EXHIBIT
10(I)(i)


 


As
adopted by the Board of Directors November 13, 2003


 


ALBANY INTERNATIONAL CORP.


2003 RESTRICTED STOCK UNIT PLAN


 


SECTION 1.  PURPOSE


 


This plan (the “Plan”)
is intended as an incentive to officers and other key employees of Albany International
Corp. (the “Company”) and its subsidiaries to encourage them to remain
in the employ of the Company and its subsidiaries by affording them a greater
interest in the success of the Company and its subsidiaries.


 


SECTION 2.  DEFINITIONS


 


As used herein, the following terms shall have the
following meanings:


 


2.1.  “Albany Group” shall mean the Company
and all corporations which are, at the time, subsidiaries of the Company.


 


2.2.  “Award Agreement” shall have the
meaning set forth in Section 4.2.


 


2.3.  “Beneficiary” shall have the meaning
set forth in Section 11.6.


 


2.4.  “Board” shall mean the Board of
Directors of the Company.


 


2.5.  “Business Day” shall mean any day on
which the shares of Common Stock are traded on The New York Stock Exchange or,
if the shares of Common Stock are not traded on such exchange, on such other
securities market or securities exchange on which such shares are traded as the
Committee may determine.


 


2.6.  “Cash Dividend Equivalents” shall
have the meaning set forth in Section 5.4.


 


2.7.  “Cause” shall be deemed to exist if a
majority of the members of the Board determine that the Participant has (i)
caused substantial harm to the Company with intent to do so or as a result of
gross negligence in the performance of his or her duties; (ii) not made a good
faith effort to carry out his or her duties; (iii) wrongfully and substantially
enriched himself or herself at the expense of the Company; or (iv) been
convicted of a felony.


 


2.8.  “Change in Control” shall be deemed
to have occurred if (i) whether as a result of a merger, consolidation,
going-private transaction or any other event, the shares of Common Stock are no
longer traded on an “exchange” within the meaning of the Exchange Act for a
period of more than ten consecutive days on which there is trading generally in
securities on such exchange; (ii) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets;
or (iii) J. Spencer Standish and any Permitted Beneficiaries no longer are the
“beneficial owners” (as defined in Rule 13d-3 under the


 

















 


Exchange Act) of securities of the Company representing in the
aggregate at least 40% of the combined voting power of the Company’s then
outstanding securities.


 


2.9.  “Committee” shall mean either the
Board, the Compensation Committee of the Board, or such other committee of the
Board as the Board may from time to time designate to exercise the powers
conferred upon “the Committee” by the Plan.


 


2.10.  “Common Stock” shall mean the Class A
common stock ($0.001 par value) of the Company.


 


2.11.  “Company” shall have the meaning set
forth Section 1.


 


2.12.  “Daily High Price” shall mean, with
respect to the shares of Common Stock, the highest price per share at which the
shares trade on The New York Stock Exchange on the relevant date as reported on
Bloomberg or, if the Common Stock is not traded on The New York Stock Exchange,
the highest price as reported on such other securities market or exchange on
which such shares are traded as the Committee may determine.


 


2.13.  “Deferral Account” shall have the
meaning set forth in Section 7.2.


 


2.14.  “Determined Value” shall mean the
highest price per share of Common Stock paid in connection with any Change in
Control (including without limitation prices paid in any subsequent merger or
combination with any entity that acquires control of the Company).


 


2.15.  “Disability” shall be deemed to exist
if (i) by reason of mental or physical illness the Participant has not
performed his or her duties for a period of six consecutive months; and (ii)
the Participant does not return to the performance of his or her duties within
thirty days after written notice is given by Company or one of its subsidiaries
that the Participant has been determined by the Committee to be “Disabled”
under the Company’s long term disability policy.


 


2.16.  “Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended.


 


2.17.  “Fair Market Value” shall mean, with
respect to any share of Common Stock, the closing price of such share as
reported in “New York Stock Exchange Composite Transactions” in “The Wall
Street Journal” for the relevant date or, if no quotation shall have been made
on such relevant date, on the next preceding day on which there were quotations
or, if the Company’s shares of Common Stock are not traded on such exchange,
such price as reported on such other securities market or exchange on which
such shares are traded as the Committee shall determine.


 


2.18.  “Involuntary Termination” shall mean
a termination of the employment of Participant by the Company or one of its
subsidiaries for any reason other than Cause.


 


2.19.  “Participant” shall have the meaning
set forth in Section 4.1.


 


2.20.  “Permitted Beneficiary” shall mean,
with respect to J. Spencer Standish, Mr. Standish’s spouse, his issue, a spouse
of his issue, a whole or half brother or sister of Mr. Standish,


 


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a cousin of Mr. Standish, or a trust the primary beneficiaries of which
are Mr. Standish or any of the persons previously specified in this Section
2.20.


 


2.21.  “Plan” shall have the meaning set
forth in Section 1.


 


2.22.  “Restricted Unit Account” shall have
the meaning set forth in Section 4.3.


 


2.23.  “Restricted Unit” shall mean a right
granted by the Committee pursuant to Section 4.1 to receive the value (as
determined pursuant to the Plan) of a share of Common Stock as of a specified
date or as of the date of occurrence of a specified event with none of the
attendant rights of a shareholder of such shares except to the extent otherwise
provided herein.


 


2.24.  “Retirement” shall mean a termination
of the employment of the Participant, after the Participant has attained 62,
for any reason other than death, Disability, Cause or Involuntary Termination.


 


2.25.  “Share Price” shall mean, as of the
date in question (either a Vesting Date or a Valuation Date, as the case may
be), the average Fair Market Value over a period of 20 consecutive Business
Days ending on the fifth Business Day preceding such date.


 


2.26.  “Target Price” shall mean the price
of a share of Common Stock designated by a Participant the attainment of which
triggers payment of the balance of the Participant’s Deferral Account in
accordance with Section 7.3(a)(ii).


 


2.27.  “Valuation Date” shall mean (i) with
respect to a termination of service, the date of such termination of service;
(ii) with respect to a date certain selected by the Participant pursuant to
Section 7.3(a)(i), such date certain; (iii) with respect to any monthly
installment, the last Business Day of the corresponding month; and (iv) with
respect to a termination of the Plan pursuant to Section 11.8, the date the
Board or Committee terminates the Plan.


 


2.28.  “Vesting Date” shall have the meaning
set forth in Section 5.1.


 


SECTION 3.  GENERAL


 


3.1.  Effective Date.  The Plan shall be effective from and after [
], 2003, until terminated as provided herein.


 


3.2.  Administration.  The Committee shall administer the
Plan.  The Committee shall interpret the
Plan and make all decisions with respect to the rights of Participants
hereunder; provided, however, that no member of the Committee
shall act on any matter in which such member has a particular or special
interest.  In addition, the Committee
shall have the authority to accelerate at any time the Vesting Date of any
outstanding unvested Restricted Units.


 


3.3.  Eligibility.  The persons eligible to participate in the
Plan are all employees of the Company who are in the top management incentive
compensation group and any other employees of the Company or any other member
of the Albany Group who, with respect to any year, are approved for
participation by the Committee.


 


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3.4.  Indemnification of the Committee.  In addition to such other rights of
indemnification as they may have as directors, as members of the Committee or
otherwise, the members of the Committee shall be indemnified by the Company
against the reasonable expenses, including attorneys’ fees, actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with an appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan or any Restricted Units granted hereunder and against
all amounts paid by them in settlement thereof (provided such settlement is
approved by independent legal counsel selected by the Company) or paid by them
in satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such Committee member is liable for negligence or misconduct in
the performance of his or her duties; provided that within sixty days
after institution of any such action, suit or proceeding, a Committee member
shall in writing offer the Company the opportunity, at its own expense, to
handle and defend the same.


 


SECTION 4.  GRANT OF RESTRICTED UNITS AND ESTABLISHMENT
OF RESTRICTED UNIT ACCOUNT


 


4.1.  Award of Restricted Units.  The Committee may from time to time, subject
to the provisions of the Plan, in its discretion award Restricted Units to
eligible employees in such amounts as the Committee shall determine to
award.  Each eligible employee to whom
Restricted Units are awarded is referred to herein as a “Participant.”


 


4.2.  Award Agreements.  The award of any Restricted Units shall be
evidenced by a written agreement (the “Award Agreement”) executed by the
Company and the Participant in accordance with its terms, stating the number of
Restricted Units awarded and such other terms and conditions of the award as
the Committee may from time to time determine.


 


4.3.  Restricted Unit Account.  The Company shall establish and maintain on
its books, for recordkeeping purposes only, an account (a “Restricted Unit
Account”) for and on behalf of each Participant and will record in such
account the number of Restricted Units awarded to the Participant and any
additional Restricted Units credited to such Restricted Unit Account as Cash
Dividend Equivalents with respect to any Restricted Units pursuant to Section
5.4.


 


SECTION 5.  VESTING OF RESTRICTED UNITS


 


5.1.  Vesting Date.  Unless otherwise provided in the Award
Agreement, in respect of any award of Restricted Units under the Plan, 20% of
such Restricted Units (including any additional Restricted Units credited as
Cash Dividend Equivalents with respect to such Restricted Units) shall vest in
the Participant on each anniversary of the date of grant of such Restricted
Units (each such date, a “Vesting Date”).


 


5.2.  Special Vesting.  Unless otherwise provided in the Award
Agreement, in the event that a Participant’s employment with the Albany Group
terminates due to death, Disability, Retirement or Involuntary Termination, the
Vesting Date for 50% of all unvested Restricted


 


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Units credited to such Participant’s Restricted Unit Account shall be
accelerated to the date of such termination.


 


5.3.  Forfeiture of Restricted Units.  Unless otherwise provided in the Award
Agreement, upon the effective date of the termination of a Participant’s employment
with the Albany Group, Participant shall automatically forfeit without
consideration or any action being required:


 


(a)           50% of all unvested
Restricted Units in the event of termination of Participant’s employment for a
reason specified in Section 5.2; or


 


(b)           100% of all unvested
Restricted Units in the event of termination of Participant’s employment for
any reason not specified in Section 5.2.


 


5.4.  Cash Dividend Equivalents.  The Company shall credit the Restricted Unit
Account or the Deferral Account, if any, of each Participant as of each date on
which the Company pays a cash dividend on shares of Common Stock (a “Dividend
Payment Date”), with additional Restricted Units, the number of which shall
be determined by first (i) multiplying the number of Restricted Units in the
Participant’s Restricted Unit Account and/or Deferral Account, on the Dividend
Payment Date by the per-share dollar amount of the dividend so paid, and then
(ii) dividing the resulting amount by the Fair Market Value of a share of
Common Stock on the Dividend Payment Date (such additional Restricted Units
being referred to herein as “Cash Dividend Equivalents”).  The additional Restricted Units credited to
a Participant’s Restricted Unit Account and/or Deferral Account as Cash
Dividend Equivalents shall, as of the Dividend Payment Date, be treated for
purposes of vesting pursuant to Section 5.1 (and any other applicable terms and
conditions) as though part of the Restricted Units in relation to which such
additional Restricted Units were credited as Cash Dividend Equivalents.


 


5.5.  Optional Terms and Conditions.  To the extent not inconsistent with the
Plan, the Committee may prescribe such terms and conditions applicable to an
award of Restricted Units as it may in its discretion determine.


 


SECTION 6.  PAYMENT OF RESTRICTED UNITS


 


6.1.  Payment Date.  As promptly as practicable after the Vesting
Date, the Company or one of its subsidiaries shall pay to the Participant or
the Participant’s Beneficiary, as applicable, an amount in U.S. dollars equal
to the product of (i) the number of Restricted Units vesting on the Vesting
Date multiplied by (ii) the Share Price as of the Vesting Date.


 


6.2.  Payment Deferred.  If the Participant desires that payment of
vested Restricted Units be made at some later date than the date set forth in
Section 6.1, the Participant shall file an election with the Committee.  This election and the terms of such deferred
Restricted Units shall be governed by Section 7 of the Plan.


 


SECTION 7.  TERMS OF DEFERRED PAYMENTS


 


7.1.  Deferral Elections.  Unless the Committee in its discretion
determines otherwise, a Participant may elect to have payment with respect to
such Participant’s Restricted


 


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Units deferred under the terms of this Plan.  Any such election shall be made in accordance with the following
provisions:


 


(a)           A deferral election
with respect to Restricted Units shall be made in writing, on a form provided
by the Committee for such purpose.


 


(b)           A deferral election
shall be effective for all Restricted Units that are scheduled to vest a year
or more after the date that the Participant files such deferral election with
the Committee, including any awards of Restricted Units granted to the Participant
subsequent to the date of his/her filing such deferral election; provided,
that a deferral election filed within thirty (30) days after the date on which
the Plan is first adopted or the Participant is first selected to participate
in the Plan shall apply to all Restricted Units that are scheduled to vest
after the date that the Participant files such deferral election with the
Committee.


 


(c)           Any Restricted Units
with a Vesting Date that occurs on or after the date certain specified by the
Participant in accordance with Section 7.3(a)(i) or the date the Target Price
specified by the Participant in accordance with Section 7.3(a)(ii) is first
attained shall be deemed not to be deferred and shall be paid in accordance
with Section 6.1 unless a new deferral election has been filed pursuant to
Section 7.1(e).


 


(d)           Any deferral election
made hereunder by a Participant shall be irrevocable except as set forth in
this  Section 7.


 


(e)           In the event a
Participant receives the balance of his/her Deferral Account prior to his/her
termination of service pursuant to Section 7.3(a)(i) or (ii), the Committee
may, in its discretion, permit such Participant to elect to make a new deferral
election with respect to any unvested and/or subsequently awarded Restricted
Units in accordance with the terms of this Section 7.1.


 


7.2.  Deferral Accounts.  The Company shall establish and maintain on
its books, for recordkeeping purposes only, a separate account (a “Deferral
Account”) for each Participant who has elected to defer the receipt of
Restricted Units pursuant to Section 7.1. 
Each Participant’s Deferral Account shall be maintained in accordance
with the following provisions:


 


(a)           On the Vesting Date for
all Restricted Units for which a Participant’s deferral election is effective,
the Participant’s Deferral Account shall be credited with a number of
Restricted Units equal to the number of Restricted Units vesting on such
Vesting Date.


 


(b)           A Participant’s
Deferral Account shall be adjusted to reflect all additional Restricted Units
to be credited to such Deferral Account as Cash Dividend Equivalents pursuant
to Section 5.4.


 


(c)           A Participant’s
interest in his or her Deferral Account shall be fully vested and
nonforfeitable at all times, except as set forth herein.


 


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7.3.  Payment of Deferral Account Balances


 


(a)           At the time a
Participant makes his or her election to defer pursuant to Section 7.1, he or
she shall also make an election, pursuant to this Section 7.3, as to the time
and manner in which the Restricted Units credited to his or her Deferral
Account shall be distributed.  Such election shall be irrevocable, except
as provided in this Section 7.  A
Participant shall be entitled to elect to receive, or to commence receiving,
the balance credited to his or her Deferral Account in U.S. dollars payable by
the Company or one of its subsidiaries as promptly as practicable following:


 


(i)            the
earlier of (A) a date certain specified by him/her; or (B) the later of his/her
termination of service as a director of the Company or as an employee of the
Albany Group;


 


(ii)           the
earlier of (A) the date the Daily High Price of a share of Common Stock first
equals or exceeds the Target Price on or after the date Restricted Units are
first credited to the Participant’s Deferral Account; or (B) the later of
his/her termination of service as a director of the Company or as an employee
of the Albany Group;


 


(iii)          his or her termination of service as an
employee of the Albany Group (whether or not such Participant is then a
director of the Company); or


 


(iv)          the
later of his or her termination of service as a director of the Company or
his/her termination of service as an employee of the Albany Group.


 


For purposes
of this Section 7.3(a), “termination of service” shall include any termination
resulting from death or Disability of the Participant.


 


(b)           A Participant who has
elected to receive the balance credited to his/her Deferral Account as set
forth in Section 7.3(a)(i) above shall receive such balance in the form of a
single lump sum payment in an amount in U.S. dollars equal to the product of
(i) the number of Restricted Units in the Deferral Account on the Valuation
Date multiplied by (ii) the Share Price as of the Valuation Date.


 


(c)           A Participant who has
elected to receive the balance credited to his/her Deferral Account as set
forth in Section 7.3(a)(ii) above shall receive the balance in the form of a
single lump sum payment in an amount in U.S. dollars equal to:


 


(i)            in
the event termination of service occurs before the Target Price is attained,
the product of (A) the number of Restricted Units in the Deferral Account on
the Valuation Date multiplied by (B) the Share Price as of the Valuation Date;
or


 


(ii)           in
the event the Target Price is attained before termination of service, the
product of (A) the Fair Market Value on the Business Day on which the Daily
High Price first equals or exceeds the Target Price multiplied by (B) the
number of Restricted Units in the Deferral Account on such date.


 


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(d)           A Participant who has
elected to receive, or to commence receiving, the balance credited to his/her
Deferral Account as set forth in Section 7.3(a)(iii) or 7.3(a)(iv) shall be
entitled to elect to receive such balance in one of the following ways:


 


(i)            in
a single lump sum payment; or


 


(ii)           in
monthly installments over a period of not more than ten (10) years elected by
the Participant.


 


(e)           A Participant who has
elected to receive the balance credited to his/her Deferral Account as set
forth in Section 7.3(d)(i) above shall receive such balance in the form of a
single lump sum payment in an amount in U.S. dollars equal to the product of
(i) the number of Restricted Units in the Deferral Account on the Valuation
Date multiplied by (ii) the Share Price as of the Valuation Date.


 


(f)            A Participant who has
elected to receive the balance credited to his/her Deferral Account as set
forth in Section 7.3(d)(ii) above shall receive monthly installments in U.S.
dollars that shall be determined by multiplying (i) the quotient resulting from
dividing (A) the number of Restricted Units in the Deferral Account on the
Valuation Date for any such monthly installment by (B) the number of remaining
monthly installments elected by the Participant and (ii) the Share Price as of
the Valuation Date for such monthly installment.


 


7.4.  Changing the Payment Election


 


(a)           A Participant who has
elected to receive the balance credited to his/her Deferral Account pursuant to
Section 7.3(a)(iii) or (iv) may at any time elect to change his/her election
under Section 7.3(d) to any other election permitted by Section 7.3(d).  Not more than three such changes of election
may be made by any Participant under this Section 7.4(a).  Unless the
Committee, in its sole and absolute discretion, shall determine otherwise, no
such change of election shall be effective if the termination of service that
constitutes the triggering event for distribution to such Participant has
already occurred, or occurs within one (1) year of the date of such change of
election; unless the termination of service is the result of the death
or Disability of a Participant who, at the time such election was made, did not
in good faith expect to die or become disabled within the next year.


 


(b)           A Participant who has
elected to receive the balance credited to his/her Deferral Account pursuant to
Section 7.3(a)(i) may, at any time prior to one (1) year before the date
certain specified in such election, change such date certain to either a later
date certain or an event permitted by Section 7.3(a)(ii) through (iv); provided
that if the Participant elects to receive the balance credited to his/her
Deferral Account pursuant to Section 7.3(a)(ii), the Participant’s change to his/her
deferral election shall not become effective until the one (1) year anniversary
of the date of the Participant’s change to his/her deferral
election.   Not more than two such changes shall be made by any
Participant under this Section 7.4(b).


 


(c)           A Participant who has
elected to receive the balance credited to his/her Deferral Account pursuant to
Section 7.3(a)(ii) may change the Target Price to any other Target Price or to
an event permitted by Section 7.3(a)(iii) or (iv); provided that if the
Participant selects a new Target Price, the Participant’s change to his/her
deferral election shall not become


 


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effective until the one (1) year anniversary of the date of the
Participant’s change to his/her deferral election. Not more than two such
changes shall be made by any Participant under this Section 7.4(c).


 


(d)           Any changes to a
deferral election pursuant to this Section 7.4 shall be made in a written
instrument filed with the Committee.


 


7.5.  Early Distributions


 


(a)           In the event of
hardship, any Participant, or Participant’s Beneficiary, may, by a written
instrument filed with the Committee, request an immediate distribution of all
or a portion of the balance credited to the Participant’s Deferral Account. 
For purposes of this Section 7.5, a distribution is on account of hardship only
if the distribution is made:


 


(i)            on
account of an immediate and heavy financial need of such Participant or
Beneficiary, occasioned by an unanticipated emergency caused by events beyond
his/her control that would result in severe financial hardship if the
distribution were not permitted;


 


(ii)           in
an amount required to satisfy such financial need; and


 


(iii)          in circumstances in which the need cannot be
satisfied from other resources that are reasonably available to the Participant
or Beneficiary, such as through reimbursement or compensation by insurance or
otherwise, by reasonable liquidation of his/her assets (to the extent such
liquidation would not itself cause an immediate and heavy financial need), or
by other permitted distributions or nontaxable (at the time of the loan) loans
from other plans maintained by the Albany Group, or by borrowing from
commercial sources on reasonable commercial terms.  The Committee shall determine whether the requested distribution
satisfies the requirements of this Section 7.5(a) on the basis of all relevant
facts and circumstances.


 


(b)           The Committee may, upon
the written request of any Participant, or any Participant’s Beneficiary, distribute
to such Participant or Beneficiary all or a portion of the balance credited to
such Participant’s Deferral Account prior to the time when he/she would
otherwise have been entitled to such distribution if the Committee determines,
in its sole and absolute discretion, that such earlier distribution is
warranted for good reasons and as a result of extraordinary circumstances.


 


(c)           (i)  Upon the request of any Participant,
including a Participant no longer serving as an employee of the Albany Group or
as a director of the Company, or any Participant’s Beneficiary, a distribution
of a portion or the entire balance credited to the Deferral Account of a
Participant shall be made at any time or times prior to the time at which
he/she would have been entitled to receive such amount in accordance with an
election


 


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pursuant to Section 7.3 hereof; provided that there shall be
withheld from each such distribution an amount equal to ten percent (10%) of
the amount requested to be distributed.  Such Participant or Beneficiary
shall forever forfeit, relinquish and waive any right to receive any such
withheld amounts, or any interest thereon.


 


(ii)  At any time prior to the
occurrence of the event triggering receipt or commencement of receipt of the
balance credited to a Participant’s Deferral Account, a Participant may elect
to receive such balance on a date certain specified by him/her; provided
that such date certain shall be no earlier than one (1) year following the date
on which the Participant makes such change to his/her deferral election; and provided,
further, that the Participant’s previous deferral election shall remain
in effect until such date.  An election
pursuant to this Section 7.5(c)(ii) shall be irrevocable.


 


(d)           Any distribution of
less than 100% of the balance credited to the Participant’s Deferral Account
pursuant to this Section 7.5 shall be deemed to be a distribution of the
Restricted Units which would have been paid earliest had they not been
deferred.


 


SECTION 8.  CHANGE IN CONTROL


 


In the event of a
Change in Control, the provisions of this Section 8 shall apply notwithstanding
any other provision herein to the contrary. 
Upon the occurrence of a Change in Control, the balance of each Participant’s
Restricted Unit Account and Deferral Account shall become immediately payable
in full.  Payment with respect to each
Participant’s Restricted Unit Account and Deferral Account shall be made to the
Participant, or if the Participant has died, to his or her Beneficiary, in the
form of a single lump sum cash payment. 
The amount so payable with respect to each Participant’s Restricted Unit
Account and Deferral Account shall be determined by multiplying the aggregate
number of Restricted Units then included in the balance of the Participant’s
Restricted Unit Account and Deferral Account by the Determined Value of one
share of Common Stock.  Amounts payable
to Participants or Beneficiaries pursuant to this Section 8, reduced by any
taxes withheld pursuant to Section 11.2, shall be paid to such Participants or
Beneficiaries as soon as practicable following the Change in Control.


 


SECTION 9.  ADJUSTMENT IN EVENT OF CHANGES IN
CAPITALIZATION


 


Notwithstanding
any other provision of the Plan, in the event of any change in the outstanding
shares of Common Stock by reason of a stock dividend, recapitalization, merger,
consolidation, split-up, combination or exchange of shares or the like, the
number and class of shares covered by the Restricted Units and the value of any
outstanding Restricted Units shall be appropriately adjusted by the Committee,
whose determination shall be conclusive.


 


SECTION 10.  FUNDING


 


10.1.  Participant’s Right Unsecured.  The Plan shall be unfunded.  Amounts
payable hereunder shall be paid from the general assets of the Company. The
right of any


 


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Participant or Beneficiary to receive payment under the provisions of
the Plan shall be an unsecured claim against the general assets of the Company,
and no provisions contained in the Plan shall be construed to give any
Participant or Beneficiary at any time a security interest in the Restricted
Unit Account, the Deferral Account or any other assets of the Company.


 


10.2.  Establishment of Trust.  The Company may establish a trust pursuant
to a trust agreement and make contributions thereto for the purpose of
assisting the Company in meeting its obligations in respect of benefits payable
under the Plan.  Any such trust agreement shall contain procedures to the
following effect:


 


(a)           In the event of the
insolvency of the Company, the trust fund will be available to pay the claims
of any creditor of the Company to whom a distribution may be made in accordance
with state and federal bankruptcy laws.  The Company shall be deemed to be
“insolvent” if the Company is subject to a pending proceeding as a debtor under
the federal Bankruptcy Code (or any successor federal statute) or any state
bankruptcy code.  In the event the Company becomes insolvent, the Board
and chief executive officer of the Company shall notify the trustee of that
event as soon as practicable.  Upon receipt of such notice, or if the
trustee receives other written allegation of the Company’s insolvency, the
trustee shall cease making payments of benefits from the trust fund, shall hold
the trust fund for the benefit of the Company’s creditors, and shall take such
steps as are necessary to determine within thirty (30) days whether the Company
is insolvent.  In the case of the trustee’s actual knowledge of or other
determination of the Company’s insolvency, the trustee will deliver assets of
the trust fund to satisfy claims of the Company’s creditors as directed by a
court of competent jurisdiction.


 


(b)           The trustee shall
resume payment of benefits under the trust agreement only after the trustee has
determined that the Company is not insolvent (or is no longer insolvent, if the
trustee had previously determined the Company to be insolvent) or upon receipt
of an order of a court of competent jurisdiction requiring such payment. 
If the trustee discontinues payment of benefits pursuant to Section 10.2(a) and
subsequently resumes such payment, the first payment on account of a
Participant following such discontinuance shall include an aggregate amount
equal to the difference between the payments which would have been made on
account of such Participant under the trust agreement and the aggregate
payments actually made on account of such Participant by the Company during any
such period of discontinuance.


 


SECTION 11.  MISCELLANEOUS


 


11.1.  Non-Transferability.  No Restricted Units shall be assignable or
transferable by the Participant, and no other person shall acquire any rights
therein other than by will, the laws of descent and distribution, or pursuant
to the designation of a Beneficiary pursuant to Section 11.6.  The Restricted Units shall not be pledged,
hypothecated, sold, assigned or otherwise disposed of, encumbered or
transferred, in whole or in part.  Any
purported pledge, hypothecation, sale, assignment or other disposition,
encumbrance or transfer of a Restricted Unit and any levy of any execution,
attachment or similar process upon a Restricted Unit, in whole or in part,
shall be null and void and without effect.


 


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11.2.  Withholding Taxes.  Any payments made to a Participant under the
Plan may be net of an amount sufficient to satisfy any U.S. federal, state,
local or foreign withholding tax requirements.


 


11.3.  Section 162.  Notwithstanding any other provision of the
Plan, the Company may, in its sole and absolute discretion, delay, for a period
of up to one (1) year, any payment to the extent that such payment would result
in compensation to the Participant that is not deductible by the Albany Group
for federal income tax purposes (whether by reason of Section 162(m) of the
Internal Revenue Code of 1986 or otherwise).


 


11.4.  No Right to Employment.  Nothing in the Plan or in any agreement
entered into pursuant to the Plan shall confer upon any Participant the right
to continue in the employment of the Company or a subsidiary or affect any
right which the Company or a subsidiary may have to terminate the employment of
such Participant.


 


11.5.  No Rights of Shareholders.  Participants shall have no rights as
shareholders of the Company with respect to awards of Restricted Units.


 


11.6.  Designation of Beneficiary.  A Participant may at any time designate a
person or persons (the “Beneficiary”) who shall receive, following the
death of the Participant, payments of the balances credited to his/her
Restricted Unit Account and Deferral Account, if any.  Such designation
may be made or changed by the Participant, at any time, by a written instrument
filed with the Committee or by the Participant’s will.  With respect to a
Participant’s Deferral Account, the Beneficiary so named shall be entitled to
receive payment of the balance in such account either (i) in the manner last
elected by the Participant pursuant to Section 7, or (ii) in accordance with
the Beneficiary’s written request pursuant to Section 7.5; provided that
such written request is executed by all persons designated as the Beneficiary
or (iii) if elected by the Participant in his/her will, in a lump sum.


 


11.7.  Governing Law.  The Plan shall be governed by and construed
in accordance with the laws of the State of New York.


 


11.8.  Amendment or Termination.  The Plan may be amended or terminated at any
time by the Board or by the Committee; provided that, unless otherwise
required by law, the rights of a Participant with respect to outstanding
Restricted Units granted prior to such amendment or termination may not be
impaired without the consent of such Participant.  Notwithstanding the
preceding sentence or any deferral election, upon termination of the Plan, no
unvested Restricted Units may be deferred but shall instead be paid out upon
vesting, and, with respect to any balance in a Participant’s Deferral Account
on such termination date, the Committee shall pay to such Participant an amount
in U.S. dollars equal to the product of (i) the number of Restricted Units in
the Deferral Account on the Valuation Date multiplied by (ii) the Share Price
as of the Valuation Date.  The Company
shall notify each Participant and the Beneficiary currently entitled to
benefits under the Plan of termination of the Plan and pay any amounts due to
such Participant as promptly as practicable after such termination; provided
that the failure to give such notice shall not affect the Company’s rights hereunder.


 


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