EXHIBIT 10.4
EXECUTIVE'S DEFERRED COMPENSATION AGREEMENT (2001 PLAN)
AGREEMENT, made as of the 1st day of November, 2001, between Brady
Corporation, a Wisconsin corporation ("Corporation") and ____________________
("Executive").
WITNESSETH:
WHEREAS, Executive is now serving as an executive of the Corporation in a
position of importance and responsibility;
WHEREAS, the Board of Directors of the Corporation has adopted a plan
permitting Executives of the Corporation to elect to defer portions of their
compensation payable from the Corporation at the times and upon the terms and
conditions of that plan; and
WHEREAS, the terms of such deferrals are reflected in individual deferred
compensation agreements that have been executed from time to time with
Executives of the Corporation and;
WHEREAS, pursuant to the plan Executive and Corporation have been party to
a deferred compensation agreement dated as of November, 1997 pursuant to which
the Executive has had the ability to defer compensation (the "Prior Agreement");
and
WHEREAS, pursuant to the authority vested in the Corporation under the
Prior Agreement the Corporation has provided the Executive with notice that no
further deferrals shall be made under the Prior Agreement on or after November
1, 2001 and that the terms of the Prior Agreement shall remain unchanged except
as it may be specifically amended from time to time in the future; and
WHEREAS, the Corporation and the Executive desire to enter into a new
Deferred Compensation Agreement to govern deferrals of (i) base salary and/or
(ii) portions of the amounts payable to Executive under the Corporation's
Executive Additional Compensation Plan, or any amendment of that plan, or any
bonus plan which replaces that plan so as to be payable on the basis, at the
times and upon the terms and conditions of that plan (collectively, the "Plan");
NOW, THEREFORE, in consideration of the premises and the mutual benefits to
be derived herefrom, IT IS AGREED AS FOLLOWS:
1. DEFERRED COMPENSATION ACCOUNT
There shall be created on the books of the Corporation an Executive's
Deferred Compensation Account (the "Account"), which shall be credited with
the amounts specified in Executive's elections under this Deferred
Compensation Agreement (the "Election").
Elections shall be in writing, made prior to the beginning of the year, or
partial year, in which the compensation would otherwise be paid, and filed
with the Corporate Controller of the Corporation. Such election shall be
made in dollar or percentage amounts and
shall be effective with respect to pay periods occurring in the following
year, or, with respect to the Plan, for amounts which would become payable
in years beginning after the date of filing.
An Election shall be irrevocable with respect to the period to which it
relates and shall continue in effect each like period thereafter until
revoked or amended in writing with respect to periods beginning after the
filing with the Corporation of such written revocation or amendment.
2. VALUATION OF ACCOUNT
(a) The Executive's Account shall be credited or charged with deemed
earnings or losses as if it were invested in accordance with paragraph
(b) below. The Executive's Account shall also be charged with the
costs of administration of such account.
(b) (1) The investment funds available hereunder for the deemed
investment of the Account shall be the same investment funds,
including the Brady Stock Fund, as available under the Brady
Matched 401(k) Plan except to the extent the Compensation
Committee of the Board of Directors (the "Committee") shall from
time to time determine that different investment funds shall be
available for the deemed investment of the Account. However, in
no event shall the Corporation be required to make any such
investment in the investment funds, and to the extent such
investments are made, such investments shall remain an asset of
the Corporation subject to the claims of its general creditors.
(2) On the date credited to the Executive's Account, deferrals shall
be deemed to be invested in one or more of the investment funds
designated by the Executive for such deemed investment. Once
made, the Executive's investment designation shall continue in
effect for all future deferrals until changed by the Executive.
Any such change may be elected by the Executive at the times
established by the Committee, which shall be no less frequently
than quarterly, and shall be effective only for deferrals,
credited from and after its effective date. Until such time as
the Committee takes action to the contrary, such changes may be
elected at the same times as changes may be elected with respect
to the Brady Matched 401(k) Plan.
(3) A Participant may elect to reallocate his Account balance among
the investment funds at the times established by the Committee,
which shall be no less frequently than quarterly. Until such time
as the Committee takes action to the contrary, such changes may
be elected at the same times as changes may be elected with
respect to the Brady Matched 401(k) Plan. Notwithstanding any
other provision of this Agreement to the contrary, Executive may
not make (i) any election or transaction in the Brady Stock Fund
at a time when Executive is in possession of any
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material non-public information or at a time not permitted under
the Corporation's policy on insider trading or (ii) an opposite
way election with respect to the Brady Stock Fund within six
months of a prior election regarding the Brady Stock Fund.
(4) All investment elections and designations by Executive shall be
made in accordance with procedures prescribed by the Committee.
The Committee may prescribe uniform percentages for such
elections and designations.
(5) The Corporation shall provide annual reports to each Executive
showing (a) the value of the Account as of the most recent
December 31st, (b) the amount of deferral made by the Executive
for the year ending on such date and (c) the amount of any
interest, earnings or investment gain or loss and the costs of
administration credited or debited to the Executive's Account.
(6) Notwithstanding any other provision of this Agreement that may be
interpreted to the contrary, the deemed investments are to be
used for measurement purposes only, and Executive's election of
any such fund, the allocation to Executive's Account balance
thereto, the calculation of additional amounts and the crediting
or debiting of such amounts to Executive's Account balance shall
not be considered or construed in any manner as an actual
investment of Executive's Account balance in any such fund. In
the event that the Corporation or the trustee of any grantor
trust, in its own discretion, decides to invest funds in any or
all of the funds, Executive shall have no rights in or to such
investments themselves. Without limiting the foregoing,
Executive's Account balance shall at all times be a bookkeeping
entry only and shall not represent any investment made on
Executive's behalf by the Corporation or any trust; the Executive
shall at all times remain an unsecured creditor of the
Corporation.
(c) An Executive shall be fully vested and nonforfeitable at all times in
Executive's Account hereunder.
3. WITHDRAWAL PAYOUTS
(a) If the Executive experiences an Unforeseeable Financial Emergency, the
Executive may petition the Committee to (i) suspend any deferrals
required to be made by Executive and/or (ii) receive a partial or full
payout of Executive's Account balance. The payout shall not exceed the
lesser of the Executive's Account balance, or the amount reasonably
needed to satisfy the Unforeseeable Financial Emergency. If, subject
to the sole discretion of the Committee, the petition for a suspension
and/or payout is approved, suspension shall take effect upon the date
of approval and any payout shall be made in a single lump sum in cash
within 90 days of the date of approval.
"Unforeseeable Financial Emergency" shall mean an unanticipated
emergency that is caused by an event beyond the control of the
Executive that would result in
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severe financial hardship to the Executive resulting from (i) a sudden
and unexpected illness or accident of the Executive or a dependent of
the Executive, (ii) a loss of the Executive's property due to
casualty, or (iii) such other extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Executive, all as determined in the sole discretion of the Committee.
(b) At any time prior to the commencement of benefit payments under
Section 4, the Executive may elect to receive a distribution of all or
a portion of Executive's Account balance. A distribution pursuant to
the provisions of this paragraph shall be made as soon as
administratively practicable in an immediate lump sum cash payment of
the requested amount, reduced by a penalty, which shall be forfeited
to the Corporation, equal to 10% of the balance of such requested
amount. In the event benefit payments to an Executive have commenced
in installments pursuant to the provisions of Section 4, the Executive
may elect instead to receive an immediate lump sum distribution of the
remaining balance of the Executive's account in which case
distribution of such remaining balance shall be made as soon
administratively practicable in an immediate lump sum cash payment,
reduced by a penalty, which shall be forfeited to the Corporation,
equal to 10% of such remaining balance.
4. DISTRIBUTIONS TO EXECUTIVE FOLLOWING TERMINATION OF EMPLOYMENT
(a) If the Executive's employment is terminated due to any reason,
including retirement, disability, or death, and if no effective
election exists under paragraph (b) below and if no application and
approval under paragraph (c) below has been made, the Corporation
shall distribute the Executive's Account to Executive, or Executive's
Beneficiary, under the Annual Installment Method over a period of ten
(10) years using the Fractional Method for a fixed period of ten
years.
(b) By submitting an Election Form to the Committee, provided that any
such Election Form is submitted as least one year prior to the date of
the Executive's termination of employment, the Executive shall elect
whether to receive his Account balance following termination of
employment in a single lump sum in cash or by means of cash
distribution under an Annual Installment Method. The Election Form
most recently on file shall govern the payout of the Account. If the
Executive does not submit an Election Form or has not submitted one
timely, then payment shall be made under paragraph (a) above unless an
application has been made and approved under paragraph (c) below. Even
if a valid election has been made under this paragraph (b), payment
shall instead be made under paragraph (c) if an application has been
made and approved under paragraph (c). The lump sum payment shall be
made, or installment payments shall commence, within 60 days after the
last day of the fiscal year in which the Executive's employment
terminates.
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(c) Upon application of the Executive (or Executive's Beneficiary if
Executive is deceased), the Corporation may, if determined by the
Committee in its absolute discretion, and upon such terms and
conditions as the Committee determines, pay Executive the amount
credited to the Account in smaller installments or in a lump sum or
other basis.
(d) "Annual Installment Method" shall be an annual installment payment
over the number of years selected by the Executive, not to exceed 10.
In each case, the Account balance of the Executive shall be calculated
as of the close of the fiscal year commencing with the close of the
fiscal year after the executive terminates employment. Each annual
installment, regardless of the method selected, shall be payable
within 60 days after such date. The alternative methods available are
as follows:
(1) Fractional Method. The annual installment shall be calculated by
multiplying this balance by a fraction, the numerator of which is
one, and the denominator of which is the remaining number of
annual payments due the Executive. By way of example, if the
Executive elects a 10 year Annual Installment Method, the first
payment shall be 1/10 of the Account balance. The following year,
the payment shall be 1/9 of the Account balance.
(2) Percentage or Fixed Dollar Method. The annual installment shall
be calculated by multiplying this balance in the case of the
percentage method, by the percentage selected by the Executive
and paying out the resulting amount, or in the case of the fixed
dollar method, by paying out the fixed dollar amount selected by
the Executive, for the number of years selected by the Executive.
However, in the event the dollar amount selected is more than the
Account balance in any given year, the entire Account balance
will be distributed. Further, regardless of the method selected
by the Executive, the final installment payment will include 100%
of the then remaining Account balance.
(e) "Election Form" shall mean the form established from time to time by
the Committee that Executive completes, signs and returns to the
Committee to make an election under the Plan. To the extent authorized
by the Committee, such form may be electronic or set forth in some
other media and need not be signed by the Executive.
5. DISTRIBUTION TO BENEFICIARY OR ESTATE OF EXECUTIVE
(a) In the event of the Executive's death, annual distributions will be
made to the Executive's Beneficiary as follows:
(1) If the Executive dies prior to termination of employment, the
distributions will be in the same annual amounts and for the same
number of years as the distribution would have been received had
the Executive terminated
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employment on the date of death and lived for the shorter of the
term, if any, in effect under 4(a) or 4(b), whichever is
applicable, or the term permitted under 4(c);
(2) If the Executive dies after employment has terminated, the
distributions will be in the same annual amounts as were being
made or were distributable at the date of death for the remaining
period that distributions would have been made had the Executive
lived.
(3) Upon application of the Executive's beneficiary, the Corporation
may, if determined by the Committee in its absolute discretion,
and upon such terms and conditions as the Committee determines,
pay Executive's beneficiary the amount credited to the account in
smaller installments or in a lump sum or other basis.
(b) The term "Beneficiary" as used herein includes the plural and means
any person(s), including corporate or individual beneficiary(s),
designated by Executive in a written instrument in a form acceptable
to and filed with the Corporation or by specific appointment in
Executive's will referring to this Agreement. Executive may designate
a primary beneficiary and a contingent beneficiary, provided, however,
that the Corporation may reject any such instrument tendered for
filing if it contains successive beneficiaries or contingencies
unacceptable to it. In the absence of an acceptable designation or if
the Beneficiary so designated predeceases Executive, the payments
shall be paid to Executive's estate. If all Beneficiaries who survive
Executive shall die before receiving the full amounts payable
hereunder, then the payments shall be paid to the estate of the
Beneficiary last to die. The Corporation shall not be charged with
notice of the appointment of a personal representative of Executive
until it shall have received a certified copy of the appointment.
6. GENERAL PROVISIONS
(a) This Agreement shall not be subject to termination, modification or
amendment by the Corporation with respect to any rights which have
accrued hereunder, the Corporation reserving the right, however, to
terminate, modify or amend this Agreement effective prospectively as
of the first day of any fiscal year upon not less than 15 days prior
written notice to Executive.
(b) The Corporation shall have the right to assign all of its right, title
and obligation in and under this Agreement upon a merger or
consolidation in which the Corporation is not the surviving entity or
to the purchaser of substantially its entire business or assets or the
business or assets pertaining to a major product line, provided such
assignee or purchaser assumes and agrees to perform after the
effective date of such assignment all of the terms, conditions and
provisions imposed by this Agreement upon the Corporation. Upon such
assignment, all of the rights, as well as all obligations, of the
Corporation under this Agreement shall thereupon cease and terminate.
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(c) Any action to be taken by the Corporation under the provisions of this
Agreement which is not the responsibility of the Committee under this
Agreement shall require the affirmative vote of the majority of the
Board of Directors.
(d) Neither Executive nor Executive's Beneficiary or estate shall have
power to transfer, assign, anticipate, mortgage or otherwise encumber
any rights or any amounts payable hereunder; nor shall any such rights
or payments be subject to seizure for the payment of any debts,
judgments, alimony, or separate maintenance, or be transferable by
operation of law in event of bankruptcy, insolvency, or otherwise.
(e) The Corporation will withhold any necessary amounts from the
distribution to satisfy its Federal and State withholding tax
obligations as a result of the distribution or from other amounts paid
to such individual by the Corporation. Further, to the extent required
by law, FICA taxes may be withheld from amounts deferred hereunder,
thereby reducing the amount of the deferral to the extent not withheld
from other amounts paid to the Executive by the Corporation.
(f) This Agreement shall not supersede any other service, retainer, or
employment contract, whether oral or in writing, between the
Corporation and Executive, nor affect or impair the rights and
obligations of the Corporation and Executive, respectively, under any
other contract, arrangement, or voluntary pension, profit-sharing or
other compensation plan of the Corporation, and the benefits and
payments under this Agreement shall be in addition to any and all of
Executive's benefits to which he may be entitled under any other such
contract, arrangement or voluntary plan. No amounts credited to
Executive hereunder and no amounts paid hereunder will be taken into
account as wages, salary, base pay or any other type of compensation
when determining the amount of any payment or allocation or for any
other purpose, under any other qualified or non-qualified pension or
profit sharing plan of the Corporation, except as otherwise may be
specifically provided by such plan. Nothing contained herein shall
impose any obligation on the Corporation to continue the tenure or
employment of Executive.
(g) The right of Executive to receive payment hereunder shall be an
unsecured claim against the general assets of the Corporation, and no
provisions contained herein, nor any action taken hereunder shall be
construed to give any individual at any time a security interest in
any asset of the Corporation, of any affiliated Corporation, or of the
stockholders of the Corporation. The liabilities of the Corporation to
Executive hereunder shall be those of a debtor pursuant to such
contractual obligations as are created hereunder and to the extent any
person acquires a right to receive payment from the Corporation
hereunder, such right shall be no greater than the right of any
unsecured general creditor of the Corporation.
The Corporation may establish a grantor trust (but shall not be
required to do so) to which shall be contributed (subject to the
claims of the general creditors of the Corporation) the amounts
credited to the Account. If a grantor trust is so
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established, payment by the trust of the amounts due Executive or his
Beneficiary hereunder shall be considered a payment by the Employer
for purposes of this Agreement.
(h) If the scheduled payments under this Agreement would result in
disallowance of any portion of the Corporation's deduction therefor
under Section 162(m) of the Code, the payments shall be limited to the
amount which is deductible, with the balance to be paid as soon as
deductible by the Corporation. The Executive shall be permitted to
continue to make investment elections with respect to the
undistributed portion of the Executive's Account.
(i) This Agreement shall be administered by the Compensation Committee of
the Board of Directors of the Corporation. The Committee shall have
all authority that may be appropriate for administering the Agreement,
including the authority to adopt rules and regulations for
implementing, amending and carrying out the Agreement, interpreting
the provisions of the Agreement and the entitlement to benefits
hereunder of Executive or Executive's Beneficiary.
The Committee shall have full and complete discretionary authority to
determine eligibility for benefits under the Agreement, to construe
the terms of the Agreement and to decide any matter presented through
the claims procedure. Any final determination by the Committee shall
be binding on all parties. If challenged in court, such determination
shall not be subject to de novo review.
If Executive is a member of the Committee, Executive may not vote or
decide upon any matter relating to his rights hereunder. Decisions
shall be made by remaining Committee or Board members even if there is
no quorum under normal Committee or Board rules.
(j) This Agreement is intended to be part of an unfunded arrangement
maintained by the Corporation primarily for the purpose of providing
deferred compensation for a select group of management or highly
compensated employees, as described in Section 201(2), Section
301(a)(3), Section 401(a)(1) and Section 4021(b)(6) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
(k) If the Executive or the Executive's Beneficiary (hereinafter referred
to as "claimant") believes claimant is being denied any benefit to
which claimant is entitled under this Plan for any reason, claimant
may file a written claim with the Committee. The Committee shall
review the claim and notify the claimant of its decision within 90
days of receipt of such claim, unless the claimant receives written
notice prior to the end of the 90 day period stating that special
circumstances require an extension of the time for decision. The
Committee's decision shall be in writing, sent by first class mail to
the claimant's last known address, and if a denial of the claim, shall
contain the specific reasons for the denial, reference to pertinent
provisions of the Agreement on which the denial is based, a
description of any additional information or material necessary to
perfect the claim, an explanation of the claims review procedure, and
a statement of the
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individual's right to bring a civil action under ERISA Section 502(a)
if the claim is denied upon review.
A claimant is entitled to request the entire Committee to review any
denial by written request to the Committee within 60 days of receipt
of the denial. Absent a request for review within the 60-day period,
the claim will be deemed to be conclusively denied. The Committee
shall afford the claimant or claimant's authorized representative the
opportunity to review all pertinent documents and submit issues and
comments in writing and shall render a review decision in writing, all
within 60 days after receipt of a request for review (provided that in
special circumstances the Committee may extend the time for decision
by not more than 60 days upon written notice to the claimant). The
Committee's review decision shall contain specific reasons for the
decision and reference to the pertinent provisions of the Plan, a
statement that the claimant is entitled to receive, upon request and
free of charge, reasonable access to, and copies of, all documents,
records, and other information relevant to the claimant's claim for
benefits and a statement of the claimant's right to bring an action
under Section 502(a) of ERISA.
(l) This Plan shall be construed in accordance with the laws of the State
of Wisconsin to the extent not preempted by the provisions of the
("ERISA") or other federal law.
(m) Notwithstanding any other provisions of this Agreement to the
contrary, the Committee may direct payment of Executive's Account
before it otherwise would be payable, if based on notification from
the Internal Revenue Service or a review by the Committee in light of
Internal Revenue Service guidance, the Committee determines that
Executive has or will recognize income for federal income tax purposes
with respect to amounts that are or will be payable hereunder before
they are to be paid. Further, the Committee may direct payment of
Executive's Account before it otherwise would be payable and may
terminate this Agreement if, based on notification from the Department
of Labor or a review by the Committee in light of Department of Labor
guidance, the Committee determines that this arrangement does not
qualify under paragraph (j) above. In the case of either such event,
the Committee shall also have the right, in its sole discretion, to
(i) terminate any deferral election the Executive has made for the
remainder of the year in which the Executive's status changes and (ii)
prevent the Executive from making future deferral elections.
(n) Any notice or filing required or permitted to be given to the
Committee hereunder shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, to the
address below:
Corporate Treasurer
Brady Corporation
P.O. Box 571
Milwaukee, WI 53201-0571
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Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification.
Any notice or filing required or permitted to be given to Executive
hereunder shall be sufficient if in writing and hand-delivered, or
sent by mail, to the last known address of the Executive.
(o) If the Committee determines in its discretion that a benefit hereunder
is to be paid to a minor, a person declared incompetent or to a person
incapable of handling the disposition of that person's property, the
Committee may direct payment of such benefit to the guardian, legal
representative or person having the care and custody of such minor,
incompetent or incapable person. The Committee may require proof of
minority, incompetence, incapacity or guardianship, as it may deem
appropriate prior to distribution of the benefit. Any payment of a
benefit shall be a payment for the account of the Executive and the
Executive's Beneficiary, as the case may be, and shall be a complete
discharge of any liability hereunder for such payment amount.
(p) The Committee is authorized to make any payments directed by court
order in any action in which the Corporation or the Committee has been
named as a party. In addition, if a court determines that a spouse or
former spouse of Executive has an interest in the Executive's benefits
hereunder in connection with a property settlement or otherwise, the
Committee, in its sole discretion, shall have the right,
notwithstanding any election made by Executive, to immediately
distribute the spouse's or former spouse's interest in the Executive's
benefits hereunder to that spouse or former spouse.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be signed
by its Officers thereunto duly authorized and its corporate seal to be hereunto
affixed, and Executive has hereunto set his hand and seal as of the day and year
first above written.
BRADY CORPORATION
By: By: (SEAL)
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Executive
Title:
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Attest:
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Title:
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