Document:

Prepared by MERRILL CORPORATION

ALBANY INTERNATIONAL

CORP.

 

EXECUTIVE DEFERRED

COMPENSATION PLAN*

 

PLAN AND ELECTION

AGREEMENT

 

* Amended and Restated as of June 15, 2001.

Reflects Amendments dated

2/11/97, 2/10/98, 5/25/01, 6/15/01 and 8/8/01.

 

TABLE OF CONTENTS

 

	

  I.

  	

  PURPOSE

  
	

   

  	

   

  
	

  II.

  	

  DEFINITIONS AND

  CERTAIN PROVISIONS

  
	

   

  	

   

  
	

  III.

  	

  PARTICIPATION

  AND COMPENSATION REDUCTION

  
	

   

  	

   

  
	

  IV.

  	

  BENEFITS

  
	

   

  	

   

  
	

  V.

  	

  CLAIMS FOR BENEFITS

  PROCEDURE

  
	

   

  	

   

  
	

  VI.

  	

  ADMINISTRATION

  
	

   

  	

   

  
	

  VII.

  	

  AMENDMENT AND

  TERMINATION

  
	

   

  	

   

  
	

  VIII.

  	

  MISCELLANEOUS

  
	

   

  	

   

  

 

ALBANY INTERNATIONAL

CORP.

EXECUTIVE DEFERRED

COMPENSATION PLAN

 

I.              PURPOSE

 

The Albany International Corp. Executive Deferred

Compensation Plan (the “Plan”) provides designated executives of Albany

International Corp. (the “Company”) with a tax-favored investment

opportunity.  By providing a means

whereby compensation may be deferred into the future, the Plan will aid in

attracting and retaining executives of exceptional ability.

 

Compensation reductions and transfers of account

balances from such other deferred compensation plans maintained by the Company

as the Committee may designate (such account balances referred to herein as

“Prior Deferrals” and such plans referred to herein as “Prior Deferred

Compensation Plans”) made pursuant to the Plan will be credited with interest

for the benefit of each Participant. 

The value of a Participant’s deferrals, and interest earned on those

deferrals, will vary by such factors as the amount and duration of the

compensation reductions, the amount of transfers of Prior Deferrals, the

Participant’s age at the time of reduction or transfer, and the date benefits

commence.  The intent of the Plan is to

credit Participants’ compensation reductions and transfers to Prior Deferrals

with a specified rate of interest rather than to provide defined benefits.  However, to provide additional financial

security, and to protect the purpose of the Plan, miscellaneous death and

disability benefits are provided to qualifying Participants.

 

To the extent that compensation reductions made by an

executive pursuant to the Plan may reduce retirement benefits provided in the

Albany International Corp. Pension Plan For Salaried Employees (the “Pension

Plan” ), the amount by which benefits are reduced, if any, will be restored to

Participants as provided in the Plan.

 

II.            DEFINITIONS

AND CERTAIN PROVISIONS

 

2.1        “Agreement” means the Albany

International Corp. Executive Deferred Compensation Election Agreement executed

by a Participant and the Company, whereby a Participant agrees to defer a

portion of his/her compensation or transfer Prior Deferrals pursuant to the

provisions of the Plan, and the Company agrees to make benefit payments in

accordance with the provisions of the Plan.

 

2.2      “Participant” means an executive of

the Company who is designated to be eligible pursuant to Section 3.1 hereof and

who enters into an Agreement.

 

2.3      Normal Benefit Date” means the date

of Termination of Service of the Participant on or after the earlier of (i)

his/her Normal Retirement Date or the date on which he/she would be eligible

for Early Retirement, as defined in the Pension Plan, or (ii) his/her

retirement date as determined by the Committee.

 

2.4      “Compensation” for any Deferral

Year means (i) twelve times the Participant’s base salary (before reductions

are made pursuant to the 401(k) Plan) earned during August, 1985, (or, in the

case of a Participant with an Eligibility Date (as defined in Section 3.6)

after 1985, during the month including his/her Eligibility Date), plus

(ii) the Participant’s standard bonus with respect to 1985 (or, in the case of

a Participant with an Eligibility Date after 1985, the standard bonus for the

Participant with respect to the Deferral Year including his/her Eligibility

Date).

 

2.5      “Adjusted Compensation” means for

purposes of the Alternate Disability Benefit, a Participant’s base salary in

effect on the date the Disability was incurred, adjusted as of January 1 of

each year thereafter by the ratio of (a) the composite Consumer Price Index, as

published by the Bureau of Labor Statistics (or, if such monthly index is no

longer published, a substantially similar one selected by the Committee), for

January of such year to (b) such index for the month in which the Disability

was incurred.

 

2.6      “Deferral Year” means any calendar

year, 1886 through 1989.  For purposes

of 1985, the Deferral Year means the Plan Effective Date through December 31,

1985.

 

2.7      “Termination of Service” means the

Participant’s ceasing his/her service with the Company, and its successors and

assigns, for any reason whatsoever, whether voluntarily or involuntarily,

including by reason of death or Disability.

 

2.8      “Disability” means a condition, as

determined by the Company, that totally and continuously prevents the

Participant, for at least six consecutive months, from engaging in an

“occupation” for compensation or profit. 

During the first twenty-four (24) months of Disability, “occupation”

means the Participant’s occupation at the time the disability was

incurred.  After that period,

“occupation” means any occupation for which the Participant is or becomes

reasonably fitted by education, training or experience.  Notwithstanding the foregoing, a Disability

shall not exist for purposes of the Plan if the Participant fails to qualify

for disability benefits under the Social Security Act, unless the Company

determines, in its sole discretion, that a Disability exists.

 

2.9      “Beneficiary” means the person or

persons so designated by a Participant pursuant to Section 4.12 hereof or, in

the absence of such a designation, the person or persons entitled to benefits

pursuant to Section 4.12 upon the death of the Participant.

 

2.10      “Board of Directors” means the

Board of Directors of Albany International Corp.

 

2.11      “Plan” means this Albany

International Corp. Executive Deferred Compensation Plan, as amended from time

to time.

 

2.12     “401(k) Plan” means the Albany

International Corp. Investment Plan for Salaried Employees, as amended from

time to time, intended to be qualified under Section 401(k) of the Internal

Revenue Code, as amended, and any successor plan thereto.

 

2.13      “Account” means the account

maintained on the books of the Company for each Participant pursuant to Article

III hereof.  A Participant’s Account

shall not constitute or be treated as a trust fund of any kind.

 

2.14      “Valuation Date” means the last day

of each calendar month.

 

2.15    “Retirement Interest Yield” with

respect to any calendar month means a rate of interest equal to one-twelfth

(1/12) of the average of the sum of the monthly composite yields on Moody’s

Seasoned Corporate Bond Yield Index for the immediately preceding calendar

year, plus three (3) percentage points, as determined from Moody’s Bond Record

monthly yields published by Moody’s Investors Service, Inc. (or any successor

thereto), or, if such monthly yield is no longer published, a substantially

similar average selected by the Committee.

 

2.16     “Committee” means the Plan Committee

appointed to administer the Plan pursuant to Article VI.

 

2.17      “Plan Effective Date” means

September 1, 1985.

 

2.18      “Deposits” means the amount of the

Participant’s deferral of base salary and/or bonus and the Participant’s

transfers of Prior Deferrals to the Plan.

 

III.           PARTICIPATION

AND COMPENSATION REDUCTION

 

3.1        Participation.  Participation in the Plan shall be limited

to executives of the Company, designated to be eligible by the Board of

Directors, who elect to participate in the Plan by filing an Agreement with the

Company.  The election to participate

shall be effective upon receipt by the Committee of an Agreement that is

properly completed and executed in conformity with the Plan.

 

3.2         Deposits and Length of Participation.  A Participant who elects to participate in

the Plan must agree to make Deposits for one or more Deferral Years for a term

not to extend beyond December 31, 1989. 

For calendar year 1985, a Participant may elect to make Deposits in an

amount equal to:

 

(i)            5, 10, 15 or 20 percent of his/her

base salary remaining due between his/her Eligibility Date and December 31,

1985, or

 

(ii)           5, 10, 15 or 20 percent of

Compensation but not to exceed, however, the amount of his/her base salary

remaining due between his/her Eligibility Date and December 31, 1985.  For calendar years 1986 through 1989, a

Participant may elect to make Deposits in consecutive years commencing with

1986 (or the year of his/her Eligibility Date, if later) in an amount in each

of the elected Deferral Years equal to 5, 10, 15 or 20 percent of his/her

Compensation.

 

3.3        Maximum Deposit Limitation.

 

(a)           For each Deferral Year, the Committee

shall establish a maximum amount of Deposits (the “Maximum Deposit Limitation”)

that may be made by Participants in the aggregate.  In the event that the aggregate amount of Deposits that

Participants have elected to make for a Deferral Year exceeds the Maximum

Deposit Limitation for such Deferral Year, the amount of Deposits that may be

made by Participants shall be reduced by reducing the Deposits elected to be

made by each Participant who has elected to make Deposits in excess of 10% of

his/her Compensation in proportion to the amount the respective excess Deposits

of each such Participant bear to the aggregate amount of such excess for all

Participants.

 

(b)           In the event that the aggregate

amount of Deposits to be made by Participants for a Deferral Year is less than

the Maximum Deposit Limitation, then the amount of each Participant’s Deposit

for such Deferral Year shall (subject to the limitation contained in the next

sentence) be increased by an amount equal to the amount of Deposits elected to

be made by the Participant in his/her Agreement for prior Deferral Years that

have not been credited to his/her Account due to the Maximum Deposit

Limitation.  In the event that the

increased aggregate amount to be deposited pursuant to the preceding sentence

shall exceed the Maximum Deposit Limitation, the amount by which each

Participant’s Deposit shall have been increased shall be reduced by whatever

percentage the aggregate increase must be reduced so that the aggregate amount

of Deposits equals the Maximum Deposit Limitation for such Deferral Year.

 

3.4   Source of Deferrals.

 

(a)           With respect to Deferral Year 1985, a

Participant’s Deposits to be derived from compensation reductions shall be made

by reducing the remaining base salary due him/her in 1985 in equal amounts per

pay period.

 

(b)           With respect to each of Deferral

Years 1986 through 1989, a Participant’s Deposits to be derived from

compensation reductions shall be made:

 

(i)            Entirely from the bonus due the

Participant in such Deferral Year.  If

the actual bonus for such Deferral Year is less than the amount to be deposited

for such Deferral Year from such bonus, the balance of such Deposit shall be

made by reducing the base salary due the Participant in equal amounts for each

pay period remaining in such Deferral Year; or

 

(ii)           By reducing base salary in equal

installments for each pay period in such Deferral Year; or

 

(iii)          By reducing base salary in equal

installments from base salary for each pay period in such Deferral Year, up to

an aggregate amount of one-half (1/2) of the Deposits to be made for such

Deferral Year, with the remainder of the Deposits for such Deferral Year to be

made by reducing the bonus due the Participant in such Deferral Year.  In the event that the bonus for such

Deferral Year is less than that portion of the Deposit to be made from the

bonus for such Deferral Year, the balance of such deposit shall be made by

reducing the base salary due the Participant in equal amounts for each pay

period remaining in such Deferral Year.

 

(c)           A Participant who has not made

Deposits from compensation reductions may elect to make Deposits by

transferring Prior Deferrals to the Plan. 

In the event of such an election, the Participant may not make any

Deposits derived from compensation reductions until his/her account balances

under the Prior Deferred Compensation Plans are exhausted.  The remainder of the Deposits in respect of a

Deferral Year (i.e., the Deposits elected for the Deferral Year in excess of

the amount of Prior Deferrals transferred to the Plan for such Deferral Year)

shall be made by reducing base salary or bonus in respect of such Deferral

Year, as the case may be, in accordance with Section 3.4(a) and (b), as

applicable.  All transfers of Prior

Deferrals shall be made on the later of the Participant’s Eligibility Date or

the first day of the Deferral Year with respect to which the Deposit is to be

made.

 

3.5           Timing of Deposit Credits.  The amount of a Participant’s Deposits

derived from compensation reductions shall cause an equivalent reduction in

his/her base salary and/or bonus, as the case may be, and shall be credited to

the Participant’s Account throughout each Deferral Year as the Participant is

paid, or would have been paid but for the Deposit, the portion of base salary

and/or bonus deferred for such Deferral Year. 

The amount a Participant elects to transfer from Prior Deferrals in the

Agreement shall cause an equivalent reduction in the balance of his/her account

under the Prior Deferred Compensation Plan form which the transfer was made,

and shall be credited to the Participant’s Account on the date as of which such

transfer is made.

 

3.6           Eligibility Date.  A Participant’s “Eligibility Date” shall be:

(a) the Plan Effective Date in respect of executives who are notified of their

eligibility to participate prior to such date provided, however, that the

executive files his/her Agreement with the Committee on or prior to the Plan

Effective Date or (b) with respect to executives who become eligible to

participate in the Plan after the Plan Effective Date, the date specified in a

notice to the executive from the Committee, provided, however, that the

executive files his/her Agreement with the Committee on or prior to such

specified date.

 

3.7           Reduction of Deposits.  A Participant’s election to make Deposits is

irrevocable, except that the Participant may file a written request with the

Committee at least seventy-five (75) days prior to the first day of a Deferral

Year for permission to reduce the amount of Deposits to be made on his/her

behalf for such Deferral Year and all future Deferral Years.  Such request shall state the reason

underlying such request.  The Committee

shall grant or deny such request and shall inform the Participant of its

decision within sixty (60) days after the date the request is filed with the

Committee.

 

3.8           Company Matching Credit.  The Participant in his/her Agreement shall

designate the Plan or the 401(k) Plan as the primary plan to which a Company

matching contribution is to be credited or made.

 

(a)           If the Participant designates the

Plan as the primary plan, then the Company shall credit a Participant’s Account

with the amount (the “Matching Credit”) of “Pre-Tax AI Contributions” (as

defined in the 401(k) Plan) that would have been made by the Company on behalf

of the Participant to the 401(k) Plan had the Participant made additional “Participant

Contributions” to the 401(k) Plan in a Deferral Year in an amount equal to

his/her deferrals, as distinct from transfers, made in such Deferral Year.  If a Participant elects to have such amount

credited to his/her Account, the Company shall deduct such amount from the

Participant Contribution that would otherwise have been made by the Company to

the 401(k) Plan on behalf of such Participant with respect to such Deferral

Year.

 

(b)           If the Participant designates the

401(k) Plan as primary, the Company shall credit a Participant’s Account with a

Matching Credit equal to the excess, if any of (i) the “Pre-Tax AI

Contributions” that the Company would have made to the Plan if the Participant

made additional “Pre-Tax Contributions” to the 401(k) Plan in a Deferral Year

in an amount equal to his/her deferrals made in such Deferral Year over (ii)

the “Pre-Tax Contributions” that the Company actually made to the 401(k) Plan

on behalf of the Participant in such Deferral Year.

 

(c)           The Participant’s Account shall be

credited with the Matching Credit at the same time that the deferrals

associated therewith are credited to the Participant’s Account.

 

(d)           Any Matching Credit made pursuant to

this Section shall be subject to the Company receiving a determination letter

from the Internal Revenue Service to the effect that an amendment to the 401(k)

Plan providing for such reduction of the Pre-Tax AI Contribution will not

adversely affect the status of the 401(k) Plan as a qualified Plan and as a

Plan described in Section 401(k) of the Internal Revenue Code.

 

3.9           Valuation of Account.  The value of each Participant’s Account as

of a Valuation Date shall consist of 

(i) the balance of such

Account as of the immediately preceding Valuation date, plus (ii) the

Participant’s Deposits and the Company’s Matching Credits made since the

immediately preceding Valuation Date, less (iii) the amount of all

distributions, if any, made from such Account since the preceding Valuation

Date, plus (iv) interest credited on the balance of such Account on the

immediately preceding Valuation Date at the Retirement Interest Yield.  Notwithstanding the preceding sentence, if

(a) benefits are payable pursuant to Section 4.3 (Termination Benefit), the

Participant’s Account may be revalued from inception with interest credited at

a rate equal to the Retirement Interest Yield, applicable from time to time,

reduced by three (3) percentage points, if and to the extent provided in

Section 4.3, and (b) benefits are payable in installments pursuant to Section

4.8(b) as a result of the death of a Participant before his/her Normal Benefit

Date, the Participant’s Account shall be credited with interest on or after the

date of the Participant’s death at a rate equal to the Retirement Interest

Yield, as applicable from time to time, reduced by three (3) percentage points.

 

IV.           BENEFITS

 

4.1           Return of Deposits.  At the time a Participant executes his/her

Agreement, he/she may elect that an amount equal to his/her Deposits and the

Matching Credit pursuant to Section 3.8 hereof be paid to him/her in a lump

sum, at the end of the seventh (7th) calendar year following the calendar year

in which the Deposit or Matching Credit was credited to his/her Account.  At least one year prior to the date on which

such Deposit and Matching Credit is to be paid pursuant to any such election,

the Participant may, with the consent of the Committee, elect to further defer

such payment until Termination of Service.

 

4.2           Retirement Benefit.  Upon a Participant’s Normal Benefit Date, the

Participant shall immediately cease to be eligible for any benefit provided

under the Plan (other than the Retirement Benefit provided for in this Section

and the benefit provided for in Section 8.10 hereof) and the Company shall make

payments from the Participant’s Account pursuant to Section 4.8(a).

 

4.3           Termination Benefit.

 

(a)                   Within sixty (60) days

following a Participant’s Termination of Service before his/her Normal Benefit

Date for reasons other than his/her death or Disability, the Company shall pay

to the Participant in a lump sum an amount equal to the amount of Deposits and

Matching Credits credited to his/her Account, less the amount of such Deposits

and Matching Credits previously paid to him/her.

 

(b)           (i) The Participant shall be entitled

to an additional benefit, the amount of which depends upon whether the

Participant has engaged in a Competing Activity (as defined in Section

4.3(b)(iii) below) during the one year period following his/her Termination of

Service.  If the Participant does engage

in a Competing Activity (as defined in Section 4.3(b)(iii) below) during the

one year period following his/her Termination of Service, the value of his/her

Account shall be determined as though at all times the interest to be credited

pursuant to Section 3.9 hereof was and thereafter will be the Retirement

Interest Yield reduced by three (3) percentage points.  If the Participant does not engage in a

Competing Activity (as defined in Section 4.3(b)(iii) below) during the one

year period following his/her Termination of Service, interest shall continue

to be credited to his/her Account at the Retirement Interest Yield.  The determination as to whether a

Participant has engaged in a Competing Activity shall be made by the Committee.

 

(ii)            The Committee, in its sole

discretion, shall direct the Company to pay the Participant either:

 

(A)     The Value (using an interest rate equal to

the Retirement Interest Yield or the Retirement Interest Yield reduced by three

(3) percentage points, as the case may be) of the Participant’s Account in a

lump sum determined on the Valuation Date coincident with or next following the

first anniversary of the Participant’s Termination of Service; or

 

(B)     Annual installments, over a period not to

exceed ten (10) years, commencing on the Valuation Date coincident with or next

following the first anniversary of the Participant’s Termination of Service,

with each installment equal to the value of such Account on the date such

installment is to be paid multiplied by a fraction whose numerator is one and

whose denominator is the number of installments remaining to be paid.

 

(iii)

         A Participant is engaging in a

“Competing Activity” if he/she is:

 

(A)          A director of a corporation, or a

member of a partnership, or a trustee of a business trust, or an officer,

employee, representative or agent of, or a consultant to, a corporation,

partnership, business trust or other entity or organization engaged in a

Competing Business (as defined in Subparagraph (C) hereof); or

 

(B)           A direct or indirect investor in a

Competing Business and the investment (whether made by loan, advance,

contribution to capital, purchase of stock or otherwise) constitutes more than

10% of (1) the total capital of such business, (2) the equity capital of such

business, or (3) the voting power for the election of the Board of Directors or

other governing body of such business.

 

(C)           A business is a “Competing Business”

at any time if at such time it is engaging in a business activity which was

conducted by the Company, or by a subsidiary of the Company, or a company

controlled by the Company or a subsidiary or subsidiaries of the Company, while

the Participant was employed by the Company and in or for the conduct of which

the Participant was involved or bore responsibility.

 

(c)           In the event that a Participant dies

prior to receiving the benefits due to him/her under this Section, his/her

benefits shall be paid to his/her Beneficiary using the same interest rate to

determine the value of his/her Account and at the same time and in the same

manner that the Account would have been paid had the Participant lived.

 

(d)           Upon Termination of Service described

in this Section, the Participant shall immediately cease to be eligible for any

benefit under the Plan (other than the Termination Benefit provided for in this

Section and the benefits provided for in Section 8.10 hereof).

 

4.4           Death Benefit.

 

(a)           Death Prior to Termination of

Service of During Alternate Disability Period.  Upon the Termination of Service of a Participant as a result of

his/her death or upon the death of a Participant who is receiving an Alternate

Disability Benefit pursuant to Section 4.6 hereof, the Beneficiary of the

deceased Participant shall be paid a Death Benefit in an amount equal to the

greater of: (i) the value, if any, of the Participant’s Account, determined

pursuant to Section 3.9 hereof, as of the Valuation Date coincident with or

next following the date of the Participant’s death, or (ii) the Participant’s

Total Expected Deferral set forth in Paragraph 4 of the Agreement, or

subsequent amendments thereto, and multiplied by a factor based on the

Participant’s age at his/her Eligibility Date as indicated below less any

amounts paid to him/her pursuant to Section 4.1 hereof:

 

	

  Age at

  Eligibility Date

  	

   

  	

  Multiplier

  	

   

  
	

  50

  and under

  	

   

  	

  5.0

  	

   

  
	

  51

  	

   

  	

  4.8

  	

   

  
	

  52

  	

   

  	

  4.6

  	

   

  
	

  53

  	

   

  	

  4.4

  	

   

  
	

  54

  	

   

  	

  4.2

  	

   

  
	

  55

  	

   

  	

  4.0

  	

   

  
	

  56

  	

   

  	

  3.8

  	

   

  
	

  57

  	

   

  	

  3.6

  	

   

  
	

  58

  	

   

  	

  3.4

  	

   

  
	

  59

  	

   

  	

  3.2

  	

   

  
	

  60

  	

   

  	

  3.0

  	

   

  
	

  61

  	

   

  	

  2.8

  	

   

  
	

  62

  	

   

  	

  2.6

  	

   

  
	

  63

  	

   

  	

  2.4

  	

   

  
	

  64

  	

   

  	

  2.2

  	

   

  
	

  65 and above 

  	

   

  	

  2.0

  	

   

  

 

The death benefit shall be paid in accordance with Section 4.8(b)

hereof.  The death benefit provided for

in this Section 4.4(a) shall be in lieu of all other benefits under the Plan

(other than the benefits provided for under Section 8.10 hereof).

 

(b)           Death

During Standard Disability Period. Upon the death of a Participant who is

receiving a Disability Benefit under Section 4.5 hereof (the Standard

Disability Benefit), the Beneficiary of the deceased Participant shall be paid

a Death Benefit in an amount equal to the value, if any, of the Participant’s

Account as of the Valuation Date coincident with or next following the date of

the Participant’s death.  The Death

Benefit shall be paid in accordance with Section 4.8(b) hereof.  The Death Benefit provided for in this

Section 4.4(b) shall be in lieu of all other benefits under the Plan (other

than the benefits provided for under Section 8.10 hereof).

4.5           Standard Disability Benefit.  In the event of a Disability prior to a

Participant’s Termination of Service which first manifests itself after the

Participant’s Eligibility  Date and

prior to his/her sixty-fifth (65th) birthday, the Company shall pay the

Participant a benefit equal to the remaining balance, if any, of the

Participant’s Account determined under Section 3.9 hereof.  Such benefit shall be payable as provided in

Section 4.8(a)(i) hereof as if he/she had reached his/her Normal Benefit Date

at such time.  During the period of

Disability the Participant’s Account shall be maintained in accordance with

Section 3.9 hereof.  Such benefit shall

be paid until the earliest of the following events: (i) there is no longer any

balance in the Participant’s Account; (ii) the Participant no longer has a

Disability and resumes employment with the Company; (iii) the Participant no

longer has a Disability and does not resume employment with the Company (in

which case the Participant shall be entitled to the benefits provided in either

Section 4.2 hereof if the Participant has attained his/her Normal Benefit Date

or Section 4.3 hereof if the Participant has not attained his/her Normal

Benefit Date, as the case may be); or (iv) the Participant dies (in which case

the Participant’s Beneficiary or Beneficiaries shall be entitled to the Death

Benefit provided for under Section 4.4(b) hereof).  Disability Benefits paid pursuant to this Section shall be

treated as distributions from the Participant’s Account.  If Disability occurs during the Deferral

Period elected in Paragraph 4 of his/her Agreement, further deferrals shall be

waived by the Company during the period of Disability.

 

4.6           Alternate Disability Benefit.

In the event a Participant is given notice by the Committee of his/her

qualification for an Alternate Disability Benefit, he/she shall be eligible for

the Alternate Disability Benefit, he/she shall be eligible for the Alternate

Disability Benefit set forth below.  In

the event of the Disability of the Participant prior to the Participant’s

Termination of Service, which first manifests itself after the Participant’s

Eligibility Date and prior to his/her sixty-fifth (65th) birthday, the

Participant shall receive the monthly benefit stated in such notice.  The Alternate Disability Benefit shall be in

lieu of the Disability Benefit provided for in Section 4.5 hereof.  During the period an Alternative Benefit

remains payable, the Participant’s Account shall be maintained in accordance

with Section 3.9 hereof.  Such benefit

shall be paid until the earliest of the following events: (i) the Participant

no longer has a Disability and resumes employment with the Company; (ii) the

Participant no longer has a Disability and does not resume employment with the

Company (in which case the Participant shall be entitled to the benefit

provided for in either Section 4.2 hereof if the Participant has attained

his/her Normal Benefit Date or Section 4.3 hereof if the Participant has not

attained his/her Normal Benefit Date, as the case may be); (iii) the

Participant attains age sixty-five (65) (in which case the Participant shall

then be entitled to the Retirement Benefit provided for under Section 4.2

hereof); or (iv) the Participant dies (in which case the Participant’s

Beneficiary shall be entitled to the Death Benefit provided for under Section

4.4(a) hereof).

 

In no event shall the

Alternate Disability Benefit in any year exceed the lesser of (i) the maximum

stated in the notice referred to in the first sentence of this Section, or (ii)

the amount that when added to the Participant’s Group Long-Term Disability

Benefits and his/her Primary Social Security Benefits equals eighty (80)

percent of the Participant’s Adjusted Compensation.  Alternate Disability Benefits paid pursuant to this Section shall

not be treated as distributions from the Participant’s Account.  If Disability occurs during the Deferral

Period elected in Paragraph 4 of the Agreement, further deferrals shall be

waived by the Company during the period of Disability.

 

4.7           Failure to Continue Participation.

 

(a)           In the event a Participant is given

approval pursuant to Section 3.7 hereof to cease or decrease participation in

the Plan, the Committee may in its discretion treat the Participant as having

terminated participation in the Plan at the end of the first calendar year in

which the amount stated in his/her Agreement has not been deposited, the effect

of which would be to render him/her ineligible for any benefit described in

Section 4.4, 4.5 or 4.6 hereof, provided, however, that if the Participant’s

failure to continue participation in the Plan is due to the fact that he/she

ceased to be a member of the class of employees eligible to participate in the

Plan or because the Participant’s compensation has been materially reduced, as

determined by the Committee, the Participant shall not be treated as having

terminated participation in the Plan pursuant to this Section, provided, however,

that the Participant’s Agreement shall be deemed to have been amended as of

such date to reflect the reduction in his/her Total Expected Referral.

 

(b)           At such time that a Participant is

transferred outside of the United States and is removed from the United States

payroll of the Company, the Participant’s remaining Deposit Commitment, if any,

shall be terminated and his/her Agreement shall be deemed to have been amended

as of such date to reflect the reduction in his/her Deposit Commitment.  In such event, the Participant shall not be

considered as having terminated participation in the Plan and shall remain

eligible for the benefits provided for in the Plan.

 

4.8           Form of Benefit Payment.

 

(a)           Retirement Benefit.  Upon a Participant’s Normal Benefit Date,

the Company shall make payments as the Retirement Benefit provided in Section

4.2 hereof from the Participant’s Account in one of the following forms, as

elected by the Participant:

 

(i)                In annual or monthly

installments commencing on the Valuation Date coincident with or next following

the Participant’s Normal Benefit Date and payable over a period not to exceed

30 years, as elected by the Participant; the amount of each installment to be

calculated by the Company using such reasonable annuity payment calculation

methods as the Company shall determine from time to time;

 

(ii)              In a single lump sum equal to the

value of the Participant’s Account on the Valuation Date coincident with or

next following the date of payment specified in his/her Agreement (which date

shall be before the fifteenth (15th) anniversary of the Participant’s Normal

Benefit Date;

 

(iii)              (A) in a single lump sum equal to

a percentage, elected by the Participant, of the value of the Participant’s

Account on the Valuation Date coincident with or next following the

Participant’s Normal Benefit Date, followed by (B) annual or monthly

installments commencing on the next succeeding Valuation Date and payable over

a period not to exceed thirty (30) years, as elected by the Participant; the amount

of each installment to be calculated by the Company using such reasonable

annuity payment calculation methods as the Company shall determine from time to

time; or

 

(iv)              (A) annual or monthly installments

commencing on the Valuation Date coincident with or next following the

Participant’s Normal Benefit Date and payable over a period not to exceed

twenty-eight (28) years, as elected by the Participant, following by (B) a

single lump sum equal to a percentage, elected by the Participant, of the value

of the Participant’s Account on the Valuation Date coincident with or next

following the Participant’s Normal Benefit Date; the amount of each installment

to be calculated by the Company using such reasonable annuity payment

calculation methods as the Company shall determine from time to time.

 

In the event that

the Participant dies prior to the payment of all amounts credited to his/her

Account, the remainder of the Account shall be paid to his/her Beneficiary

either (1) at the same time and in the same manner as the Account would have

been paid to the Participant had he/she lived, or (2) if elected by the

Participant in a written instrument filed with the Committee prior to the

Participant’s death or in such Participant’s will, in a lump sum on the

Valuation Date coincident with or next following the date of the Participant’s

death.  A Participant may at any time

elect to change his/her election to any other election permitted under this

clause (a).  Such request shall be made

in a written instrument filed with the Committee.  Not more than three such changes of election may be made by any

Participant.  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)                   Death Benefit.  The amount of any Death Benefit determined

pursuant to Section 4.4 hereof shall be paid to the Participant’s Beneficiary

in the same manner as elected by the Participant pursuant to clause (a) of this

Section 4.8 with respect to Account balances. 

In such an event, the value of the Participant’s Account as of the

Valuation Date coincident with or next following the date of the Participant’s

death shall be equal to the amount of the Death Benefit as determined pursuant

to Section 4.4.  Until such Account is

paid to the Beneficiary, the Account shall be maintained pursuant to Section

3.9 and shall be credited with interest at the Retirement Interest Yield as in

effect from time to time; provided that the Account of a Participant who dies

before his Normal Benefit Date shall be credited with interest at the

Retirement Interest Yield as in effect from time to time, reduced by three (3)

percentage points.

 

4.9           Withholding, Employment Taxes.  To the extent required by the law in effect

at the time payments are made, the Company shall withhold any taxes required to

be withheld by the federal or any state or local government from payments made

hereunder.

 

4.10         Commencement of Payments.  All benefit payments shall be made as soon

as practicable after the Valuation Date as of which the amount thereof is

determined.  Neither the Company nor the

Committee shall be liable for the payment or crediting of interest with respect

to the period between the Valuation Date as of which a benefit is determined

and the date such benefit is paid.

 

4.11         (Intentionally Omitted.)

 

4.12         Recipients of Payments; Designation

of Beneficiary.  All payments to be

made by the Company under the Plan shall be made to the Participant during

his/her lifetime, provided that if the Participant dies prior to the completion

of such payments or a payment is due as a result of his/her death, then all

subsequent payments under the Plan shall be made by the Company to the

Beneficiary or Beneficiaries determined in accordance with this Section

4.12.  Unless the Participant files a

written notice of a different Beneficiary designation with the Committee, the

Participant’s Beneficiary shall be the beneficiary or beneficiaries designated

in the Company’s Basic Life Insurance Plan. 

The Participant may designate a Beneficiary by filing a written notice

of such designation with the Committee may include contingent beneficiaries.  The Participant may from time to time change

the designated Beneficiary or Beneficiaries without the consent of such

Beneficiary or Beneficiaries by filing a new designation in writing with the

Committee.  (If a Participant interests

hereunder would be subject to community property laws, the spouse of a

Participant shall join in any designation of a Beneficiary or Beneficiaries

other than the spouse.)  If no

designation shall be in effect at the time when any benefits payable under the

Plan shall become due, the Beneficiary shall be the legal representatives of

the Participant’s estate.

 

V.            CLAIMS

FOR BENEFITS PROCEDURE

 

5.1           Claim for Benefits.  Any claim for benefits under the Plan shall

be made in writing to any member of the Committee.  If such claim for benefits is wholly or partially denied by the

Committee, the Committee shall, within a reasonable period of time, but not

later than sixty (60) days after receipt of the claim, notify the claimant of

the denial of the claim.  Such notice of

denial shall be in writing and shall contain:

 

(a)           The specific reason or reasons for

denial of the claim;

 

(b)           A reference to the relevant Plan

provisions upon which the denial is based;

 

(c)           A description of any additional

material or information necessary for the claimant to perfect the claim,

together with an explanation of why such material or information is necessary;

and

 

(d)           An explanation of the Plan’s claim

review procedure.

 

If

no such notice is provided, the claim shall be deemed granted.

 

5.2           Request for Review of a Denial of

a Claim for Benefits.  Upon the

receipt by the claimant of written notice of denial of the claim, the claimant

may within ninety (90) days file a written request to the full Committee,

requesting a review of the denial of the claim, which review shall include a

hearing if deemed necessary by the Committee. 

In connection with the claimant’s appeal of the denial of his/her claim,

he/she may review relevant documents and may submit issues and comments in

writing.

 

5.3           Decision Upon Review of Denial of

Claim for Benefits.  The Committee

shall promptly render a decision on the claim review within sixty (60) days

after the receipt of the claimant’s request for review, unless special

circumstances (such as the need to hold a hearing) require an extension of

time, in which case the sixty (60) day period shall be extended to one hundred

twenty (120) days.  Such decision shall:

 

(a)           Include specific reasons for the

decision;

 

(b)           Be written in a manner calculated to

be understood by the claimant; and

 

(c)           Contain specific references to the

relevant Plan provisions upon which the decision is based.

 

VI.           ADMINISTRATION

 

6.1           Plan Committee.  The Plan shall be administrated by the

Committee appointed by the Board of Directors. 

Members of the Committee or agents of the Committee may be Participants

under the Plan.

 

6.2           General Rights, Powers, and Duties

of the Committee.  The Committee

shall be the fiduciary responsible for the management, operation, and

administration of the Plan.  In addition

to any powers, rights and duties set forth elsewhere in the Plan, it shall have

the following powers and duties:

 

(a)           To adopt such rules and regulations

consistent with the provisions of the Plan as it deems necessary for the proper

and efficient administration of the Plan;

 

(b)           To administer the Plan in accordance

with its terms and any rules and regulations it establishes;

 

(c)           To maintain records concerning the

Plan sufficient to prepare reports, returns and other information required by

the Plan or by law;

 

(d)           To construe and interpret the Plan

and to resolve all questions arising under the Plan;

 

(e)           To direct the Company to pay benefits

under the Plan, and to give such other directions and instructions as may be

necessary for the proper administration of the Plan;

 

(f)            To employ or retain agents,

attorneys, actuaries, accountants or other persons, who may also be

Participants in the Plan or be employed by or represent the Company; and

 

(g)           To be responsible for the

preparation, filing and disclosure on behalf of the Plan of such documents and

reports as are required by any applicable Federal or State law.

 

6.3           Information to Be Furnished to

Committee.  The Company shall

furnish the Committee such data and information as it may require.  The records of the Company shall be

determinative of each Participant’s period of employment, termination of

employment and the reason therefor, leave of absence, reemployment, years of

service, personal data, and compensation or bonus reductions.  Participants and their Beneficiaries shall

furnish to the Committee such evidence, data, or information, and execute such

documents as the Committee requests.

 

6.4           Responsibility.  No member of the Committee or of the Board

of Directors shall be liable to any person for any action taken or omitted in

connection with the administration of the Plan unless attributable to his/her

own fraud or willful misconduct; nor shall the Company be liable to any person

for any such action unless attributable to fraud or willful misconduct on the

part of a director, officer or employee of the Company.

 

VII.          AMENDMENT

AND TERMINATION

 

7.1           Amendment.  The Plan may be amended in whole or in part

by the Committee at any time.  Notice of

any such amendment shall

be given in writing to each Participant and each Beneficiary of a deceased

Participant.  No amendment shall

decrease the amount of a Participant’s Account.

 

7.2           Company’s Right to Terminate.  The Company reserves the right to terminate

the Plan and/or the Agreement pertaining to any or all Participants at any

time.  In the event of any such

termination, (i) any Participant who is not then receiving benefits under

Section 4.2, 4.3, 4.4, 4.5 or 4.6 hereof shall be entitled to a “Termination

Benefit” under Section 4.3 hereof determined as though he/she had incurred a

Termination of Service for reasons other than death or Disability on the date

of Plan termination and (ii) any Participant (or Beneficiary) who is then

receiving benefits under Section 4.2, 4.3, 4.4, 4.5 or 4.6 hereof shall in the

sole discretion of the Committee, exercised on a Participant by Participant

basis (or a Beneficiary by Beneficiary basis), be entitled to either (A)

continue receiving benefits as if the Plan had not terminated or (B) receive a

lump sum benefit equal to the value of the Participant’s Account determined as

of the First Valuation Date coincident with or next following the date of such

termination.  The benefits provided in

this Section 7.2 shall be in lieu of all other benefits under the Plan (other

than the benefits provided for under Section 8.10 hereof).

 

7.3           Early Withdrawal.

 

(a)           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 Beneficiary of a deceased Participant

designated pursuant to Section 4.8 hereof, a distribution of all or a portion

of the value of the Participant’s Account 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 pursuant to clause (a) of Section 4.8;

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.

 

(b)           Upon the request of any Participant

who at the time is serving as an employee of the Albany Group or a director of

the Company, a distribution of all or a portion of the value of the

Participant’s Account 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 pursuant to clause (a) of Section 4.8; provided that (i) there

shall be withheld from any such distribution an amount equal to five percent

(5%) of the amount requested to be distributed, and (ii) such Participant

thereafter shall be precluded from deferring any subsequent compensation under

any deferred compensation plan of the Company during the period of three years

following the date of each such distribution. 

In the event that such Participant’s service as an employee of the

Albany Group or as a director of the Company is terminated by the Albany Group

for cause, as determined by the Committee in its sole discretion, or

voluntarily by such Participant, in either case during any such three year

period, the Participant shall forever forfeit, relinquish and waive any right

to receive the amount withheld from the withdrawal that triggered such period

and any earnings thereon.  Any amount so

withheld shall otherwise be distributed to such Participant upon termination of

his/her service during such period for any other reason, or upon expiration of

such three year period.  Interest on any

such withheld amount shall continue to accrue in the manner described in

Section 3.9 at the Retirement Interest Yield, as applicable from time to time,

reduced by three (3) percentage points, until expiration of such three year

period or until it is forfeited.

 

VIII.  MISCELLANEOUS

 

8.1           No Implied Rights; Rights on

Termination of Service.  Neither the

establishment of the Plan nor any amendment thereof shall be construed as

giving any Participant, Beneficiary, or any other person any legal or equitable

right unless such right shall be specifically provided for in the Plan or

conferred by specific action of the Company in accordance with the terms and

provisions of the Plan.  Except as expressly

provided in the Plan, the Company shall not be required or be liable to make

any payment under the Plan.

 

8.2           No Right to Company Assets.  Neither the Participant nor any other person

shall acquire by reason of the Plan any right in or title to any assets, funds

or property of the Company whatsoever including, without limiting the

generality of the foregoing, any specific funds, assets, or other property

which the Company, in its sole discretion, may set aside in anticipation of a

liability hereunder.  No trust of any

kind shall be created in connection with or by the execution or adoption of the

Plan, and any benefits which become payable hereunder shall be paid from the

general assets of the Company.  The

Participant shall have only a contractual right to the amounts, if any, payable

hereunder unsecured by any asset of the Company.  Nothing contained in the Plan constitutes a guarantee by the

Company that the assets of the Company shall be sufficient to pay any benefit

to any person.

 

8.3           No Employment Rights.  Nothing herein shall constitute a contract

of employment or of continuing service or in any manner obligate the Company to

continue the services of a Participant, or obligate the Participant to continue

in the service of the Company, or as a limitation of the right of the Company to

discharge any of its employees, with or without cause.  Nothing herein shall be construed as fixing

or regulating the compensation payable to the Participant.

 

8.4           Offset.  If, at the time payments or installments of

payments are to be made hereunder, the Participant or the Beneficiary or both

are indebted or obligated to the Company, then the payments remaining to be

made to the Participant or the Beneficiary or both may, at the discretion of

the Company, be reduced by the amount of such indebtedness or obligation,

provided, however, that an election by the Company not to reduce any such

payment or payments shall not constitute a waiver of its claim for such

indebtedness or obligation.

 

8.5           Protective Provisions.  In the event of a Participant’s suicide during

the first two (2) years of his/her participation or if the Participant makes

any material misstatement or fails to make a material disclosure of

information, then no benefits will be payable to the Participant under the

Plan, or in the Company’s sole discretion, benefits may be payable in a reduced

amount.

 

8.6           Non-assignability.  Neither a Participant nor any other person

shall have any voluntary or involuntary right to commute, sell, assign, pledge,

anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in

advance of actual receipt the amounts, if any, payable hereunder, or any part

thereof, which are expressly declared to be unassignable and

non-transferable.  No part of the

amounts payable shall be, prior to actual payment, subject to seizure or

sequestration for the payment of any debts, judgments, alimony or separate

maintenance owed by a Participant or any other person, or be transferable by

operation of law in the event of a Participant’s or any other person’s

bankruptcy or insolvency.

 

8.7           Gender and Number.  Wherever appropriate herein, the masculine

may mean the feminine and the 

singular may mean the

plural or vice versa.

 

8.8           Notice.  Any notice required or permitted to be given

under the Plan shall be sufficient if in writing and hand delivered, or sent by

registered or certified mail, and if given to the Company, delivered to the

principal office of the Company, directed to the attention of the

Committee.  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 or the receipt for registration or certification.

 

8.9           Governing Laws.          The Plan shall be construed and

administered according to the internal laws of the State of New York.

 

8.10         Participants Covered by Pension Plan.  If the benefits payable to or in respect of

a Participant under the Pension Plan are reduced by reason of Deposits made

hereunder derived from compensation reductions, then upon such Participant’s

Termination of Service the Committee shall determine the excess of the

actuarial present value of the benefit that would have been payable under the

Pension Plan but for the fact that the Participant made such Deposits over the

actuarial present value of the benefits actually payable under the Pension

Plan.  In determining such actuarial

present values the Committee shall use the actuarial assumptions set forth in

the Pension Plan or, in the absence of any such assumptions specifically

applicable to the computations, using such actuarial assumptions as the

Committee may deem appropriate.  Upon

the Participant’s Termination of Service, an amount equal to such excess shall

be credited to the Participant’s Account (in the case of a Participant who dies

and whose Beneficiary is entitled to a death benefit pursuant to Section

4.4(a), after the Account is increased to reflect the death benefit payable in

Section 4.4(a)) to be maintained pursuant to Section 3.9 hereof and paid as

part of his/her Account in the manner provided hereunder.

 

IN WITNESS WHEREOF, the Company has adopted the ALBANY

INTERNATIONAL CORP. EXECUTIVE DEFERRED COMPENSATION PLAN as of September 1,

1985.

 

	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  ALBANY INTERNATIONAL CORP.

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  By

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  (Title:

  	

  )Prepared by MERRILL CORPORATION

ALBANY INTERNATIONAL

CORP.

 

 

DIRECTORS’ DEFERRED

COMPENSATION PLAN*

 

 

PLAN AND ELECTION

AGREEMENT

 

*

Amended and Restated as of June 15, 2001.

Reflects Amendments dated 2/11/97, 2/10/98, 5/25/01, 6/15/01 and 8/8/01.

 

TABLE OF CONTENTS

 

 

	

  I.

  	

   

  	

  PURPOSE

  
	

   

  	

   

  	

   

  
	

  II.

  	

   

  	

  DEFINITIONS AND

  CERTAIN PROVISIONS

  
	

   

  	

   

  	

   

  
	

  III.

  	

   

  	

  PARTICIPATION

  AND COMPENSATION REDUCTION

  
	

   

  	

   

  	

   

  
	

  IV.

  	

   

  	

  BENEFITS

  
	

   

  	

   

  	

   

  
	

  V.

  	

   

  	

  CLAIMS FOR BENEFITS

  PROCEDURE

  
	

   

  	

   

  	

   

  
	

  VI.

  	

   

  	

  ADMINISTRATION

  
	

   

  	

   

  	

   

  
	

  VII.

  	

   

  	

  AMENDMENT AND TERMINATION

  
	

   

  	

   

  	

   

  
	

  VIII.

  	

   

  	

  MISCELLANEOUS

  

 

ALBANY INTERNATIONAL

CORP.

DIRECTORS’ DEFERRED

COMPENSATION PLAN

 

I.              PURPOSE

 

The

Albany International Corp. Directors’ Deferred Compensation Plan (the “Plan”)

provides directors of Albany International Corp. (the “Company”) with a

tax-favored investment opportunity.  By

providing to Directors a means whereby fees may be deferred into the future,

the Plan will encourage productive efforts of the Board.

 

Compensation reductions and transfers of account

balances from other deferred compensation plans maintained by the Company (such

account balances are referred to herein as “Prior Deferrals” and such plans are

referred to herein as “Prior Deferred Compensation Plans”) made pursuant to the

Plan will be credited with interest for the benefit of each Participant.  The value of a Participant’s deferrals, and

interest earned on those deferrals, will vary by such factors as the amount and

duration of the compensation reductions, the amount of transfers of Prior

Deferrals, the Participant’s age at the time of reduction or transfer, and the

date benefits commence.  The intent of

the Plan is to credit Participants’ compensation reductions and transfers of

Prior Deferrals with a specified rate of interest, rather than to provide

defined benefits.  However, to provide

additional financial security, and to protect the purpose of the Plan, death

benefits are provided to qualifying Participants.

 

II.            DEFINITIONS AND CERTAIN PROVISIONS

 

2.1        “Agreement”

means the Albany International Corp. Directors’ Deferred Compensation Election

Agreement executed by a Participant and the Company, whereby a Participant

agrees to defer his/her compensation or transfer Prior Deferrals pursuant to

the provisions of the Plan, and the Company agrees to make benefit payments in

accordance with the provisions of the Plan.

 

2.2        “Participant”

means a director of the Company, under age 70, who enters into an Agreement.

 

2.3        “Normal

Benefit Date” means the date a Participant ceases to be a director of the

Company, other than as a result of the death of such Participant.

 

2.4        “Compensation”

means any fees paid to a Participant during a calendar year and considered to

be “wages” for purposes of federal income tax withholding, but before

reductions are made pursuant to the Plan.

 

2.5        “Deferral

Year” means any calendar year, 1986 through 1989.  For purposes of 1985, the Deferral Year means the Plan Effective

Date through December 31, 1985.

 

2.6        “Beneficiary”

means the person or persons so designated by a Participant pursuant to Section

4.8 hereof.

 

2.7        “Age”

means the Participant’s chronological age on the relevant date.

 

2.8        “Board

of Directors” means the Board of Directors of Albany International Corp.

 

2.9        “Plan”

means this Albany International Corp. Directors’ Deferred Compensation Plan as

amended from time to time.

 

2.10      “Account”

means the account maintained on the books of the Company for each Participant

pursuant to Article III hereof.  A

Participant’s Account shall not constitute or be treated as a trust fund of any

kind.

 

2.11      “Valuation

Date” means the last day of each calendar month.

 

2.12      “Retirement

Interest Yield” with respect to any calendar month means a rate of interest

equal to one-twelfth (1/12) of the average of the sum of the monthly composite yields

on Moody’s Seasoned Corporate Bond Yield Index for the immediately preceding

calendar year plus three (3) percentage points, as determined from Moody’s Bond

Record monthly yields published by Moody’s Investors Service, Inc. (or any

successor thereto), or, if such monthly yield is no longer published, a

substantially similar average selected by the Committee.

 

2.13      “Committee”

means the Plan Committee appointed to administer the Plan pursuant to Article

VI.

 

2.14      “Plan

Effective Date” means September 1, 1985.

 

2.15      “Deposits”

means the amount of the Participant’s deferrals of Compensation and the

Participant’s transfers of Prior Deferrals to the Plan.

 

III.           PARTICIPATION AND COMPENSATION

REDUCTION

 

3.1        Participation.  Participation in the Plan shall be limited

to directors of the Company, under age 70, who elect to participate in the Plan

by filing an Agreement with the Company. 

The election to participate shall be effective upon receipt by the

Committee of the Agreement that is properly completed and executed in

conformity with the Plan.

 

3.2        Initial

Contribution.  Upon execution of the

Agreement, the Participant’s total Prior Deferrals in all Prior Deferred

Compensation Plans shall be treated as the initial contribution to the

Participant’s Account.

 

3.3        Minimum

and Maximum Deposit and Length of Participation.  A Participant who first elects to participate in the Plan must

agree to continue to participate and to deposit one hundred percent (100%) of

Compensation for one or more consecutive Deferral Years for a term not to

extend beyond December 31, 1989.  A

Participant’s election to defer future Compensation is irrevocable upon the

filing of an Agreement.  For purposes of

a Participant’s initial year of participation, the Deposit shall be total Compensation

remaining to be paid to the Participant from his/her Eligibility Date through

December 31 of such year.  A Participant

eligible to participate prior to January 1, 1986 may elect to commence Deposits

in Deferral Year 1986.

 

3.4        Timing

of Deposit Credits.  The amount of a

Participant’s Deposits derived from compensation reductions shall cause an

equivalent reduction in his/her Compensation and shall be credited to the

Participant’s Account throughout each Deferral Year as the Participant is paid,

or would have been paid but for the Deposit, his/her compensation for such

Deferral Year.  The amount of a

Participant’s Prior Deferrals shall eliminate the balances in his/her accounts

under Prior Deferred Compensation Plans and shall be credited to the

Participant’s Account on the date as of which such transfers are made.

 

3.5        Eligibility

Date.  A Participant’s “Eligibility

Date” shall be: (a) the Plan Effective Date in respect of directors who are

eligible to participate prior to such date provided, however, that the director

files his/her Agreement with the Committee on or prior to the Plan Effective

Date or (b) with respect to directors who become eligible to participate in the

Plan after the Plan Effective Date, the date specified in a notice to the

director from the Committee, provided, however, that the director files his/her

Agreement with the Committee on or prior to such specified date.

 

3.6        Valuation

of Account.  Each Participant’s

Account as of a Valuation Date shall consist of (i) the balance of the

Participant’s Account as of the immediately preceding Valuation Date, plus

(ii) the Participant’s Deposits made since the immediately preceding Valuation

Date, less (iii) the amount of all distributions, if any, made from such

Account since the preceding Valuation Date, plus (iv) interest credited

on the balance of such Account on the immediately preceding Valuation Date at

the Retirement Interest Yield.

 

3.7        Reduction

of Deposits.  A Participant’s

election to make Deposits is irrevocable, except that the Participant may file

a written request with the Committee at least seventy-five (75) days prior to

the first day of a Deferral Year for permission to reduce the amount of

Deposits to be made on his/her behalf for such Deferral Year and all future

Deferral Years.  Such request shall

state the reason underlying such request. 

The Committee shall grant or deny such request and shall inform the

Participant of its decision within sixty (60) days after the date the request

is filed with the Committee.

 

IV.           BENEFITS

 

4.1        Retirement

Benefit.  Upon a Participant’s

Normal Benefit Date, the Participant shall immediately cease to be eligible for

any benefit provided under the Plan (other than the Retirement Benefit provided

for in this Section) and the Company shall make payments from the Participant’s

Account pursuant to Section 4.4(a).

 

4.2        Death

Benefit.  Upon the death of a

Participant prior to his/her Normal Benefit Date, the Beneficiary of the

deceased Participant shall be paid a Death Benefit equal to the greater of: (i)

the value, if any, of the Participant’s Account determined pursuant to Section

3.6 hereof, as of the Valuation Date coincident with or next following the date

of the Participant’s death, or (ii) the Participant’s Total Expected Deferral

set forth in Paragraph 4 of the Agreement, or subsequent amendments thereof,

and multiplied by a factor based on the Participant’s age at his/her

Eligibility Date as indicated below:

 

	

  Age

  at

  	

   

  	

   

  	

   

  
	

  Eligibility

  	

   

  	

   

  	

   

  
	

  Date

  	

   

  	

  Multiplier

  	

   

  
	

  50 and under

  	

   

  	

  5.0

  	

   

  
	

  51

  	

   

  	

  4.8

  	

   

  
	

  52

  	

   

  	

  4.6

  	

   

  
	

  53

  	

   

  	

  4.4

  	

   

  
	

  54

  	

   

  	

  4.2

  	

   

  
	

  55

  	

   

  	

  4.0

  	

   

  
	

  56

  	

   

  	

  3.8

  	

   

  
	

  57

  	

   

  	

  3.6

  	

   

  
	

  58

  	

   

  	

  3.4

  	

   

  
	

  59

  	

   

  	

  3.2

  	

   

  
	

  60

  	

   

  	

  3.0

  	

   

  
	

  61

  	

   

  	

  2.8

  	

   

  
	

  62

  	

   

  	

  2.6

  	

   

  
	

  63

  	

   

  	

  2.4

  	

   

  
	

  64

  	

   

  	

  2.2

  	

   

  
	

  65 and above

  	

   

  	

  2.0

  	

   

  

 

The Death Benefit shall be paid in accordance with Section 4.4(b)

hereof.  The Death Benefit provided for

in this Section 4.2 shall be in lieu of all other benefits under the Plan.

 

4.3        Failure

to Continue Participation.  In the

event a Participant is given approval pursuant to Section 3.7 hereof to cease

or decrease participation in the Plan, the Committee may in its discretion

treat the Participant as having terminated participation in the Plan at the end

of the first calendar year in which the amount stated in this Agreement has not

been deposited, the effect of which would be to render him/her ineligible for

any benefit described in Section 4.2 hereof.

 

4.4        Form

of Benefit Payment.  (a) Retirement

Benefit.  Upon a Participant’s

Normal Benefit Date, the Company shall make payments as the Retirement Benefit

provided in Section 4.1 hereof from the Participant’s Account in one of the

following forms, as elected by the Participant:

 

  (i)        in

annual or monthly installments commencing on the Valuation Date coincident with

or next following the Participant’s Normal Benefit Date and payable over a

period not to exceed 30 years, as elected by the Participant; the amount of

each installment to be calculated using such reasonable annuity payment

calculation methods as the Company shall determine from time to time;

 

(ii)        in

a single lump sum equal to the value of the Participant’s Account on the

Valuation Date coincident with or next following the date of payment specified

in his/her Agreement (which date shall be before the fifteenth (15th)

anniversary of the Participant’s Normal Benefit Date);

 

(iii)        (A)

in a single lump sum equal to a percentage, elected by the Participant, of the

value of the Participant’s Account on the Valuation Date coincident with or

next following the Participant’s Normal Benefit Date, followed by (B) annual or

monthly installments commencing on the next succeeding Valuation Date and

payable over a period not to exceed thirty (30) years, as elected by the

Participant; the amount of each installment to be calculated by the Company

using such reasonable annuity payment calculation methods as the Company shall

determine from time to time; or

 

(iv)       (A)

annual or monthly installments commencing on the Valuation Date coincident with

or next following the Participant’s Normal Benefit Date and payable over a

period not to exceed twenty-eight (28) years, as elected by the Participant,

followed by (B) a single lump sum equal to a percentage, elected by the

Participant, of the value of the Participant’s Account on the Valuation Date

coincident with or next following the Participant’s Normal Benefit Date; the

amount of each installment to be calculated by the Company using such

reasonable annuity payment calculation methods as the Company shall determine

from time to time.

 

                                In

the event that the Participant dies prior to the payment of all amounts

credited to his/her Account, the remainder of the Account shall be paid to

his/her Beneficiary either (1) at the same time and in the same manner as the

Account would have been paid to the Participant had he/she lived, or (2) if

elected by the Participant in a written instrument filed with the Committee

prior to the Participant’s death or in such Participant’s will, in a lump sum

on the Valuation Date coincident with or next following the date of the

Participant’s death.  A Participant may

at any time elect to change his/her election to any other election permitted

under this clause (a).  Such request

shall be made in a written instrument filed with the Committee.  Not more than three (3) such changes of

election may be made by any Participant. 

Unless the Committee, in its sole and absolute discretion, shall

determine otherwise, no such change of election shall be effective if the

triggering event for distribution to such Participant under this Plan has

already occurred, or occurs within one (1) year of the date of such change of

election; unless the triggering event 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)        Death

Benefit.  The amount of any Death

Benefit determined pursuant to Section 4.2 hereof shall be paid to the

Participant’s Beneficiary in the same manner as elected by the Participant

pursuant to clause (a) of this Section 4.4 with respect to Account

balances.  In such an event, the value

of the Participant’s Account as of the Valuation Date coincident with or next

following the date of the Participant’s death shall be equal to the amount of

the Death Benefit as determined pursuant to Section 4.2.  Until such account is paid to the

Beneficiary, the Account shall be maintained pursuant to Section 3.6 and shall

be credited with interest at the Retirement Interest Yield as in effect from

time to time; provided that the Account of a Participant who dies before

his/her Normal Benefit Date shall be credited with interest at the Retirement

Interest Yield as in effect from time to time, reduced by three (3) percentage

points.

 

4.5        Withholding;

Employment Taxes.  To the extent

required by the law in effect at the time payments are made, the Company shall

withhold any taxes required to be withheld by the federal or any state or local

government from payments made hereunder.

 

4.6        Commencement

of Payments.  All benefit payments

shall be made as soon as practicable after the Valuation Date as of which the

amount thereof is determined.  Neither

the Company nor the Committee shall be liable for the payment or crediting of

interest with respect to the period between the Valuation Date as of which a

benefit is determined and the date such benefit is paid.

 

4.7        (Intentionally

Omitted.)

 

4.8        Recipients

of Payments; Designation of Beneficiary. 

All payments to be made by the Company under the Plan shall be made to

the Participant during his/her lifetime, provided that if the Participant dies

prior to the completion of such payments or a payment is due as a result of

his/her death, then all subsequent payments under the Plan shall be made by the

Company to the Beneficiary or Beneficiaries determined in accordance with this

Section 4.8.  Unless the Participant

files a written notice of a different Beneficiary designation with the

Committee, the Participant’s Beneficiary shall be the beneficiary or

beneficiaries designated in the Company’s Basic Life Insurance Plan.  The Participant may designate a Beneficiary

by filing a written notice of such designation with the Committee in such form

as the Company requires and may include contingent beneficiaries.  The Participant may from time to time change

the designated Beneficiary or Beneficiaries without the consent of such

Beneficiary or Beneficiaries by filing a new designation in writing with the

Committee.  (If a Participant’s

interests hereunder would be subject to community property laws, the spouse of

a Participant shall join in any designation of a Beneficiary or Beneficiaries

other than the spouse.)  If no

designation shall be in effect at the time when any benefits payable under the

Plan shall become due, the Beneficiary shall be the legal representatives of

the Participant’s estate.

 

V.            CLAIMS FOR BENEFITS

PROCEDURE

 

5.1        Claim

for Benefits.  Any claim for

benefits under the Plan shall be made in writing to any member of the

Committee.  If such claim for benefits

is wholly or partially denied by the Committee, the Committee shall, within a

reasonable period of time, but not later than sixty (60) days after receipt of

the claim, notify the claimant of the denial of the claim.  Such notice of denial shall be in writing

and shall contain:

 

(a)           The specific reason or reasons for

denial of the claim;

 

(b)           A reference to the relevant Plan

provisions upon which the denial is based;

 

(c)           A description of any additional

material or information necessary for the claimant to perfect the claim,

together with an explanation of why such material or information is necessary;

and

 

(d)           An explanation of the Plan’s claim

review procedure.

 

If

no such notice is provided, the claim shall be deemed granted.

 

5.2        Request

for Review of a Denial of a Claim for Benefits.  Upon the receipt by the claimant of written notice of denial of

the claim, the claimant may within ninety (90) days file a written request to

the full Committee, requesting a review of the denial of the claim, which

review shall include a hearing if deemed necessary by the Committee.  In connection with the claimant’s appeal of

the denial of his/her claim, he/she may review relevant documents and may

submit issues and comments in writing.

 

5.3        Decision

Upon Review of Denial of Claim for Benefits.  The Committee shall promptly render a decision on the claim

review within sixty (60) days after the receipt of the claimant’s request for

review, unless special circumstances (such as the need to hold a hearing)

require an extension of time, in which case the sixty (60) day period shall be extended

to one hundred twenty (120) days.  Such

decision shall:

 

(a)           Include specific reasons for the

decision;

 

(b)           Be written in a manner calculated to

be understood by the claimant; and

 

(c)           Contain specific references to the

relevant Plan provisions upon which the decision is based.

 

VI.           ADMINISTRATION

 

6.1        Plan

Committee.  The Plan shall be

administrated by the Committee appointed by the Board of Directors.  Members of the Committee or agents of the

Committee may be Participants under the Plan.

 

6.2        General

Rights, Powers, and Duties of the Committee.  The Committee shall be the fiduciary responsible for the

management, operation, and administration of the Plan.  In addition to any powers, rights and duties

set forth elsewhere in the Plan, it shall have the following powers and duties:

 

(a)           To adopt such rules and regulations

consistent with the provisions of the Plan as it deems necessary for the proper

and efficient administration of the Plan;

 

(b)           To administer the Plan in accordance

with its terms and any rules and regulations it establishes;

 

(c)           To maintain records concerning the

Plan sufficient to prepare reports, returns and other information required by

the Plan or by law;

 

(d)           To construe and interpret the Plan

and to resolve all questions arising under the Plan;

 

(e)           To direct the Company to pay benefits

under the Plan, and to give such other directions and instructions as may be

necessary for the proper administration of the Plan;

 

(f)            To employ or retain agents,

attorneys, actuaries, accountants or other persons, who may also be

Participants in the Plan or be employed by or represent the Company; and

 

(g)           To be responsible for the

preparation, filing and disclosure on behalf of the Plan of such documents and

reports as are required by any applicable federal or state law.

 

6.3        Information

to Be Furnished to Committee.  The

Company shall furnish the Committee such data and information as it may

require.  The records of the Company

shall be determinative of each Participant’s period of employment, termination

of employment and the reason therefor, leave of absence, reemployment, years of

service, personal data, and compensation or bonus reductions.  Participants and their Beneficiaries shall

furnish to the Committee such evidence, data, or information, and execute such

documents as the Committee requests.

 

6.4        Responsibility.  No member of the Committee or of the Board

of Directors shall be liable to any person for any action taken or omitted in

connection with the administration of the Plan unless attributable to his/her

own fraud or willful misconduct; nor shall the Company be liable to any person

for any such action unless attributable to fraud or willful misconduct on the

part of a director, officer or employee of the Company.

 

VII.          AMENDMENT

AND TERMINATION

 

7.1        Amendment.  The Plan may be amended in whole or in part

by the Committee at any time.  Notice of

any such amendment shall be given in writing to each Participant and each

Beneficiary of a deceased Participant. 

No amendment shall decrease the amount of a Participant’s Account.

 

7.2        Company’s

Right to Terminate.  The Company

reserves the right to terminate the Plan and/or the Agreement pertaining to any

or all Participants at any time.  In the

event of any such termination, (i) any Participant who is not then receiving

benefits under Sections 4.1 or 4.2 hereof shall be entitled to a “Retirement

Benefit” under Section 4.1 hereof determined as though he/she had attained

his/her Normal Benefit Date on the date of Plan termination and (ii) any

Participant (or Beneficiary) who is then receiving benefits under Section 4.1

or 4.2 hereof shall in the sole discretion of the Committee, exercised on a

Participant by Participant basis (or a Beneficiary by Beneficiary basis), be

entitled to either (A) continue receiving benefits as if the Plan had not

terminated or (B) receive a lump sum benefit equal to the value of the

Participant’s Account determined as of the First Valuation Date coincident with

or next following the date of such termination.  The benefits provided in this Section 7.2 shall be in lieu of all

other benefits under the Plan.

 

7.3        Early

Withdrawal.  (a) Upon the request of

any Participant, including a Participant no longer serving as a director of the

Company, or any Beneficiary of a deceased Participant designated pursuant to

Section 4.8 hereof, a distribution of all or a portion of the value of the

Participant’s Account may be made at any time prior to the time at which he/she

would have been entitled to receive such amount in accordance with an election

pursuant to clause (a) of Section 4.4; provided that there is withheld from any

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.

 

(b)        Upon the request of any Participant who at

the time is serving as a director of the Company and has not made known to the

Company any present intention to terminate such service during the three years

following such request, a distribution of all or a portion of the value of the

Participant’s Account may be made at any time prior to the time at which he/she

would have been entitled to receive such amount in accordance with an election

pursuant to clause (a) of Section 4.4; provided that (i) there is withheld from

any such distribution an amount equal to five percent (5%) of the amount

requested to be distributed, and (ii) such Participant is thereafter precluded

from deferring any subsequent compensation (including compensation payable

after such distribution that would have been deferred pursuant to a deferred

election made prior to the distribution) under any deferred compensation plan

of the Company for a period of three years from the date of distribution.  In the event that such Participant’s service

as a director of the Company is terminated for cause, as determined by the

Committee in its sole discretion, or voluntarily by such Participant, in either

case during such three year period, the Participant shall forever forfeit,

relinquish and waive any right to receive any such withheld amounts, or any

earnings thereon.  Such withheld amount

shall otherwise be distributed to such Participant upon termination of his/her

service during such period for any other reason, or upon expiration of such

three year period.  Interest on any such

withheld amount shall continue to accrue in the manner described in Section 3.6

at the Retirement Interest Yield, as applicable from time to time, reduced by

three (3) percentage points, until expiration of such three year period or

until it is forfeited.

 

VIII.         MISCELLANEOUS

 

                                           8.1        No Implied Rights; Rights on Termination of Service.  Neither the establishment of the Plan nor

any amendment thereof shall be construed as giving any Participant,

Beneficiary, or any other person any legal or equitable right unless such right

shall be specifically provided for in the Plan or conferred by specific action

of the Company in accordance with the terms and provisions of the Plan.  Except as expressly provided in the Plan,

the Company shall not be required or be liable to make any payment under the

Plan.

 

8.2        No

Right to Company Assets.  Neither

the Participant nor any other person shall acquire by reason of the Plan any

right in or title to any assets, funds or property of the Company whatsoever

including, without limiting the generality of the foregoing, any specific

funds, assets, or any other property which the Company, in its sole discretion,

may set aside in anticipation of a liability hereunder.  No trust of any kind shall be created in

connection with or by the execution or adoption of the Plan, and any benefits

which become payable hereunder shall be paid from the general assets of the

Company.  The Participant shall have

only a contractual right to the amounts, if any, payable hereunder unsecured by

any asset of the Company.  Nothing

contained in the Plan constitutes a guarantee by the Company that the assets of

the Company shall be sufficient to pay any benefit to any person.

 

                                           8.3        No Employment Rights. 

Nothing herein shall constitute a contract of employment or of

continuing service or in any manner obligate the Company to continue the

services of a Participant, or obligate the Participant to continue in the

service of the Company, or as a limitation of the right of the Company to

discharge any of its employees, with or without cause.  Nothing herein shall be construed as fixing

or regulating the compensation payable to the Participant.

 

8.4        Offset.  If, at the time payment or installments of

payments are to be made hereunder, the Participant or the Beneficiary or both

are indebted or obligated to the Company, then the payments remaining to be

made to the Participant or the Beneficiary or both may, at the discretion of

the Company, may be reduced by the amount of such indebtedness or obligation,

provided, however, that an election by the Company not to reduce any such

payment or payments shall not constitute a waiver of its claim for such

indebtedness or obligation.

 

                                           8.5        Protective Provisions.  In the event of a Participant’s suicide during the first two (2)

years of his/her participation or if the Participant makes any material

misstatement or fails to make a material disclosure of information, then no

benefits will be payable to the Participant under the Plan, or in the Company’s

sole discretion, benefits may be payable in a reduced amount.

 

                                           8.6        Non-assignability. 

Neither a Participant nor any other person shall have any voluntary or

involuntary right to commute, sell, assign, pledge, anticipate, mortgage or

otherwise encumber, transfer, hypothecate or convey in advance of actual

receipt the amounts, if any, payable hereunder, or any part thereof, which are

expressly declared to be unassignable and non-transferable.  No part of the amounts payable shall be,

prior to actual payment, subject to seizure or sequestration for the payment of

any debts, judgments, alimony or separate maintenance owed by a Participant or

any other person, or be transferable by operation of law in the event of a

Participant’s or any other person’s bankruptcy or insolvency.

 

8.7        Gender

and Number.  Wherever appropriate

herein, the masculine may mean the feminine and the singular may mean the

plural or vice versa.

 

                                           8.8        Notice.  Any

notice required or permitted to be given under the Plan shall be sufficient if

in writing and hand delivered, or sent by registered or certified mail, and if

given to the Company, delivered to the principal office of the Company,

directed to the attention of the Committee. 

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 or the receipt

for registration or certification.

 

                                           8.9        Governing Laws.          The

Plan shall be construed and administered according to the internal laws of the

State of New York.

 

IN

WITNESS WHEREOF, the Company has adopted the ALBANY INTERNATIONAL CORP.

DIRECTORS’ DEFERRED COMPENSATION PLAN as of September 1, 1985.

 

 

	

   

  	

  ALBANY INTERNATIONAL CORP.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By

  	

   

  	

   

  
	

   

  	

   

  	

  (Title:

  	

  )

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