Exhibit 99
BRADY CORPORATION RESTORATION PLAN
RESTATED EFFECTIVE AS OF JANUARY 1, 2005
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TABLE OF CONTENTS
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ARTICLE I INTRODUCTION ............................................... 1
1.1 Establishment and Effective Date ........................... 1
1.2 Purpose .................................................... 1
1.3 Section 409A ............................................... 1
ARTICLE II DEFINITIONS ................................................ 2
2.1 Account .................................................... 2
2.2 Additional Employer Contribution ........................... 2
2.3 Additional Matching Contribution ........................... 2
2.4 Affiliate .................................................. 2
2.5 Beneficiary ................................................ 2
2.6 Board ...................................................... 2
2.7 Code ....................................................... 2
2.8 Committee .................................................. 2
2.9 Compensation ............................................... 2
2.10 Elective Deferral .......................................... 3
2.11 Elective Deferral Account .................................. 3
2.12 Eligible Employee .......................................... 3
2.13 Employee ................................................... 3
2.14 Employer ................................................... 3
2.15 Employer Contribution ...................................... 3
2.16 Employer Contribution Account .............................. 3
2.17 Excess Compensation ........................................ 3
2.18 Matching Contribution ...................................... 3
2.19 Matching Contribution Account .............................. 3
2.20 Participant ................................................ 3
2.21 Plan ....................................................... 3
2.22 Plan Year .................................................. 3
2.23 Qualified 401(k) Plan ...................................... 3
2.24 Separation from Service .................................... 3
2.25 Specified Employee ......................................... 4
2.26 Unforeseeable Emergency .................................... 5
ARTICLE III PARTICIPATION .............................................. 7
3.1 Eligibility to Participate ................................. 7
3.2 Continuation of Eligibility ................................ 7
ARTICLE IV DEFERRALS .................................................. 8
4.2 Additional Rules Governing Deferral Elections .............. 8
4.3 Matching Contribution ...................................... 9
4.4 Employer Contribution ...................................... 9
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4.5 Additional Matching Contribution ........................... 9
4.6 Additional Employer Contribution ........................... 9
ARTICLE V ACCOUNTS AND CREDITS ....................................... 10
5.1 Credits to Accounts ........................................ 10
5.2 No Funding ................................................. 10
5.3 Deemed Investment of Accounts .............................. 10
5.4 Reports to Participants .................................... 11
ARTICLE VI VESTING .................................................... 12
ARTICLE VII MANNER AND TIMING OF DISTRIBUTION .......................... 13
7.1 Payment of Benefits ........................................ 13
7.2 Payment Election ........................................... 14
7.3 Financial Hardship ......................................... 15
7.4 Delayed Distribution ....................................... 15
7.5 Inclusion in Income Under Section 409A ..................... 16
7.6 Domestic Relations Order ................................... 16
7.7 De Minimis Amounts ......................................... 17
ARTICLE VIII PLAN OPERATION AND ADMINISTRATION .......................... 18
8.1 Administrator .............................................. 18
8.2 Committee .................................................. 18
8.3 Authority to Act ........................................... 18
8.4 Information from Participants .............................. 18
8.5 Committee Discretion ....................................... 18
8.6 Committee Members' Conflict of Interest .................... 19
8.7 Governing Law .............................................. 19
8.8 Expenses ................................................... 19
8.9 Minor or Incompetent Payees ................................ 19
8.10 Withholding ................................................ 19
8.11 Indemnification ............................................ 19
ARTICLE IX .............................................................. 21
9.1 Claims ..................................................... 21
9.2 Review ..................................................... 21
9.3 Disability ................................................. 22
ARTICLE X ............................................................... 23
ARTICLE XI .............................................................. 24
11.1 Headings ................................................... 24
11.2 No Contract of Employment .................................. 24
11.3 Rights of Participants and Beneficiaries ................... 24
11.4 Nonalienation of Benefits .................................. 24
11.5 Tax Treatment .............................................. 24
11.6 Other Plans and Agreements ................................. 24
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11.7 Number and Gender .......................................... 25
11.8 Plan Provisions Controlling ................................ 25
11.9 Severability ............................................... 25
11.10 Evidence Conclusive ........................................ 25
11.11 Status of Plan Under ERISA ................................. 25
11.12 Name and Address Changes ................................... 26
11.13 Assignability by Corporation ............................... 26
11.14 Special rule for 2005-2006 ................................. 26
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ARTICLE I
INTRODUCTION
1.1 ESTABLISHMENT AND EFFECTIVE DATE
Brady Corporation established the Brady Corporation Restoration Plan
effective as of January 1, 2000, and it is hereby restated effective as of
January 1, 2005.
1.2 PURPOSE
The Plan is intended to restore to key management employees of Brady and
its affiliates income deferral opportunities and employer contributions
they would have had under the Company's tax qualified Brady Matched 401(k)
Plan and Brady Funded Retirement Plan but for the limitations of the
Internal Revenue Code of 1986, as amended and to provide certain additional
benefits.
1.3 SECTION 409A
This document is intended to comply with the provisions of Section 409A of
the Internal Revenue Code and shall be interpreted accordingly. If any
provision or term of this document would be prohibited by or inconsistent
with the requirements of Section 409A of the Code, then such provision or
term shall be deemed to be reformed to comply with Section 409A of the
Code.
ARTICLE II
DEFINITIONS
The following terms, when used in the Plan with initial capital letters, shall
have the meaning given to them in this Article.
2.1 ACCOUNT shall mean the account maintained to record a Participant's
interest in the Plan and shall be composed of the following subaccounts:
Elective Deferral Account, Matching Contribution Account and Employer
Contribution Account.
2.2 ADDITIONAL EMPLOYER CONTRIBUTION shall mean the amount credited to a
Participant pursuant to Section 4.6.
2.3 ADDITIONAL MATCHING CONTRIBUTION shall mean the amount credited to a
Participant pursuant to Section 4.5.
2.4 AFFILIATE shall mean each incorporated or unincorporated trade or business
in which Brady Corporation directly or indirectly owns, as applicable,
eighty percent (80%) of the voting stock or eighty percent (80%) of the
capital or profits interest.
2.5 BENEFICIARY means the person, persons, or entity designated by the
Participant to receive any benefits payable under the Plan on or after the
Participant's death. Each Participant shall be permitted to name, change or
revoke the Participant's designation of a Beneficiary in writing on a form
and in the manner prescribed by the Employer; provided, however, that the
designation on file with the Employer at the time of the Participant's
death shall be controlling. Should a Participant fail to make a valid
Beneficiary designation or leave no named Beneficiary surviving, any
benefits due shall be paid to such Participant's spouse, if living; or if
not living, then any benefits due shall be paid to such Participant's
estate. A Participant may designate a primary beneficiary and a contingent
beneficiary; provided, however, that the Employer may reject any such
instrument tendered for filing if it contains successive beneficiaries or
contingencies unacceptable to it. If all Beneficiaries who survive the
Participant shall die before receiving the full amounts payable hereunder,
then the payments shall be paid to the estate of the Beneficiary last to
die.
2.6 BOARD shall mean the Board of Directors of Brady Corporation.
2.7 CODE shall mean the Internal Revenue Code of 1986, as amended, and any
regulations issued thereunder.
2.8 COMMITTEE shall mean the Compensation Committee of the Board.
2.9 COMPENSATION shall mean the total compensation payable to a Participant by
the Employer for any period (prior to elective deferrals under this Plan or
any other plan or deferral agreement) required to be reported as wages on
the Employee's Form W-2 for income tax purposes, but reduced by all of the
following items (even if includable in
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gross income): reimbursements or other expense allowances, fringe benefits
(cash and non-cash), moving expenses and welfare benefits.
2.10 ELECTIVE DEFERRAL shall mean the portion of a Participant's Compensation
that is reduced and credited to his Elective Deferral Account pursuant to
his election under Section 4.1.
2.11 ELECTIVE DEFERRAL ACCOUNT shall mean the account maintained to record a
Participant's interest in the Plan attributable to his Elective Deferrals.
2.12 ELIGIBLE EMPLOYEE shall mean an Employee eligible under Section 3.1 and
3.2(a).
2.13 EMPLOYEE shall mean an employee of the Employer.
2.14 EMPLOYER shall mean Brady Corporation and any Affiliate that adopts the
Plan with the approval of the Board.
2.15 EMPLOYER CONTRIBUTION shall mean the amount credited to a Participant
pursuant to Section 4.4.
2.16 EMPLOYER CONTRIBUTION ACCOUNT shall mean the account maintained to record a
Participant's interest in the Plan attributable to Employer Contributions
and Additional Employer Contributions on his behalf.
2.17 EXCESS COMPENSATION shall mean the portion of Compensation earned by a
Participant during a Plan Year after the date the Compensation he has
earned during the Plan Year equals the limit in Code Section 401(a)(17) for
such Plan Year.
2.18 MATCHING CONTRIBUTION shall mean the amount credited to a Participant
pursuant to Section 4.3.
2.19 MATCHING CONTRIBUTION ACCOUNT shall mean the account maintained to record a
Participant's interest in the Plan attributable to Matching Contributions
and Additional Matching Contributions on his behalf.
2.20 PARTICIPANT shall mean (i) an Eligible Employee under Section 3.1 and
3.2(a) or (ii) a former Eligible Employee who has an Account under the
Plan.
2.21 PLAN shall mean the Brady Corporation Restoration Plan, as set forth in
this document, as the same may be amended or restated from time to time.
2.22 PLAN YEAR shall mean the calendar year.
2.23 QUALIFIED 401(K) PLAN shall mean the Brady Matched 401(k) Plan (or any
successor plan thereto qualified under Code Sections 401(a) and 401(k)).
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2.24 SEPARATION FROM SERVICE means a termination of employment with the Employer
and all affiliates of the Employer for any reason (including retirement,
death, disability or other termination) subject to the following:
(a) The employment relationship is treated as continuing intact while the
individual is on military leave, sick leave, or other bona fide leave
of absence (such as temporary employment by the government) if the
period of such leave does not exceed six months, or if longer, so long
as the individual's right to reemployment with the employer is
provided either by statute or by contract. If the period of leave
exceeds six months and the individual's right to reemployment is not
provided either by statute or by contract, the employment relationship
is deemed to terminate on the first date immediately following such
six-month period.
(b) Whether a termination of employment has occurred is determined based
on the facts and circumstances. Where an employee either actually or
purportedly continues in the capacity of an employee, such as through
the execution of an employment agreement under which the employee
agrees to be available to perform services if requested, but the facts
and circumstances indicate that the employer and the employee did not
intend for the employee to provide more than insignificant services
for the employer, an employee will be treated as having a Separation
from Service. For purposes of the preceding sentence, an employer and
employee will not be treated as having intended for the employee to
provide insignificant services where the employee continues to provide
services as an employee at an annual rate that is at least equal to 20
percent of the services rendered, on average, during the immediately
preceding three full calendar years of employment (or, if employed
less than three years, such lesser period). Where an employee
continues to provide services to a previous employer in a capacity
other than as an employee, a Separation from Service will not be
deemed to have occurred if the former employee is providing services
at an annual rate that is 50 percent or more of the services rendered,
on average, during the immediately preceding three full calendar years
of employment (or if employed less than three years, such lesser
period) and the annual remuneration for such services is 50 percent or
more of the annual remuneration earned during the final three full
calendar years of employment (or if less, such lesser period). For
purposes of this definition, the annual rate of providing services is
determined based upon the measurement used to determine the
individual's base compensation (for example, amounts of time required
to earn salary, hourly wages, or payments for specific projects).
2.25 SPECIFIED EMPLOYEE
(a) In General. "Specified Employee" means a "key employee" as defined in
Code Section 416(i) (disregarding Section 416(i)(5)), i.e., an
employee who at any time during the 12 month period ending on an
identification date is an officer of the Employer or one of its
affiliates having an annual compensation greater than $130,000, a 5%
owner of the Employer or one of its affiliates or a 1% owner of
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the Employer or one of its affiliates having compensation of more than
$150,000. The $130,000 amount described in the preceding sentence
shall be adjusted for cost of living increases in such amounts and at
such times as specified by the Internal Revenue Service. Further, no
more than 50 employees (or, if lesser, the greater of 3 or 10% of the
employees) shall be treated as officers. The foregoing definition
shall be interpreted at all times in a manner consistent with such
regulations as may be adopted from time to time by the Internal
Revenue Service for purposes of applying the key employee definition
of Section 416(i) to the requirements of Code Section 409A. If a
person is a key employee as of an identification date, the person is
treated as a Specified Employee for the 12-month period beginning on
the first day of the fourth month following the identification date.
The "identification date" is December 31.
(b) Spinoffs and Mergers. Where a new corporation or entity (new
corporation) is established as part of a corporate division governed
by Code Section 355 from a corporation that is publicly traded on an
established securities market or otherwise (old corporation), any
employee of the new corporation who was a key employee of the old
corporation immediately prior to the spinoff is a key employee of the
new corporation until the end of the 12-month period beginning on the
first day of the fourth month following the old corporation's last
identification date preceding the spinoff transaction. Where two
corporations (pre-merger corporations) are merged or become part of
the same controlled group of corporations, any employee of the merged
corporation who was a key employee of either of the pre-merger
corporations immediately before the merger is a key employee of the
merged corporation until the first day of the fourth month after the
identification date of the merged corporation next following the
merger.
(c) Nonresident alien employees. For purposes of determining key
employees, all employees are generally included, including employees
who are nonresident aliens, as defined in IRS Regulation Section
1.409A-1(j). However, for purposes of applying the delay in
distribution rule of Section 7.1(b) to Specified Employees, all
employees that are nonresident aliens during the entire 12-month
period ending with the relevant identification date are excluded for
purposes of determining which employees are key employees; provided
that the Employer shall apply such exclusion with respect to all
arrangements of the Employer, and any change to include such
nonresident alien employees may not be effective for a period of 12
months.
2.26 UNFORESEEABLE EMERGENCY means a severe financial hardship to a Participant
resulting from an illness or accident of the Participant or the
Participant's spouse or dependent (as defined in Section 152(a) of the
Code), loss of the Participant's property due to casualty (including the
need to rebuild a home following damage to a home not otherwise covered by
insurance, for example, as a result of a natural disaster), or other
similar extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant. For example, the imminent
foreclosure of or eviction from the Participant's primary residence may
constitute an Unforeseeable Emergency. In addition, the need to
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pay for medical expenses, including non-refundable deductibles, as well as
for the costs of prescription drug medication, may constitute an
Unforeseeable Emergency. Finally, the need to pay for funeral expenses of a
spouse or a dependent (as defined in Code section 152(a)) may also
constitute an Unforeseeable Emergency. Except as otherwise provided above,
the purchase of a home and the payment of college tuition are not
Unforeseeable Emergencies. Whether a Participant is faced with an
Unforeseeable Emergency is to be determined based on the relevant facts and
circumstances of each case.
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ARTICLE III
PARTICIPATION
3.1 ELIGIBILITY TO PARTICIPATE
An Employee shall be eligible to elect deferrals and receive Employer
contributions in accordance with the provisions of Article IV beginning on
the date the Committee advises the Employee he is eligible because the
Committee in its discretion has determined that the Employee may reasonably
be anticipated to earn Compensation from the Employer in excess of the
limit described in Code Section 401(a)(17).
3.2 CONTINUATION OF ELIGIBILITY
(a) An Employee shall continue to be eligible to elect deferrals and
receive Employer contributions in accordance with the provisions of
Article IV only for so long as he continues in employment with the
Employer.
(b) An individual who has a Separation from Service shall cease to be
eligible and shall again be eligible to elect deferrals and receive
Employer contributions in accordance with the provisions of Article IV
only in accordance with Section 3.1.
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ARTICLE IV
DEFERRALS
4.1 ELECTIVE DEFERRALS
(a) An Eligible Employee may elect an Elective Deferral of up to four
percent (4%) of his Excess Compensation for services performed during
a Plan Year by completing and filing such forms as may be required by
the Employer.
(b) An Eligible Employee's Elective Deferral election under paragraph (a)
of this Section shall apply to and reduce his Excess Compensation,
i.e., the portion of his Compensation earned during a Plan Year after
the date the Compensation he has earned during the Plan Year equals
the limit in Code Section 401(a)(17) for such Plan Year.
4.2 ADDITIONAL RULES GOVERNING DEFERRAL ELECTIONS
(a) An Eligible Employee's election under Section 4.1 shall (i) if made
within the thirty (30) day period following the date he is first
eligible to participate in the Plan, be effective for that portion of
his Excess Compensation to be paid for services performed subsequent
to the election, and (ii) if not made within said thirty (30) day
period, be effective for Excess Compensation paid for services
performed during the Plan Year following the date the election is
received by the Employer, or its designee.
(b) An Eligible Employee's election for a Plan Year under this Article IV
shall be irrevocable after the last day upon which such election is
permitted to be made for such Plan Year and shall continue in effect
for subsequent Plan Years until changed or revoked pursuant to
paragraph (c) below.
(c) An Eligible Employee may change or revoke his election which would
otherwise be effective for a Plan Year by completing and filing such
forms as may be required by the Employer by the last day of the
preceding Plan Year.
(d) Notwithstanding paragraphs (a), (b) and (c), in the event that a
Participant makes application for a hardship distribution under
Section 7.3 and the Administrator determines that an Unforeseeable
Emergency exists, his deferral election otherwise in effect under this
Article IV shall immediately terminate upon such determination. To
resume deferrals thereafter, a Participant must make an election
satisfying the provisions of paragraph (c).
(e) Notwithstanding paragraphs (a), (b) and (c), if an Eligible Employee
receives a withdrawal of his elective contributions under the
Qualified 401(k) Plan or any other 401(k) plan (i.e., a qualified cash
or deferred arrangement) of the Employer (or any affiliate treated
under the Code as a single employer with the Employer
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for purposes of the 401(k) plan) due to financial hardship pursuant to
IRS Regulation Section 1.40(k)-1(d)(3) or its successor, his deferral
election under this Section 4.1 shall be revoked automatically
(effective on the date such hardship withdrawal is paid). In addition,
such Eligible Employee shall not be eligible to have another deferral
election in effect until the first day of the Plan Year which begins
after a six month suspension period that begins on the first day of
the calendar month following the date the hardship withdrawal is paid.
Such Eligible Employee may then resume deferrals by making an
election, pursuant to the rules of paragraph (c) above, effective for
any Plan Year which begins after the end of such suspension period.
4.3 MATCHING CONTRIBUTION
An Eligible Employee shall be credited with a Matching Contribution for a
Plan Year in an amount equal to the amount of the Elective Deferral made on
the Eligible Employee's behalf for the Plan Year.
4.4 EMPLOYER CONTRIBUTION
An Eligible Employee shall be credited with an Employer Contribution for a
Plan Year in an amount equal to 4% of the Eligible Employee's Excess
Compensation for the Plan Year; provided the Eligible Employee remains in
the Employer's employ on the last day of such Plan Year.
4.5 ADDITIONAL MATCHING CONTRIBUTION
There shall be credited to the Participant's Matching Contribution Account
for a Plan Year an amount in addition to amounts credited under Section 4.3
for the same year. The amount credited under this Section 4.5 shall be
equal to .04(X-(Y-Z)) where X is the limit in Code Section 401(a)(17) for
such Plan Year, Y is the Participant's Compensation for the Plan Year as
defined in Section 2.9 and Z is the amount of elective deferrals for the
Plan Year under all nonqualified deferred compensation plans and agreements
(including this Plan) of the Employer covering the Participant. No amount
shall be credited under this Section if X does not exceed the remainder of
Y minus Z.
4.6 ADDITIONAL EMPLOYER CONTRIBUTION
As of the last day of a Plan Year, there shall be credited to the
Participant's Employer Contribution Account an amount in addition to
amounts credited under Section 4.4 for the same year. The amount credited
under this Section 4.6 shall be equal to .04(X-(Y-Z)) where X is the limit
in Code Section 401(a)(17) for such Plan Year, Y is the Participant's
Compensation for the Plan Year as defined in Section 2.9 and Z is the
amount of elective deferrals for the Plan Year under all nonqualified
deferred compensation plans and agreements (other than this Plan) of the
Employer covering the Participant. No amount shall be credited under this
Section if X does not exceed the remainder of Y minus Z."
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ARTICLE V
ACCOUNTS AND CREDITS
5.1 CREDITS TO ACCOUNTS
(a) An amount equal to the amount by which a Participant's Compensation
has been reduced pursuant to his deferral election under Section 4.1
shall be credited to his Elective Deferral Account.
(b) Matching Contributions and Additional Matching Contributions on a
Participant's behalf shall be credited to his Matching Contribution
Account.
(c) Employer Contributions and Additional Employer Contributions on a
Participant's behalf shall be credited to his Employer Contribution
Account.
(d) Said credits shall be made at times established by the Committee but
no later than as of the last day of the Plan Year to which they
relate.
(e) Each Account shall also be credited or charged with deemed earnings
and losses as if it were invested in accordance with Section 5.3.
5.2 NO FUNDING
(a) The right of any individual to receive payment under the provisions of
this Plan shall be an unsecured claim against the general assets of
the Employer, and no provisions contained in this Plan, nor any action
taken pursuant to this Plan, shall be construed to give any individual
at any time a security interest in any asset of the Employer, of any
affiliated company, or of the stockholders of the Employer. The
liabilities of the Employer to any individual pursuant to this Plan
shall be those of a debtor pursuant to such contractual obligations as
are created by this Plan and, to the extent any person acquires a
right to receive payment from the Employer under this Plan, such right
shall be no greater than the right of any unsecured general creditor
of the Employer.
(b) The Employer 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 Employer) the amounts credited to the
Accounts. If a grantor trust is so established, except as specifically
provided otherwise by the terms of the trust agreement for the trust,
payment by the trust of the amounts due to a Participant or his
Beneficiary under the Plan shall be considered a payment by the
Employer for purposes of the Plan.
5.3 DEEMED INVESTMENT OF ACCOUNTS
(a) The Committee shall select one or more investment funds for the deemed
investment of Accounts. However, in no event shall the Employer be
required to
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make any such investment in the investment funds, and to the extent
such investments are made, such investments shall remain an asset of
the Employer subject to the claims of its general creditors.
(b) On the date credited to the respective Account, a Participant's
Elective Deferrals, Matching Contributions, Additional Matching
Contributions, Employer Contributions and Additional Employer
Contributions shall be deemed to be invested in one or more of the
investment funds designated by the Participant for such deemed
investment. Once made, the Participant's investment designation shall
continue in effect for all future Elective Deferrals, Matching
Contributions, Additional Matching Contributions, Employer
Contributions and Additional Employer Contributions until changed by
the Participant. Any such change may be elected by the Participant at
the times established by the Committee, which shall be no less
frequently than quarterly, and shall be effective only for Elective
Deferrals, Matching Contributions, Additional Matching Contributions,
Employer Contributions and Additional Employer Contributions credited
from and after its effective date.
(c) A Participant may elect to reallocate the balance of his Accounts
deemed to be invested in the investment funds under this Section at
the times established by the Committee, which shall be no less
frequently quarterly.
(d) All elections and designations under this Section shall be made in
accordance with procedures prescribed by the Committee. The Committee
may prescribe uniform percentages for such elections and designations.
(e) Any distribution of a Participant's Account which is not a
distribution of the entire account shall be taken pro rata from each
of the investment funds in which the account is deemed to be invested.
5.4 REPORTS TO PARTICIPANTS
The Employer shall provide annual reports to each Participant showing (a)
the value of the Account as of the most recent December 31st (b) the amount
of contributions made by the Employer for the year ending on such date and
(c) the amount of any investment earnings or loss credited or debited to
the Participant's Account.
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ARTICLE VI
VESTING
A Participant shall be fully vested and nonforfeitable at all times in all
of his Accounts herein.
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ARTICLE VII
MANNER AND TIMING OF DISTRIBUTION
7.1 PAYMENT OF BENEFITS
(a) After a Participant's Separation from Service the Participant's
Account shall be paid to the Participant (or in the event of the
Participant's death, to the Participant's Beneficiary). Payment shall
be made in one of the following forms as specified in the
Participant's payment election pursuant to Section 7.2:
(i) Single Sum. A single sum distribution of the value of the balance
of the Account on the first day of the second month following the
Participant's Separation from Service; or
(ii) Installments. This subparagraph (ii) shall only be applicable
after April 30, 2006. The value of the balance of the Account
shall be paid in annual installments with the first of such
installment to be paid on the first day of the second month
following the Participant's Separation from Service and with
subsequent annual installments to be paid on an anniversary of
the payment of the first installment. Annual installments shall
be paid in one of the alternative methods specified below over
the number of years selected by the Participant in the payment
election made pursuant to Section 7.2, but not to exceed 10. The
earnings (or losses) provided for in Section 5.1(e) shall
continue to accrue on the balance remaining in the Account during
the period of installment payments. The alternative methods
available are as follows:
(A) Fractional Method. The annual installment shall be
calculated by multiplying the most recent value of the Account by
a fraction, the numerator of which is one, and the denominator of
which is the remaining number of annual payments due the
Participant. By way of example, if the Participant elects a 10
year annual installment method, the first payment shall be
one-tenth (1/10) of the Account balance. The following year, the
payment shall be one-ninth (1/9) of the Account balance.
(B) Percentage or Fixed Dollar Method. The annual
installment shall be calculated by multiplying the most recent
value of the Account, in the case of the percentage method, by
the percentage selected by the Participant 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 Participant
for the number of years selected by the Participant. However, in
the event the dollar amount selected is more than the value of
the Account in any given year, the entire value of the Account
will be distributed. Further, regardless of the method selected
by the Executive,
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the final installment payment will include 100% of the then
remaining Account value.
(b) In the case of a Participant who is a Specified Employee, payment
pursuant to paragraph (a) above shall commence no earlier than the
first day of the seventh month following the Participant's Separation
from Service. This delay in distribution rule does not apply if the
payment is being made as a result of the Participant's death or
disability. For this purpose, "disability" means that the Participant:
(i) is unable to engage in any substantial gainful activity by reason
of any medically determinable or physical or mental impairment
which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, or
(ii) is, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be
expected to last for a continued period of not less than 12
months, receiving income replacement benefits for a period of not
less than three months under an accident and health plan covering
the employees of the Employer or one of its affiliates in which
the Participant is covered.
7.2 PAYMENT ELECTION
An individual who first becomes a Participant at the beginning of a Plan
Year shall, prior to his date of participation, complete a payment election
form specifying the form of payment applicable to such Participant's
Account under the Plan. Absent an actual election by such Participant by
the effective date of participation, the Participant shall be deemed to
have elected the five (5) annual installment payment form. An individual
who first becomes a Participant other than on the first day of a Plan Year
shall, no later than 30 days after the effective date of participation,
complete a payment election form specifying the form of payment applicable
to such Participant's Account. In the event such a Participant does not
make an actual election within such 30 day period, the Participant shall be
deemed to have elected the five (5) annual installment payment form;
provided, however, that if such Participant is already a participant in any
other nonqualified plan or plans sponsored by the Employer of the account
balance type, the most recent payment election with respect to any one of
those plans shall be the payment election form deemed elected under this
Plan regardless of whether the individual elects a different payment
election form during that initial 30 day period. Elections shall be made on
a "payment election form" - the form established from time to time by the
Committee which a Participant 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 provided electronically and, in such case, need
not be signed by the Participant. A Participant may change the form of
payment by completing and filing a new payment election form with the
Committee, and the payment election form on file with the Committee as of
the date of the Participant's Separation from Service shall be controlling.
Notwithstanding the
14
foregoing, a payment election form changing the Participant's form of
payment shall not be effective if the Participant has a Separation from
Service within twelve months after the date on which the election change is
filed with the Committee. Any change in payment method must have the effect
of delaying the commencement of payments to a date which is at least five
(5) years following the initially scheduled commencement date of payment
previously in effect. For purposes of compliance with Code Section 409A, a
series of installment payments is designated as a single payment rather
than a right to a series of separate payments; therefore, a Participant who
has elected (or is deemed to have elected) any option available under
Section 7.1(a)(i) or (ii) may substitute any of the other options for the
option originally selected as long as the foregoing one-year and five year
rules are satisfied. A switch from the percentage method to the fixed
dollar method or vice versa and a switch from either of those methods to
the fractional method or vice versa is considered a substitution of a new
option for the original option for purposes of this rule even if the number
of yearly installments is not changed. The five year delay rule does not
apply if the revised payment method applies only upon the Participant's
death or disability. For this purpose, disability has the same meaning as
in Section 7.1(b). In the event that the Participant's new payment election
would not be effective under the foregoing rules, the payment election
previously in effect shall be controlling.
7.3 FINANCIAL HARDSHIP
A partial or total distribution of the Participant's Account shall be made
prior to Separation from Service upon the Participant's request and a
demonstration by the Participant of severe financial hardship as a result
of an Unforeseeable Emergency. Such distribution shall be made in a single
sum as soon as administratively practicable following the Committee's
determination that the foregoing requirements have been met. In any case, a
distribution due to Unforeseeable Emergency may not be made to the extent
that such emergency is or may be relieved through reimbursement or
compensation from insurance or otherwise, by liquidation of the
Participant's assets, to the extent the liquidation of such assets would
not cause severe financial hardship, or by cessation of deferrals under
Article IV. Distributions because of an Unforeseeable Emergency must be
limited to the amount reasonably necessary to satisfy the emergency need
(which may include amounts necessary to pay any Federal, state, or local
income taxes or penalties reasonably anticipated to result from the
distribution). Determinations of amounts reasonably necessary to satisfy
the emergency need must take into account any additional compensation that
is available because of cancellation of a deferral election under Article
IV upon a payment due to an Unforeseeable Emergency. The payment may be
made from any arrangement in which the Participant participates that
provides for payment upon an Unforeseeable Emergency, provided that the
arrangement under which the payment was made must be designated at the time
of payment.
7.4 DELAYED DISTRIBUTION
(a) A payment otherwise required to be made pursuant to the provisions of
this Article VII shall be delayed if the Employer reasonably
anticipates that the Employer's deduction with respect to such payment
would be limited or
15
eliminated by application of Code Section 162(m); provided, however
that such payment shall be made on the earliest date on which the
Employer anticipates that the deduction of the payment of the amount
will not be limited or eliminated by application of Code Section
162(m). In any event, such payment shall be made no later than the
last day of the calendar year in which the Participant has a
Separation from Service.
(b) A payment otherwise required under this Article VII shall be delayed
if the Employer reasonably anticipates that the making of the payment
will violate a term of a loan agreement to which the Employer is a
party, or other similar contract to which the Employer is a party, and
such violation will cause material harm to the Employer; provided,
however, that payments shall be made on the earliest date on which the
Employer reasonably anticipates that the making of the payment will
not cause such violation, or such violation will not cause material
harm to the Employer, and provided that the facts and circumstances
indicate that the Employer entered into the loan agreement (including
such covenant) or other similar contract for legitimate reasons, and
not to avoid the restrictions on deferral elections and subsequent
deferral elections under Code Section 409A.
(c) A payment otherwise required under this Article VII shall be delayed
if the Employer reasonably anticipates that the making of the payment
will violate federal securities laws or other applicable law;
provided, however, that payments shall nevertheless be made on the
earliest date on which the Employer reasonably anticipates that the
making of the payment will not cause such violation. (The making of a
payment that would cause inclusion in gross income or the
applicability of any penalty provision or other provision of the Code
is not treated as a violation of applicable law.)
(d) A payment otherwise required under this Article VII shall be delayed
upon such other events and conditions as the Internal Revenue Service
may prescribe in generally applicable guidance published in the
Internal Revenue Bulletin.
7.5 INCLUSION IN INCOME UNDER SECTION 409A
Notwithstanding any other provision of this Article VII, in the event this
Plan fails to satisfy the requirements of Code Section 409A and regulations
thereunder with respect to any Participant, there shall be distributed to
such Participant as promptly as possible after the Administrator becomes
aware of such fact of noncompliance such portion of the Participant's
Account balance hereunder as is included in income as a result of the
failure to comply, but no more.
7.6 DOMESTIC RELATIONS ORDER
Notwithstanding any other provision of this Article VII, payments shall be
made from the Account of a Participant in this Plan to such individual or
individuals (other than the
16
Participant) and at such times as are necessary to comply with a domestic
relations order (as defined in Code Section 414(p)(1)(B)).
7.7 DE MINIMIS AMOUNTS
Notwithstanding any other provision of this Article VII hereof, a
Participant's Account balance shall automatically be distributed to the
Participant on or before the later of December 31 of the calendar year in
which occurs the Participant's Separation from Service or the 15th day of
the third month following the Participant's Separation from Service if the
total amount in such Account balance at the time of distribution, when
aggregated with all other amounts payable to the Participant under all
arrangements benefiting the Participant described in IRS Regulations
Section 1.409A-1(c) (or any successor thereto), do not exceed $10,000. The
foregoing lump sum payment shall be made automatically and any other
distribution elections otherwise applicable with respect to the individual
in the absence of this provision shall not apply.
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ARTICLE VIII
PLAN OPERATION AND ADMINISTRATION
8.1 ADMINISTRATOR
The Committee shall be the plan administrator and shall be responsible for
and perform the duties imposed on a plan administrator.
8.2 COMMITTEE
The Committee shall have the power and duty to administer the Plan in
accordance with its terms, including, but not limited to, the following:
(a) to make and enforce such rules and regulations as it may deem
necessary or desirable for the efficient administration of the Plan;
(b) to interpret the Plan, including the right to remedy possible
ambiguities, inconsistencies or omissions;
(c) to decide all questions related to participation in, and payment of
amounts under, the Plan, including all factual questions related
thereto; and
(d) to maintain all necessary records for the administration of the Plan.
8.3 AUTHORITY TO ACT
Brady Corporation or the Committee may authorize one or more of Brady
Corporation's employees, members, representatives or agents, as applicable,
to execute on its behalf instructions or directions to any interested
party, and any such interested party may rely thereupon and the information
contained therein.
8.4 INFORMATION FROM PARTICIPANTS
Each Participant and Beneficiary shall furnish the Committee in the form
prescribed by it and at its request, such personal data, affidavits,
authorizations to obtain information, or other information as the Committee
deems necessary or desirable for the administration of the Plan.
8.5 COMMITTEE DISCRETION
The Committee has full and complete discretionary authority to determine
eligibility for benefits, to construe the terms of the Plan and to decide
any matter presented through the claims review procedure. Any final
determination by the Committee (including claims decisions made pursuant to
Article IX) shall be binding on all parties and afforded the maximum
deference allowed by law. If challenged in court, such determination shall
not be subject to de novo review and shall not be overturned unless proven
to be arbitrary and
18
capricious upon the evidence considered by the Committee at the time of
such determination.
8.6 COMMITTEE MEMBERS' CONFLICT OF INTEREST
A member of the Committee who is covered hereunder may not vote or decide
upon any matter relating solely to himself or vote in any case in which his
individual right to any benefit under the Plan is particularly involved.
Decisions shall be made by remaining Committee or Board members even if
there is no quorum under normal Committee or Board rules.
8.7 GOVERNING LAW
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 Employee
Retirement Income Security Act of 1974, as amended, or other federal law.
8.8 EXPENSES
All expenses and costs incurred in connection with the administration and
operation of the Plan shall be borne by the Employer and/or the Trust.
8.9 MINOR OR INCOMPETENT PAYEES
If a person to whom a benefit is payable is a minor or is otherwise
incompetent by reason of a physical or mental disability, the Committee may
cause the payments due to such person to be made to another person for the
first person's benefit without any responsibility to see to the application
of such payment. Such payments shall operate as a complete discharge of the
obligations to such person under the Plan.
8.10 WITHHOLDING
The Employer shall comply with all applicable tax and governmental
withholding requirements. To the extent required by law, the Employer shall
withhold any taxes required to be withheld by the federal or any state or
local government from payments made hereunder or from any other amounts
paid to a Participant by the Employer. If FICA taxes must be withheld in
connection with amounts credited hereunder before payments are otherwise
due hereunder and if there are no other wages from which to withhold them,
the Employer shall pay such FICA taxes generated by such payment (and taxes
under Code Section 3401 triggered thereby and additional taxes under
Section 3401 attributable to pyramiding of Section 3401 wages and taxes)
but no more and the Participant's Account hereunder shall be reduced by an
amount equal to the payments made by the Employer.
19
8.11 INDEMNIFICATION
Except as otherwise provided by law, neither the Board nor the Committee
nor any individual member of the Board or the Committee, nor the Employer,
nor any officer, shareholder or employee of the Employer shall be liable
for any error of judgment, action or failure to act hereunder or for any
good faith exercise of discretion, excepting only liability for gross
negligence or willful misconduct. Such individuals and entities shall be
indemnified and held harmless by the Employer against any and all claims,
damages, liabilities, costs and expenses (including attorneys' fees)
arising by reason of any good faith error of omission or commission with
respect to any responsibility, duty or action hereunder. Nothing herein
contained shall preclude the Employer from purchasing insurance to cover
potential liability of one or more persons who serve in an administrative
capacity with respect to the Plan.
20
ARTICLE IX
CLAIMS PROCEDURE
9.1 CLAIMS
If the Participant or the Participant's Beneficiary (hereinafter referred
to as a "Claimant") is denied all or a portion of an expected benefit under
the Plan for any reason, he or she may file a claim with the Committee or
its designee. The Committee or its designee shall notify the Claimant
within 60 days of allowance or denial of the claim, unless the Claimant
receives written notice prior to the end of the sixty (60) day period
stating that special circumstances require an extension of the time for
decision and specifying the expected date of decision. The notice of the
such decision shall be in writing, sent by mail to the Claimant's last
known address, and if a denial of the claim, must contain the following
information:
(a) the specific reasons for the denial;
(b) specific reference to pertinent provisions of the Plan on which the
denial is based;
(c) if applicable, a description of any additional information or material
necessary to perfect the claim, an explanation of why such information
or material is necessary, and an explanation of the claims review
procedure; and
(d) a description of the Plan's claims review procedure, including a
statement of the Claimant's right to bring a civil action under
Section 502 of ERISA if the Claimant's claim is denied upon review.
9.2 REVIEW
A Claimant is entitled to request a review of any denial of his claim. The
request for review must be submitted in writing to the Committee within 60
days after receipt of the notice of the denial. The timely filing of such a
request is necessary to preserve any legal recourse which may be available
to the Claimant and, absent the submission of request for review within the
60-day period, the claim will be deemed to be conclusively denied. Upon
submission of a written request for review, the Claimant or his
representative shall be entitled to review all pertinent documents, and to
submit issues and comments in writing for consideration by the Committee.
The Committee shall fully and fairly review the matter and shall consider
all information submitted in the review request, without regard to whether
or not such information was submitted or considered in the initial claim
determination. The Committee shall promptly respond to the Claimant, in
writing, of its decision within 60 days after receipt of the review
request. However, due to special circumstances, if no response has been
provided within the first 60 days, and notice of the need for additional
time has been furnished within such period, the review and response may be
made within the following 60 days. The Committee's decision shall include
specific reasons for the decision, including references to the particular
Plan provisions
21
upon which the decision is based, notification that the Claimant can
receive or review copies of all documents, records and information relevant
to the claim, and information as to the Claimant's right to file suit under
Section 502(a) of ERISA.
9.3 DISABILITY
If a determination of disability for purposes of Section 7.1(b) or 7.2
becomes necessary and if such determination is considered to be with
respect to a claim for benefits based on disability for purposes of 29 CFR
Section 2560.503-1, then the Committee shall adopt and administer a special
procedure for considering such disability claims meeting the requirements
of 29 CFR Section 2560.503-1 for disability benefit claims.
22
ARTICLE X
AMENDMENT AND TERMINATION
Brady Corporation (through its Board of Directors or authorized officers or
employees and/or the Committee) reserves the right to alter or amend the Plan,
or any part thereof, in such manner as it may determine, at any time and for any
reason. Further, the Board of Directors of Brady Corporation reserves the right
to terminate the Plan, at any time and for any reason. Notwithstanding the
foregoing, in no event shall any amendment or termination deprive any
Participant or Beneficiary of any amounts credited to him under this Plan as of
the date of such amendment or termination; provided, however, that Brady
Corporation may prospectively change the manner in which earnings are credited
or discontinue the crediting of earnings and, further, Brady Corporation may
make any amendment it deems necessary or desirable for purposes of compliance
with the requirements of Code Section 409A and regulations thereunder.
If this Plan is terminated, no additional deferrals or contributions shall
be credited to any Participant Account hereunder. Following Plan termination,
Participants' Accounts shall be paid at such time and in such form as provided
under Article VII of the Plan. Notwithstanding the preceding sentence, either at
the time of termination or on a subsequent date Brady Corporation may, in its
discretion, determine to distribute the then existing Account balances of
Participants and beneficiaries and, following such distribution, there shall be
no further obligation to any Participant or beneficiary under this Plan;
provided, however, that the authority granted to Brady Corporation under this
sentence shall be implemented only to the extent permissible under Code Section
409A and regulations and other guidance issued by the Internal Revenue Service
interpreting the provisions of that Section.
23
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 HEADINGS
The headings of the Plan have been inserted for convenience of reference
and shall be ignored in the construction of the provisions herein.
11.2 NO CONTRACT OF EMPLOYMENT
The existence of the Plan shall not create or change any contract, express
or implied, between the Employer and its employees and shall not affect the
Employer's right to take any action with respect to its employees.
11.3 RIGHTS OF PARTICIPANTS AND BENEFICIARIES
The interest and rights of a Participant and Beneficiary under the Plan
shall be those of a general unsecured creditor of the Employer, and with
respect to the creditors of the Employer, no Participant or Beneficiary
shall have any preferred claims on, or any beneficial ownership in, the
assets of the Employer, including any assets in which the Employer may
invest to aid in meeting its obligations under the Plan.
11.4 NONALIENATION OF BENEFITS
All benefits payable hereunder are for the sole use and benefit of the
Participants and their Beneficiaries and, to the extent permitted by law,
shall be free, clear and discharged of and from, and are not to be in any
way liable for, debts, contracts or agreements, now contracted or which may
hereafter be contracted and from all claims and liabilities now or
hereafter incurred by any Participant or Beneficiary covered by this Plan.
No Participant or Beneficiary covered by this Plan shall have the right to
anticipate, surrender, encumber, alienate or assign, whether voluntarily or
involuntarily, any of the benefits to become due hereunder unto any person
or person upon any terms whatsoever, and any attempt to do so shall be
void.
11.5 TAX TREATMENT
There is no commitment or guarantee with respect to the tax treatment to be
accorded to a Participant or Beneficiary under the Plan.
11.6 OTHER PLANS AND AGREEMENTS
(a) Participation in the Plan shall not affect a Participant's rights to
participate in and receive benefits under any other plans of the
Employer, nor shall it affect his rights under any other agreement
entered into with the Employer, unless explicitly provided otherwise
by such agreement.
24
(b) Any amount credited under or paid pursuant to the Plan shall not be
treated as wages, salary or any other type of compensation or
otherwise taken into account in the determination of the Participant's
benefits under any other plans of the Employer, unless explicitly
provided otherwise by such plan.
11.7 NUMBER AND GENDER
The use of the singular shall be interpreted to include the plural and the
plural the singular, as the context shall require. The use of the
masculine, feminine or neuter shall be interpreted to include the
masculine, feminine or neuter, as the context shall require.
11.8 PLAN PROVISIONS CONTROLLING
In the event of any conflict between the provisions of the Plan and the
provisions of a summary or description of the Plan or the terms of any
agreement or instrument related to the Plan, the provisions of the Plan
shall be controlling.
11.9 SEVERABILITY
If any provisions of the Plan shall be held illegal or invalid for any
reason, such illegality or invalidity shall not affect the remaining parts
of the Plan, but this Plan shall be construed and enforced as if the
illegal and invalid provisions had never been included herein.
11.10 EVIDENCE CONCLUSIVE
The Employer, the Committee and any person or persons involved in the
administration of the Plan shall be entitled to rely upon any
certification, statement, or representation made or evidence furnished by
any person with respect to any facts required to be determined under any of
the provisions of the Plan, and shall not be liable on account of the
payment of any monies or the doing of any act or failure to act in reliance
thereon. Any such certification, statement, representation, or evidence,
upon being duly made or furnished, shall be conclusively binding upon the
person furnishing it but not upon the Employer, the Committee or any other
person involved in the administration of the Plan. Nothing herein contained
shall be construed to prevent any of such parties from contesting any such
certification, statement, representation, or evidence or to relieve any
person from the duty of submitting satisfactory proof of any fact.
11.11 STATUS OF PLAN UNDER ERISA
The Plan is intended to be an unfunded plan maintained by an Employer
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.
25
11.12 NAME AND ADDRESS CHANGES
Each Participant shall keep his name and address on file with the Employer
and shall promptly notify the Employer of any changes in his name or
address. All notices required or contemplated by this Plan shall be deemed
to have been given to a Participant if mailed with adequate postage prepaid
thereon addressed to him at his last address on file with the Employer. If
any check in payment of a benefit hereunder (which was mailed to the last
address of the payee as shown on the Employer's records) is returned
unclaimed, further payments shall be discontinued unless evidence is
furnished that the recipient is still alive.
11.13 ASSIGNABILITY BY CORPORATION
The Employer shall have the right to assign all of its right, title and
obligation in and under this Plan upon a merger or consolidation in which
the Employer 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 Plan upon the
Employer. Upon such assignment, all of the rights, as well as all
obligations, of the Employer under this Plan shall thereupon cease and
terminate.
11.14 SPECIAL RULE FOR 2005-2006.
Notwithstanding the usual rules regarding distribution elections contained
in Article VII, a Participant, on or before December 31, 2006, may make an
election as to distribution of his Account from among the choices described
in Section 7.1 hereof without complying with the rules described in Section
7.2 hereof as long as the effect of the election is not to accelerate
payments into 2006 or to defer payments which would otherwise have been
made in 2006. Such election shall become effective after the last day upon
which it is permitted to be made. In order to change any such election
after it has become effective, the requirements of Section 7.2 hereof must
be satisfied.
IN WITNESS WHEREOF, the Corporation has caused its duly authorized officer
to execute this Plan document on its behalf this 16th day of February, 2006, to
be effective as of January 1, 2005.
BRADY CORPORATION
By: /s/ FRANK M. JAEHNERT
------------------------------------
FRANK M. JAEHNERT
Attest: /s/ CONRAD G. GOODKIND
--------------------------------
CONRAD G. GOODKIND
26