BRADY
CORPORATION
CHANGE OF CONTROL AGREEMENT
AGREEMENT, made as
of December 23, 2008, between Brady Corporation, a Wisconsin
corporation, (“Corporation”) and Frank M.
Jaehnert.
WHEREAS, the
Executive is now serving as an executive of the Corporation in a
position of importance and responsibility; and
WHEREAS, the
Executive possesses intimate knowledge of the business and affairs
of the Corporation and its policies, markets and financial and
human resources, and the Executive has acquired certain
confidential information and data with respect to the Corporation;
and
WHEREAS, the
Corporation wishes to continue to receive the benefit of the
Executive’s knowledge and experience and, as an inducement
for continued service, is willing to offer the Executive certain
payments due to severance as a result of change of control as set
forth herein;
NOW, THEREFORE, in
consideration of the mutual promises and covenants set forth
herein, the Executive and Corporation agree as follows:
(a) Change
of Control. For purposes of this Agreement, a “Change of
Control” shall occur if and when any person or group of
persons (as defined in Section 13(d)(3) of the Securities and
Exchange Act of 1934) other than the members of the family of
William H. Brady, Jr. and their descendants, or trusts for their
benefit, and the W.H. Brady Foundation, Inc., collectively,
directly or indirectly controls in excess of 50% of the voting
common stock of the Corporation.
(b) Termination
Due to Change of Control. A “Termination Due to Change of
Control” shall occur if within the 24 month period
beginning with the date a Change of Control occurs (i) the
Executive’s employment with the Corporation is involuntarily
terminated (other than by reason of death, disability or Cause) or
(ii) the Executive’s employment with the Corporation is
voluntarily terminated by the Executive subsequent to (A) any
reduction in the total of the Executive’s annual base salary
(exclusive of fringe benefits) and the Executive’s target
bonus in comparison with the Executive’s annual base salary
and target bonus immediately prior to the date the Change of
Control occurs, (B) a significant diminution in the
responsibilities or authority of the Executive in comparison with
the Executive’s responsibility and authority immediately
prior to the date the Change of Control occurs or (C) the
imposition of a requirement by the Corporation that the Executive
relocate to a principal work location more than 50 miles from the
Executive’s principal work location immediately prior to the
date the Change of Control occurs.
(c) “Cause”
means (i) the Executive’s willful and continued failure
to substantially perform the Executive’s duties with the
Corporation (other than any such failure resulting from physical or
mental incapacity) after written demand for performance is given
to
the Executive
by the Corporation which specifically identifies the manner in
which the Corporation believes the Executive has not substantially
performed and a reasonable time to cure has transpired,
(ii) the Executive’s conviction of (or plea of nolo
contendere for the commission of) a felony, or (iii) the
Executive’s commission of an act of dishonesty or of any
willful act of misconduct which results in or could reasonably be
expected to result in significant injury (monetarily or otherwise)
to the Corporation, as determined in good faith by the Board of
Directors of the Corporation.
(d)
“Beneficiary” means any one or more primary or
secondary beneficiaries designated in writing by the Executive on a
form provided by the Corporation to receive any benefits which may
become payable under this Agreement on or after the
Executive’s death. The Executive shall have the right to
name, change or revoke the Executive’s designation of a
Beneficiary on a form provided by the Corporation. The designation
on file with the Corporation at the time of the Executive’s
death shall be controlling. Should the Executive fail to make a
valid Beneficiary designation or leave no named Beneficiary
surviving, any benefits due shall be paid to the Executive’s
spouse, if living; or if not living, then to the Executive’s
estate.
(e)
“Code” means the Internal Revenue Code of 1986, as
amended.
SECTION 2.
PAYMENTS UPON TERMINATION DUE TO CHANGE OF CONTROL.
(a) Following
Termination Due to Change of Control, the Executive shall be paid
an amount equal to three times the annual base salary paid the
Executive by the Corporation in effect immediately prior to the
date the Change of Control occurs, and three times the average
bonus payment received in the three years immediately prior to the
date the Change of Control occurs. Such amount shall be paid in
36 monthly installments beginning on the 15
th day of the month following the month in which
the Executive’s employment with the Corporation
terminates.
(b) If
the scheduled payments under paragraph (a) above would result
in disallowance of any portion of the Corporation’s deduction
therefore under Section 162(m) of the Code, the payments called for
under paragraph (a) shall be limited to the amount which is
deductible, with the balance to be paid during the first taxable
year in which the Corporation reasonably anticipates that the
deduction of such payment is not barred by Section 162(m).
However, in such event, the Corporation shall pay the Executive on
a quarterly basis an amount of interest based on the prime rate
recomputed each quarter on the unpaid scheduled
payments.
(c) It
is intended that (A) each payment or installment of payments
provided under this Section 2 is a separate
“payment” for purposes of Code Section 409A and
(B) that the payments satisfy, to the greatest extent
possible, the exemptions from the application of Code
Section 409A, including those provided under Treasury
Regulations 1.409A-1(b)(4) (regarding short-term deferrals),
1.409A-1(b)(9)(iii) (regarding the two-times, two year exception),
and 1.409A-1(b)(9)(v) (regarding reimbursements and other
separation pay). Notwithstanding anything to the contrary in this
Agreement, if the Corporation determines that on the Termination
Due to Cha
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