Exhibit 99.1
BRADY CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2005
ARTICLE I
INTRODUCTION
For periods prior to calendar year 2005, Brady Corporation has maintained
the Brady Corporation Executive Deferred Compensation Plan by means of a series
of individual deferred compensation agreements with covered executives. Amounts
deferred prior to January 1, 2005 (which were all fully vested under Plan
terms), including past and future earnings credited thereon, shall remain
subject to the terms of those individual agreements as previously in effect (the
"Frozen Agreements") but no further amounts shall be deferred under the Frozen
Agreements. All deferrals to the Plan for periods on or after January 1, 2005
shall be governed by the terms and provisions of this document. Except as
provided in Sections 4.2(b)(x) and 6.1(a)(iii)(C) below, nothing in this
document shall apply to amounts deferred prior to 2005 and past and future
earnings credited thereon. 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 definitions shall be applicable throughout the Plan:
2.1 "Account" means the account credited from time to time with bookkeeping
amounts equal to the portions of a Participant's compensation deferred pursuant
to Section 3.2 and earnings credited on such amounts in accordance with Article
IV.
2.2 "Administrator" means the Compensation Committee of the Board of
Directors of Brady Corporation.
2.3 "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 Corporation; provided, however, that the
designation on file with the Corporation 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 Corporation 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.
2.4 "Code" means the Internal Revenue Code of 1986, including any
subsequent amendments.
2.5 "Corporation" means Brady Corporation, and each of its affiliates which
has adopted the Plan or may adopt the Plan. Currently, the additional sponsoring
affiliates are Tricor Direct, Inc. and Brady Worldwide, Inc. The term
"Corporation" as used throughout this Plan shall include references to those
affiliates of Brady Corporation which have also adopted the Plan; provided,
however, that for purposes of the power to amend or terminate the Plan or take
any other action under or with respect to the Plan, except for the payment of
benefits, the term "Corporation" shall refer only to Brady Corporation.
2.6 "Effective Date" means January 1, 2005.
2.7 "ERISA" means the Employee Retirement Income Security Act of 1974,
including any subsequent amendments.
2.8 "Fiscal Year" means the period beginning August 1 and ending July 31.
2.9 "Participant" means a key management or highly compensated employee
designated as eligible to participate in the Plan for a Plan Year under Section
3.1 (such persons shall be known as "Active Participants" for such Plan Year)
and any person who previously participated in the Plan and is entitled to
benefits.
2.10 "Performance Based Bonus" means bonus compensation, the amount of
which or entitlement to, is based on services performed over a period of at
least 12 consecutive months which is contingent on the satisfaction of
pre-established organizational or individual performance criteria, which
performance criteria are not substantially certain to be met at the time a
deferral election is permitted. Performance Based Bonus compensation may include
payments based upon subjective performance criteria, but (i) any subjective
performance criteria must relate to the performance of the Participant service
provider, a group of service providers that includes the Participant service
provider, or a business unit for which the Participant provides services (which
may include the entire organization) and (ii) the determination that any
subjective performance criteria have been met must not be made by the
Participant or a family member of the Participant (as defined in Code Section
267(c)(4) applied as if the family of an individual includes the spouse of any
family member). Organizational or individual performance criteria are considered
pre-established if established in writing by not later than 90 days after the
commencement of the period of service to which the criteria relate, provided
that the outcome is substantially uncertain at the time the criteria are
established. A Performance Based Bonus may include payments based on performance
criteria that are not approved by the Administrator or by the stockholders of
the Corporation. A Performance Based Bonus shall not include any amount or
portion of any amount that will be paid either regardless of performance, or
based upon a level of performance that is substantially certain to be met at the
time the criteria are established
2.11 "Plan" means the Brady Corporation Executive Deferred Compensation
Plan, as set forth herein, as applicable to amounts deferred after calendar year
2004, and as it may be amended from time to time.
2.12 "Plan Year" means the calendar year.
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2.13 "Separation from Service" means a termination of employment with the
Corporation and all affiliates of the Corporation 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 Corporation 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).
2.14 "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 Corporation or one of its affiliates having an annual
compensation greater than $130,000, a 5% owner of the Corporation or one of
its affiliates or a 1% owner of the Corporation 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.
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(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
6.1(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 Corporation shall apply such exclusion with
respect to all arrangements of the Corporation, and any change to include
such nonresident alien employees may not be effective for a period of 12
months.
2.15 "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 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.
ARTICLE III
PARTICIPATION AND DEFERRALS
3.1 Determination of Participants. Within a reasonable period of time prior
to the beginning of a Plan Year or at any time during a Plan Year, the
Administrator will designate employees who will be eligible to become Active
Participants in the Plan for that Plan Year (or the remainder of such Plan
Year). An employee designated as an Active Participant for a Plan Year shall
remain an Active Participant until the employee's Termination of Service or the
Administrator or the Board of Directors of the Corporation takes action to
terminate such employee's participation effective on the first day of any Plan
Year subsequent to the date of such action by the Administrator or the Board.
3.2 Deferral Elections.
(a) Salary Payments. An Active Participant may elect to defer a
specified percentage of his salary for services performed during a Plan
Year by completing and filing such
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forms as required by the Corporation prior to the first day of the Plan
Year. A Participant's deferrals shall be taken at a uniform percentage rate
from each of his salary payments during the year. Compensation deferred
shall be retained by the Corporation, credited to the Participant's Account
pursuant to Section 4.1 and paid in accordance with the terms and
conditions of the Plan. An employee who is not already eligible to
participate in any other deferred compensation plan of the account balance
type who becomes an Active Participant for the first time during a Plan
Year (for example, an employee designated to be a Participant by the
Administrator upon hire or promotion) may within 30 days after the
effective date of participation make an election to defer a specified
percentage of salary to be paid to him for services to be performed
subsequent to the deferral election.
(b) Bonus Payments. An Active Participant may elect to defer a portion
of any and all bonus payments made to him during a Plan Year by completing
and filing such forms as required by the Corporation. To the extent a bonus
payment represents a payment of a Performance Based Bonus, to be effective
the deferral election with respect to such bonus must be filed with the
Corporation at least seven months prior to the end of the period in which
the bonus payment is earned. If a bonus payment is not a Performance Based
Bonus but is calculated on a Fiscal Year basis, then to be effective the
deferral election must be filed prior to the beginning of the Fiscal Year
during which the Participant first renders any services giving rise to the
payment of the bonus. If a bonus is not a Performance Based Bonus and is
not calculated on a Fiscal Year basis, to be effective, the deferral
election must be filed prior to the beginning of the first Plan Year in
which are performed any services for which such bonus is payable. An
employee who is not already eligible to participate in any other deferred
compensation plan sponsored by the Corporation of the account balance type
who becomes an Active Participant for the first time during a Plan Year
(for example, an employee designated to be a Participant by the
Administrator upon hire or promotion) may within 30 days after the
effective date of participation make an election to defer a specified
percentage of any bonus payment for which the service period has already
begun and, in such event, the election shall apply to the portion of bonus
compensation equal to the total bonus compensation to be paid to the
Participant with respect to that service period multiplied by a fraction of
which the numerator is the number of days remaining in the performance
period and the denominator is the total number of days in the performance
period.
3.3 Continued Effect of Elections.
(a) Salary Payments. An Active Participant's deferral election with
respect to a Plan Year under Section 3.2(a) shall be irrevocable after the
last date upon which it may be filed pursuant to Section 3.2(a) and shall
continue in effect each subsequent Plan Year until prospectively revoked or
amended in writing. For a revocation or amendment to be effective with
respect to salary payments during a Plan Year, it must be filed by the last
date for which an effective deferral election is permitted to be filed with
respect to those salary payments under Section 3.2(a).
(b) Bonus Payments. An Active Participant's deferral election under
Section 3.2(b) with respect to a bonus shall be irrevocable after the last
date upon which it may be filed pursuant to Section 3.2(b) and shall
continue in effect with respect to bonuses earned in subsequent performance
periods until prospectively revoked or amended in writing. For a revocation
or amendment to be effective for any bonus payment, it must be filed by the
last date for which an effective deferral election is permitted to be filed
with respect to that bonus payment under Section 3.2(b).
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3.4 Prior Deferral Elections. Any deferral election made prior to calendar
year 2005 under a Frozen Agreement shall be treated as a deferral election
described in Section 3.2(a) and/or Section 3.2(b), as the case may be, and shall
continue in effect until modified as described in Section 3.3 above unless
modified earlier pursuant to Section 8.14(a) below.
3.5 Unforeseeable Emergency. In the event that a Participant makes
application for a hardship distribution under Section 6.3 and the Administrator
determines that an Unforeseeable Emergency exists, all deferral elections
otherwise in effect under this Article III shall immediately terminate upon such
determination. To resume deferrals thereafter, a Participant must make an
election satisfying the provisions of Section 3.2(a) and/or (b), as the case may
be, as those provisions apply to someone who is already an Active Participant in
the Plan.
3.6 401(k) Hardship. Any deferral elections in effect under this Article
III shall be cancelled as required due to a hardship distribution described in
IRS Regulation Section 1.401(k)-1(d)(3) or any successor thereto. To resume
deferrals after the required suspension period, a Participant must make an
election satisfying the provisions of Section 3.2(a) and/or (b), as the case may
be, as those provisions apply to someone who is already an Active Participant in
the Plan.
ARTICLE IV
ACCOUNTS
4.1 Credits to Account. Bookkeeping amounts equal to the amounts deferred
by a Participant pursuant to Section 3.2 shall be credited to such Participant's
Deferral Account as soon as practicable after the deferred compensation would
otherwise have been paid to such Participant in the absence of deferral.
4.2 Valuation of Account.
(a) The Participant's Account shall be credited or charged with deemed
earnings or losses as if it were invested in accordance with paragraph (b)
below.
(b) (i) The investment funds available hereunder for the deemed
investment of the Account shall be the Brady Stock Fund and such other
funds as the Administrator shall from time to time determine. However, in
no event shall the Corporation be required to make any such investment in
the Brady Stock Fund or any other investment fund 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.
(ii) On the date credited to the Participant's Account, deferrals
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 deferrals until changed by the Participant. Any such change
may be prospectively elected by the Participant at the times
established by the Administrator, 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
Administrator 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.
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(iii) A Participant's balance in the Brady Stock Fund shall be
determined as though the Participant's deferrals allocated to that
Fund are invested in shares of Class A non-voting common stock of
Brady Corporation by purchase at the fair market value price of such
stock on the date the deferrals are credited to the Participant's
Brady stock account.
(iv) The portion of a Participant's Account invested in the Brady
Stock Fund shall be called the Brady Stock Sub-account. The remaining
portion of the Participant's Account shall be referred to as the
General Investment Sub-account.
(v) The value of the Brady Stock Sub-account on any particular
date will be based upon the value of the shares of Class A non-voting
common stock of Brady Corporation which the sub-account is deemed to
hold on that date. The shares of such stock deemed to be held in such
sub-account shall be credited with dividends at the time they are
credited with respect to actual shares of Class A non-voting common
stock of Brady Corporation and such dividends shall be deemed to be
used to purchase additional shares of Class A non-voting common stock
of Brady Corporation on the day following the crediting of such
dividends at the then fair market value price of such stock. The
sub-account shall also be credited from time to time with additional
shares of Class A non-voting common stock of Brady Corporation equal
in number to the number of shares granted in any stock dividend or
split to which the holder of a like number of shares of Class A
non-voting common stock would be entitled. All other distributions
with respect to shares of Class A non-voting common stock of Brady
Corporation shall be similarly applied. In the event of a distribution
of preferred stock, such preferred stock shall be valued at its par
value (or its voluntary liquidating price, if it does not have a par
value).
(vi) The valuation of the funds held in the General Investment
Sub-account shall be accomplished in the same manner as though the
deemed investment in such funds had actually been made and are valued
at their fair market value price on valuation dates hereunder.
(vii) A Participant's Account shall be valued as of December 31
each year and at such other times established by the Administrator,
which shall be no less frequently than quarterly. Until such time as
the Administrator takes action to the contrary, such valuation shall
be at the same time as valuations made of Brady matched 401(k) plan
assets.
(viii) All elections and designations under this section shall be
made in accordance with procedures prescribed by the Administrator.
The Administrator may prescribe uniform percentages for such elections
and designations.
(ix) A Participant may prospectively elect to reallocate his
Account balance among the investment funds at the times established by
the Administrator, which shall be no less frequently than quarterly.
Until such time as the Administrator 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 Plan to the contrary, a Participant may
not make (i) any election or transaction in the Brady Stock Fund at a
time when the Participant is in possession of any 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.
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(x) Notwithstanding subparagraph (ix) above, from and after May
1, 2006, a Participant may not shift any amounts from his Brady Stock
Sub-account to his General Investment Sub-account or vice-versa.
Notwithstanding Article I and Section 2.11 of this Plan to the
contrary, the rule of this subparagraph (x) shall apply to all amounts
held for a Participant under a Frozen Agreement as well, meaning that
from and after May 1, 2006, a Participant shall not be entitled to
transfer any amount to or from the portion of his account held in the
Brady Stock Fund under the Frozen Agreement. The preceding sentence
shall not apply to a Participant who has had a Separation from Service
prior to May 1, 2006.
(c) The Corporation 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 deferral made by the Participant for the Plan Year ending
on such date and (c) the amount of any investment gain or loss and the
costs of administration credited or debited to the Participant's Account.
(d) 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 shall not be considered or construed in any
manner as an actual investment of the Participant's Account balance in any
such fund. In the event that Brady Corporation or the trustee of any
grantor trust which Brady Corporation may choose to establish to finance
some or all of its obligations hereunder, in its own discretion, decides to
invest funds in any or all of the funds, the Participant shall have no
rights in or to such investments themselves. Without limiting the
foregoing, the Participant's Account balance shall at all times be a
bookkeeping entry only and shall not represent any investment made on the
Participant's behalf by the Corporation or any trust; the Participant shall
at all times remain an unsecured creditor of the Corporation.
ARTICLE V
VESTING
5.1 Full Vesting. A Participant shall be fully vested and nonforfeitable at
all times in his or her Account hereunder.
ARTICLE VI
MANNER AND TIMING OF DISTRIBUTION
6.1 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 6.2:
(i) Single Sum. A single sum distribution of the value of the
balance of the Account on the first day of October following the
Participant's Separation from Service; or
(ii) Installments. The value of the balance of the Account shall
be paid in annual installments on the first day of October each year
with the first of such
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installments to be paid on the first day of October following the
Participant's Separation from Service. 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 6.2, but not to exceed 10. The earnings (or
losses) provided for in Section 4.2 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 July 31 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
July 31 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, the final installment payment will
include 100% of the then remaining July 31 Account value.
(iii) In Cash or In Stock. Prior to May 1, 2006 all payments
shall be made in cash. From and after May 1, 2006, payments shall be
made in cash and/or Class A non-voting common stock of Brady
Corporation pursuant to the following:
(A) If distribution is made in a single sum, the value of
the portion of the Participant's Account which consists of the
General Investment Sub-account shall be paid in cash while the
value of the portion of the Account which consists of the Brady
Stock Sub-account shall be paid by distributing the number of
shares of Class A non-voting stock of Brady Corporation which
represent the number of deemed shares held in the Brady Stock
Sub-Account, except, however, that any fractional shares shall be
valued and distributed in cash.
(B) If distribution is made in installments, a portion of
each installment shall be distributed in cash and a portion in
Class A non-voting shares of common stock of Brady Corporation.
The portion to be distributed in cash shall be that portion of
the total installment payment which is the same percentage as
derived by dividing the value of the Balance in the General
Investment Sub-account by the value of the total Account balance
and the portion to be distributed in stock shall be the same
percentage as determined by dividing the value of the balance of
the Brady Stock Sub-account by the value of the total Account
balance. The number of shares of Class A non-voting shares of
common stock of Brady Corporation to be distributed shall be the
number having the same value as the portion of the installment to
be paid in such stock, except, however, that any fractional
shares shall be distributed in cash.
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(C) Notwithstanding Article I and Section 2.11 of this Plan
to the contrary, the rule of this sub-paragraph (iv) shall apply
to amounts held for a Participant under a Frozen Agreement from
and after May 1, 2006. The preceding sentence shall not apply to
a Participant who has had a Separation from Service prior to May
1, 2006.
(b) In the case of a Participant who is a Key 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 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 Corporation or one of its affiliates in which the Participant
is covered.
6.2 Payment Election. An individual who first becomes an Active Participant
at the beginning of a Plan Year who is provided with prior written notice of the
effective date of participation shall 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 payment in the
five (5) annual installment payment form. An individual who first becomes an
Active Participant other than on the first day of a Plan Year shall complete a
payment election form specifying the form of payment applicable to such
Participant's Account no later than 30 days after the effective date of
participation. 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 Corporation 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. A Participant may change the form of payment by completing and filing a
new payment election form with the Corporation, and the payment election form on
file with the Corporation as of the date of the Participant's Separation from
Service shall be controlling. Notwithstanding the 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 Corporation. 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 Section
409A of the Internal Revenue Code, a series of five year installment payments,
ten year installment payments and twenty year installment payments are each
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 under Section 6.1 may substitute any of the other options
for the option originally elected as long as the foregoing one-year and five
year rules are satisfied. 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 6.1(b). In the event that
the
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Participant's new payment election would not be effective under the
foregoing rules, the payment election form previously in effect shall be
controlling.
6.3 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
Administrator'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 Section 3.2.
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 Section 3.2 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.
6.4 Delayed Distribution.
(a) A payment otherwise required to be made pursuant to the provisions
of this Article VI shall be delayed if the Corporation reasonably
anticipates that the Corporation's deduction with respect to such payment
would be limited or eliminated by application of Code Section 162(m);
provided, however that such payment shall be made on the earliest date on
which the Corporation 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 VI shall be
delayed if the Corporation reasonably anticipates that the making of the
payment will violate a term of a loan agreement to which the Corporation is
a party, or other similar contract to which the Corporation is a party, and
such violation will cause material harm to the Corporation; provided,
however, that payments shall be made on the earliest date on which the
Corporation reasonably anticipates that the making of the payment will not
cause such violation, or such violation will not cause material harm to the
Corporation, and provided that the facts and circumstances indicate that
the Corporation 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 VI shall be
delayed if the Corporation 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 Corporation 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.)
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(d) A payment otherwise required under this Article VI 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.
6.5 Inclusion in Income Under Section 409A. Notwithstanding any other
provision of this Article VI, 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. Any such distribution
shall be taken on a pro rata basis from the Participant's General Investment
Sub-account and Brady Stock Sub-account in the manner described in Section
6.1(a)(iv)(B).
6.6 Domestic Relations Order. Notwithstanding any other provision of this
Article VI, payments shall be made from an account of a Participant in this Plan
to such individual or individuals (other than the Participant) and at such times
as are necessary to comply with a domestic relations order (as defined in Code
Section 414(p)(1)(B)). Any such distribution shall be taken on a pro rata basis
from the Participant's General Investment Sub-account and Brady Stock
Sub-account in the manner described in Section 6.1(a)(iv)(B).
6.7 De Minimis Amounts. Notwithstanding any other provision this Article
VI, 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 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.
ARTICLE VII
ADMINISTRATION
7.1 Compensation Committee as Administrator. The Plan shall be administered
by the Administrator, which shall be the Compensation Committee of the
Corporation's Board of Directors. The Administrator shall have all authority
that may be appropriate for administering the Plan, including the authority to
adopt rules and regulations for the conduct of its affairs and for implementing,
amending and carrying out the Plan, interpreting the provisions of the Plan and
determining a Participant's entitlement to benefits hereunder. The Administrator
shall be entitled to rely upon the Corporation's records as to information
pertinent to calculations or determinations made pursuant to the Plan.
The Administrator may also delegate any of its clerical or other
administrative duties to one or more officers or employees of the Corporation,
who may assist the Administrator in the performance of any of its functions
hereunder. In the event of such delegation, a reference to the Administrator
shall be deemed to refer to such officer(s) or employee(s).
7.2 Authority of Administrator. The Administrator shall have full and
complete discretionary authority to determine eligibility for benefits under the
Plan, to construe the terms of the Plan and to decide any matter presented
through the claims procedure. Any final determination by the Administrator 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
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to be arbitrary and capricious based upon the evidence considered by the
Administrator at the time of such determination.
7.3 Administrator Actions. The Administrator may authorize one or more of
its members to execute on its behalf instructions or directions to any
interested party, and any such interested party may rely upon the information
contained therein. The members may also act at a meeting or by unanimous written
consent. A majority of the members shall constitute a quorum for the transaction
of business and shall have full power to act hereunder. All decisions shall be
made by vote of the majority present at any meeting at which a quorum is
present, except for actions in writing without a meeting, which must be
unanimous.
7.4 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 Corporation 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.
7.5 No Liability. Except as otherwise provided by law, neither the
Administrator, nor any member thereof, nor any director, officer or employee of
the Corporation involved in the administration of the Plan 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. The Corporation shall hold harmless and defend any individual in the
employment of the Corporation and any director of the Corporation against any
claim, action or liability asserted against him in connection with any action or
failure to act regarding the Plan, except as and to the extent that any such
liability may be based upon the individual's own gross negligence or willful
misconduct. This indemnification shall not duplicate but may supplement any
coverage available under any applicable insurance.
7.6 Claims Procedure.
(a) 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
Administrator or its designee. The Administrator 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:
(i) the specific reasons for the denial;
(ii) specific reference to pertinent provisions of the Plan on
which the denial is based;
(iii) 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
(iv) 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.
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(b) 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
Administrator 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 Administrator. The Administrator 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 Administrator 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 Administrator's decision shall include specific reasons for the
decision, including references to the particular Plan provisions 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.
(c) If a determination of disability for purposes of Section 6.1(b) or
6.2 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 Administrator 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.
ARTICLE VIII
MISCELLANEOUS
8.1 Amendment or Termination. The Corporation (through its Board of
Directors or authorized officers or employees and/or the Compensation 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 the 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 the Corporation may prospectively change the manner in
which earnings are credited or discontinue the crediting of earnings and,
further, the 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 VI of the Plan. Notwithstanding the preceding sentence, either at
the time of termination or on a subsequent date the 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 the 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.
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8.2 Applicable Law. This Plan shall be governed by the laws of the State of
Wisconsin, except to the extent preempted by the provisions of ERISA or other
applicable federal law.
8.3 Relationship to Other Programs. Participation in the Plan shall not
affect a Participant's rights to participate in and receive benefits under any
other plans of the Corporation, nor shall it affect the Participant's rights
under any other agreement entered into with the Corporation, unless expressly
provided otherwise by such plan or agreement. Any amount credited under or paid
pursuant to this 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 Corporation, unless
expressly provided otherwise by such plan.
8.4 Non-Assignability by Participant. No Participant or Beneficiary shall
have any right to commute, sell, assign, pledge, convey, or otherwise transfer
any rights or claims to receive benefits hereunder, nor shall such rights or
claims be subject to garnishment, attachment, execution or levy of any kind
except to the extent otherwise required by law.
8.5 Status of Plan Under ERISA. The Plan is intended to be an unfunded plan
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 ERISA.
8.6 Withholding. The Corporation shall comply with all applicable tax and
governmental withholding requirements. To the extent required by law, the
Corporation 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 Corporation. 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
Corporation 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 Corporation. Any such distribution shall be taken on a pro
rata basis from the Participant's General Investment Sub-account and Brady Stock
Sub-account in the manner described in Section 6.1(a)(iv)(B).
8.7 No Right to Continued Employment. Neither participation in this Plan,
nor the payment of any benefit hereunder, shall be construed as giving to a
Participant any right to be retained in the service of the Corporation, or
limiting in any way the right of the Corporation to terminate the Participant's
service at any time. Nor does participation in this Plan guarantee the
Participant the right to be continued in service in any particular position or
at any particular rate of compensation.
8.8 Assignability by Corporation. The Corporation 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 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 Plan upon
the Corporation. Upon such assignment, all of the rights, as well as all
obligations, of the Corporation under this Plan shall thereupon cease and
terminate.
8.9 Unsecured Claim; Grantor Trust. The right of a Participant 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
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Corporation. The liabilities of the Corporation to a Participant 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 the Corporation may in its discretion contribute (subject to the
claims of the general creditors of the Corporation) the amounts credited to the
Account. If a grantor trust is so established, payment by the trust of the
amounts due the Participant or his Beneficiary hereunder shall be considered a
payment by the Corporation for purposes of this Plan.
8.10 Notices or Filings. Any notice or filing required or permitted to be
given to the Administrator 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
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 a Participant
hereunder shall be sufficient if in writing and hand-delivered, or sent by mail,
to the last known address of the Participant.
8.11 Special rules for 2005-2006. Notwithstanding the usual rules required
regarding the deferral elections and distribution elections:
(a) A Participant may on or before March 15, 2005 make a new deferral
election to apply to amounts which would otherwise be paid in calendar year
2005; provided that such amounts have not been paid or become payable at
the time of the election. Such election shall remain in effect for future
years until modified pursuant to Section 3.3(a) and/or (b), as the case may
be.
(b) On or before December 31, 2006, a Participant may make an election
as to distribution of his Account from among the choices described at
Section 6.1 hereof without complying with the rules described in Section
6.2 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 December 31, 2006, the requirements of Section 6.2 hereof must be
satisfied. (The special election described in this paragraph (b) will not
apply to distribution of the Participant's account holding amounts earned
and vested prior to January 1, 2005, if any, (and earnings credited
thereon) since distribution of such account is not governed by this
document but is governed by the Frozen Agreement.)
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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
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