Exhibit 10.2
BRADY CORPORATION
DIRECTORS’ DEFERRED COMPENSATION PLAN
AS
AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2008
ARTICLE I
INTRODUCTION
1.1 For periods prior to calendar
year 2005, Brady Corporation has maintained the Brady Corporation
Directors’ Deferred Compensation Plan by means of a series of
individual deferred compensation agreements with covered directors.
This document amends and restates those prior agreements effective
as of January 1, 2005 with respect to both investment and
distribution of amounts deferred before 2005 and after 2004 and
with respect to rules for making deferrals after 2004. 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.
This document describes how this Plan has been administered for
periods after 2004 and prior to January 1, 2008 and how it
shall be administered for periods after 2007.
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 3.1 and earnings credited on such
amounts in accordance with Article IV.
2.2 “ Administrator
” means 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 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.
2.6 “ Distribution Date
” means the date specified by the Participant pursuant to
Section 6.2 upon which distribution shall be made or commenced
following the Participant’s Separation from Service or
In-Service Payment Event Date, as the case may be. The Distribution
Date selected by the Participant must be on the first day of a
calendar quarter and may be no later than 12 months after the
Participant’s Separation from Service or In-Service Payment
Event Date, whichever is the cause of the distribution. If the
distribution is payable other than in a single installment,
subsequent installments shall be paid on anniversaries of the
Distribution Date.
2.7 “ In-Service Payment
Event Date ” means the date, if any, specified by the
Participant pursuant to Section 6.2 as the reference date
following which distribution of his Account shall begin. An
In-Service Payment Event Date may be no earlier than
January 1, 2007.
2.8 “ Participant
” means a director of Brady Corporation currently eligible to
make deferrals (an “Active Participant”) and any former
director who previously participated in the Plan and is entitled to
benefits.
2.9 “ Payment Event
” means the earlier of the date of a Participant’s
Separation From Service or the date the Participant specifies as
his In-Service Payment Event Date.
2.10 “ Plan ”
means the Brady Corporation Directors’ Deferred Compensation
Plan, as set forth herein and as it may be amended from time to
time.
2.11 “ Plan Year ”
means the calendar year.
2.12 “ Separation from
Service ” means expiration or termination of the
arrangement with the Corporation pursuant to which the Participant
performed services as a director of the Corporation if such
expiration or termination constitutes a good faith and complete
termination of the relationship and all other independent
contractor relationships the Participant has with the Corporation.
A good faith and complete termination of a relationship shall not
be deemed to have occurred if the Corporation anticipates a renewal
of a contractual relationship or anticipates that the Participant
shall become an employee of the Corporation. For this purpose, the
Corporation is considered to anticipate the renewal of a
contractual relationship with the Participant if it intends to
contract again for the services provided under the expired
arrangement, and neither the Corporation nor the Participant has
eliminated the Participant as a possible provider of services under
any such new arrangement. Further, the Corporation is considered to
intend to contract again for the services provided under an expired
arrangement if the Corporation’s doing so is conditioned only
upon incurring a need for the services, the availability of funds
or both. The foregoing requirements are deemed satisfied if no
amount will be paid to the Participant before a date at least
12 months after the day on which the arrangement expires
pursuant to which the Participant performed services for the
Corporation (or, in the case of more than one arrangement, all such
arrangements expire) and no amount payable to the Participant on
that date will be paid to the Participant if, after the expiration
of the arrangement (or arrangements) and before that date, the
Participant performs services for the Corporation as a director or
other independent contractor or an employee). If a Participant
provides services both as an employee of the Corporation and as a
member of the board of directors of the Corporation, the services
provided as an employee are not taken into account in determining
whether the Participant has a Separation from Service as a director
for purposes of this Plan because this Plan is not aggregated with
any plan in which the Participant participates as an employee
pursuant to IRS
Regulation Section 1.409A-1(c)(2)(ii).
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2.13 “ 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
DEFERRALS
3.1 Deferral Elections . An
Active Participant may elect to defer a specified percentage of his
fees for services performed as a director of the Corporation during
a Plan Year by completing and filing such 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 the payments made to him by the
Corporation during the Plan 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. A director who is not already
eligible to participate in any other deferred compensation plan of
the account balance type sponsored by the Corporation who becomes
an Active Participant for the first time during a Plan Year (i.e.,
first becomes a director) may within 30 days after the
effective date of participation make an election to defer a
specified percentage of compensation to be paid to him for services
to be performed subsequent to the deferral election.
3.2 Continued Effect of
Elections . An Active Participant’s deferral election
with respect to a Plan Year under Section 3.1 shall be
irrevocable after the last date upon which it may be filed pursuant
to Section 3.1 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 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 payments under Section 3.1.
3.3 Prior Deferral Elections .
Any deferral election made prior to calendar year 2005 under an
individual agreement shall be treated as a deferral election
described in Section 3.1 and shall continue in effect until
modified as described in Section 3.2 above unless modified
earlier pursuant to Section 8.12(a) below.
3.4 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 and any
other nonqualified deferred compensation plan of the account
balance type sponsored by the Corporation shall immediately
terminate upon such determination. To resume deferrals thereafter,
a Participant must make an election satisfying the provisions of
Section 3.1, as the case may be, as those provisions apply to
someone who is already an Active Participant in the Plan.
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ARTICLE IV
ACCOUNTS
4.1 Credits to Account .
Bookkeeping amounts equal to the amounts deferred by a Participant
pursuant to Section 3.1 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.
(iii) 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.
(iv) 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 Fund 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
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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.
(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. The preceding
sentence shall not apply to a Participant who has had a Separation
from Service prior to May 1, 2006. A Participant shall, on or
after February 16, 2006 and prior to May 1, 2006, be
entitled to reallocate up to 50% of the balance of the portion of
his Account attributable to pre-2004 deferrals from investments in
the Brady Stock Fund to the other investment funds available
hereunder; and, thereafter, the portion of such account
attributable to pre-2004 deferrals held in the Brady Stock Fund
must remain in the Brady Stock Fund but the director may continue
to make new investment choices from among available investment
funds with respect to remaining portions of that account. The
preceding sentence shall not apply to a Participant who has a
Separation from Service before reallocation under such sentence has
taken place.
(c) The Corporation shall provide
annual reports to each Participant showing (a) the value of
the Account as of the most recent December 31 st , (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.
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(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 .
After a Participant’s Payment Event 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 a Single Sum or Installments 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
Distribution Date following the Participant’s Payment Event.
If the Participant receives a single sum distribution before
Separation from Service with the result that additional amounts are
subsequently deposited in the Participant’s Account, a
distribution shall be made on
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