLE VIII
VESTING
8.01 Vesting A Participant is always one hundred percent (100%) vested in
his subaccounts representing deferrals of Base Salary, Bonus or Salary
Deferrals. Subject to the provisions of Section 8.02 a Participant
shall be vested in his Matching Contributions credited under Section
5.01 when they become vested under the terms of the Savings Plan.
Non-vested amounts shall be forfeited and used by the Company in its
discretion, when similar amounts are forfeited in the Savings Plan. If
the participant reinstates forfeitures in the Savings Plan, those
forfeitures will also be reinstated in this Plan.
8.02 Misconduct If the Plan Administrator finds that any Participant
engages in conduct detrimental to the best interest of the Company or
misconduct involving dishonesty or moral turpitude which results in
detriment or financial loss to the Company or in malicious destruction
of Company property, or is convicted of a felony committed and arising
out of the Participant's employment, the Plan Administrator may direct
forfeiture of all of the Participant's subaccount attributable to
Matching Contributions credited under Section 5.01.
ARTICLE IX
ACCELERATED DISTRIBUTIONS
9.01 Hardship Distribution At the request of a Participant before the
Executive's termination of service with the Company or a Board
Member's termination of Board membership, the Plan Administrator may,
in its sole discretion, accelerate and cause all or part of the value
of a Participant's vested Bookkeeping Account to be paid due to
financial hardship as defined herein. An accelerated distribution must
be limited to only that amount necessary to relieve the financial
hardship, plus the after-tax amount needed to pay federal, state or
local income taxes reasonably anticipated to result from the payment.
In the event the Plan Administrator determines the existence of a
financial hardship and decides in its sole and absolute discretion to
accelerate payments hereunder, it may in its sole and absolute
discretion, reduce or suspend future Deferred Amounts under the
Participant's Deferral Agreement in effect during such Plan Year.
"Financialhardship" shall mean an immediate and heavy financial need
of the Participant which cannot be satisfied from other
reasonably available resources and which are caused by
events that are beyond the control of the Participant.
9.02 Elective Accelerated Distribution A Participant may request an
elective accelerated distribution of all or a portion of his vested
Bookkeeping Account, prior to the Executive's termination of service
with the Company or a Board Member's termination of Board membership.
This distribution may be made for any reason or for no reason.
Provided however, that any distribution made under this section shall
be reduced by an amount of ten percent (10%) of the amount of the
distribution requested, with the reduction irrevocably forfeited and
used by the Company in its discretion.
ARTICLE X
BENEFICIARY
10.01 Beneficiary Designation A Participant shall designate his Beneficiary
to receive benefits under the Plan by completing the appropriate form
provided by the Plan Administrator. If more than one (1) Beneficiary
is named, the shares and/or percentage of each Beneficiary shall be
indicated. A Participant shall have the right to change the
Beneficiary by submitting to the Plan Administrator a Beneficiary
Designation Form. However, no change of Beneficiary shall be effective
until acknowledged, in writing, by the Plan Administrator. A
Beneficiary may be a natural person or a trust. If no beneficiary is
designated, then payments shall be made to the Participant's estate.
10.02 Proper Beneficiary If the Company has any doubt as to the proper
Beneficiary to receive payments hereunder, the Company shall have the
right to withhold such payments until the matter is finally
adjudicated. However, any payment made by the Company, in good faith
and in accordance with this Plan, shall fully discharge the Company
and the Plan Administrator from all further obligations with respect
to that payment.
10.03 Minoror Incompetent Beneficiary In making any payments to or for the
benefit of any minor or an incompetent Beneficiary, the Plan
Administrator, in its sole and absolute discretion, may (a) make a
distribution to a legal or natural guardian or other relative of a
minor or court appointed committee of such incompetent; or (b) make a
payment to any adult with whom the minor or incompetent temporarily or
permanently resides. The receipt by a guardian, committee, relative or
other person shall be a complete discharge to the Company and the Plan
Administrator. Neither the Plan Administrator nor the Company shall
have any responsibility to see to the proper application of any
payments so made.
ARTICLE XI
ADMINISTRATION OF THE PLAN
11.01 Finality of Determination Subject to the Plan, the Plan Administrator
shall, from time to time, establish rules, forms and procedures for
the administration of the Plan. Except as herein otherwise expressly
provided, the Plan Administrator shall have full and absolute
discretion to (i) construe and interpret the Plan, (ii) decide all
questions arising with respect to the Plan, and (iii) determine the
amount, manner and time of payment of any benefits to any Participant
or Beneficiary. The respective decisions, actions and records of the
Plan Administrator shall be conclusive and binding upon the Company
and all persons having or claiming to have any right or interest in or
under the Plan.
11.02 Certificates and Reports The Plan Administrator and the officers and
directors of the Company shall be entitled to rely on all
certificates, opinions, and reports made by any duly appointed
accountants and consultants, and on all opinions given by any duly
appointed legal counsel, which legal counsel may be counsel for the
Company.
11.03 Indemnification and Exculpation The Company shall indemnify and hold
harmless any person acting on behalf of or pursuant to appointment by
the Plan Administrator (hereinafter referred to as "designee") in
connection with the administration of the Plan against any and all
expenses and liabilities arising out of his administration of the Plan
or any action or failure to act by any such designee, except if such
action or failure to act constitutes gross negligence or willful
misconduct. Expenses against which any such designee shall be
indemnified hereunder shall include, without limitation, the amount of
any settlement or judgment, costs, counsel fees, and related charges
reasonably incurred in connection with a claim asserted, or a
proceeding brought or settlement thereof. The foregoing rights of
indemnification shall be in addition to any other rights to which any
such designee may be entitled as a matter of law.
11.04 Expenses The expenses of administering the Plan shall be borne by the
Company.
ARTICLE XII
CLAIMS PROCEDURE
12.01 Written Claim Benefits shall be paid in accordance with the provisions
of this Plan. The Participant, or a designated Beneficiary or any
other person claiming through the Participant, shall make a written
request for benefits under this Plan. This written claim shall be
mailed or delivered to the Plan Administrator. Such claim shall be
reviewed by the Plan Administrator or his delegate.
12.02 Denied Claim If the claim is denied, in full or in part, the Plan
Administrator shall provide a written notice within ninety (90) days
setting forth the specific reasons for denial and any additional
material or information necessary to perfect the claim and an
explanation of why such material or information is necessary and
appropriate information and explanation of the steps to be taken if a
review of the denial is desired.
12.03 Review Procedure If the claim is denied and a review is desired, the
Participant (or Beneficiary) shall notify the Plan Administrator, in
writing, within sixty (60) days (a claim shall be deemed denied if the
Plan Administrator does not take any action within the aforesaid
ninety (90) day period) after receipt of the written notice of denial.
In requesting a review, the Participant or his Beneficiary may request
a review of the Plan document or other pertinent documents with regard
to the Plan, may submit any written issues and comments, may request
an extension of time for such written submission of issues and
comments and may request that a hearing be held, but the decision to
hold a hearing shall be within the sole discretion of the Plan
Administrator.
12.04 Plan Administrator Review The decision on the review of the denied
claim shall be rendered by the Plan Administrator within sixty (60)
days after the receipt of the request for review (or within one
hundred twenty (120) days if special circumstances exist). The
decision shall be written and shall state the specific reasons for the
decision including reference to the specific provisions of this Plan
on which the decision is based.
ARTICLE XIII
NATURE OF COMPANY'S OBLIGATION
13.01 Company's Obligation The Company's payment obligations in connection
with Deferred Amounts or Deferred Compensation under this Plan shall
be an unfunded and unsecured promise to pay the benefit due in
accordance with the Plan and Deferral Agreement. The Company shall not
be obligated under any circumstances to set aside assets to discharge
its financial obligations under this Plan, except as provided under
Section 13.03 of the Plan, in which event the Company shall establish
an irrevocable trust and contribute assets to such trust for the
purpose of satisfying its obligations under the Plan. The Company's
payment obligations hereunder shall be discharged and satisfied to the
extent proper payments are made from such trust to a Participant or
Beneficiary.
13.02 Creditor Status Any assets which the Company may acquire or set aside
to help cover its financial liabilities under the Plan are and shall
remain general assets of the Company subject to the claims of the
creditors of the Company. Neither the Company hereunder nor this Plan
gives the Participant or any Beneficiary any ownership interest in any
asset of the Company. All rights of ownership in any such assets are,
and remain, in the Company.
13.03 Change of Control In the event of a Change in Control, an amount equal
to the Participant's Bookkeeping Account at the time of such Change in
Control shall be paid to a trustee designated in advance by the
Company and such amounts shall be held in an irrevocable trust for the
benefit of Participants pursuant to the terms of the Plan and
Participants' Deferral Agreements. Such trust shall be irrevocable and
shall provide that the trustee shall make payments of benefits in
accordance with the Plan and the Deferral Agreements, and shall also
provide that no assets of the trust may be used for any purpose other
than the payment of benefits. Provided however, that such trust's
assets shall be required to be delivered to the Company's trustee in
bankruptcy pursuant to the terms of the trust.
ARTICLE XIV
MISCELLANEOUS
14.01 Written Notice Any notice which shall or may be given under this Plan
or a Deferral Agreement shall be in writing and shall be mailed by
United States mail, postage prepaid. If notice is to be given to the
Company, such notice shall be addressed to the Company at:
5457 West 79th Street
Indianapolis, Indiana 46268
Attn.: Vice-President, Human Resources
or, if notice is to a Participant, addressed to the last known address
shown on the Company's records.
14.02 Change of Address Any party may, from time to time, change the address
to which notices shall be mailed by giving written notice of such new
address.
14.03 Merger, Consolidation or Acquisition The Plan shall be binding upon
the Company, its assigns, and any successor company which shall
succeed to substantially all of its assets and business through
merger, acquisition or consolidation, and upon a Participant, his
Beneficiary, assigns, heirs, executors and administrators.
14.04 Amendment and Termination Except as provided herein, the Company
retains the sole and unilateral right to terminate, amend, modify or
supplement this Plan, in whole or in part, at any time. This right
includes the right to make retroactive amendments. However, in no
event shall the Company have the right to amend the Plan in a manner
that (i) reduces the amount credited, including earnings, to any
Participant's Bookkeeping Account, as of the later of the date the
amendment is adopted or effective, or (ii) reduces or eliminates any
benefit, right or feature which has accrued under the terms of the
Plan with respect to all amounts deferred or credited under the Plan
as of the later of the amendment's adoption or effective date.
14.05 Employment This Plan does not provide a contract of employment between
the Company and the Participant, and, except as provided in any other
contractual arrangement, if any, between a Participant and the
Company, the Company reserves the right to terminate the Participant's
employment, for any reason, at any time, notwithstanding the existence
of this Plan.
14.06 Nontransferability Except insofar as prohibited by applicable law, no
sale, transfer, alienation, assignment, pledge, collateralization or
attachment of any benefits under this Plan shall be valid or
recognized by the Company or the trustee of any related trust. Neither
the Participant, his spouse, or designated Beneficiary, shall have any
right to hypothecate, mortgage, commute, modify or otherwise encumber
in advance of any receipt of the benefits payable hereunder, nor shall
any of said benefits be subject to seizure for the payment of any
debts, judgments, alimony maintenance, owed by the Participant or his
Beneficiary, or be transferable by operation of law in the event of
bankruptcy, insolvency or otherwise.
14.07 Legal Fees All reasonable legal fees incurred by any Participant (or
former Participant) to successfully enforce his valid rights under
this Plan shall be paid by the Company in addition to sums due under
this Plan.
14.08 Tax Withholding The Company may withhold from a payment any federal,
state or local taxes required by law to be withheld with respect to
such payment.
14.09 Applicable Law This Plan shall be governed by the laws of the state of
Indiana without respect to principles of conflicts of law.
14.10 Remedies All parties shall have the right to pursue any and all
remedies available under law or equity.
14.11 Beneficial Interest This Plan is established solely for the benefit of
the Company, its successors and assigns, and the Participants as
defined herein. No person other than the Company and each Participant
or, if applicable, the Participant's Beneficiary may claim any rights
or benefits under this Plan nor may seek to enforce any of the
provisions of this Plan.
14.12 Construction The following principles apply to the construction of the
Plan.
(a) Interpretation of Plan The Company has the sole authority
and discretion to construe the language of the Plan and to
resolve all questions concerning eligibility for benefits,
plan administration and interpretation of the plan document.
(b) Amendment of Qualified Savings Plan If the Savings Plan is
amended or terminated, this Plan must be construed in a
manner consistent with such amendment or termination.
(c) Invalidity of Any Provision In the event any provision of
the Plan is declared to be invalid, in whole or in part,
such provision is null and void. The remaining provisions of
the Plan are unaffected and remain in full force and effect.
However, the Company, in its discretion may construe the
provision in such a manner that it is valid in the
jurisdiction where it is declared to be invalid.
(d) Enforceability of Any Provision A provision of the Plan
which is invalid in any jurisdiction remains in effect and
is enforceable in all jurisdictions in which the provision
is valid.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its
duly authorized officer on this _____ day of _______________, 19___, effective
as set forth herein.
AEARO COMPANY
By__________________________
ATTEST:
By: ________________________________
[SEAL]