Document:

exv10w2

 

Exhibit 10.2

BRADY CORPORATION

DIRECTORS’ DEFERRED COMPENSATION PLAN

AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2008

ARTICLE I

INTRODUCTION

     1.1 For periods prior to calendar year 2005, Brady Corporation has maintained the Brady
Corporation Directors’ Deferred Compensation Plan by means of a series of individual deferred
compensation agreements with covered directors. This document amends and restates those prior
agreements effective as of January 1, 2005 with respect to both investment and distribution of
amounts deferred before 2005 and after 2004 and with respect to rules for making deferrals after
2004. This document is intended to comply with the provisions of Section 409A of the Internal
Revenue Code and shall be interpreted accordingly. If any provision or term of this document
would be prohibited by or inconsistent with the requirements of Section 409A of the Code, then
such provision or term shall be deemed to be reformed to comply with Section 409A of the Code.
This document describes how this Plan has been administered for periods after 2004 and prior to
January 1, 2008 and how it shall be administered for periods after 2007.

ARTICLE II

DEFINITIONS

     The following definitions shall be applicable throughout the Plan:

     2.1 “Account” means the account credited from time to time with bookkeeping amounts
equal to the portions of a Participant’s compensation deferred pursuant to Section 3.1 and earnings
credited on such amounts in accordance with Article IV.

     2.2 “Administrator” means the Board of Directors of Brady Corporation.

     2.3 “Beneficiary” means the person, persons, or entity designated by the Participant
to receive any benefits payable under the Plan on or after the Participant’s death. Each
Participant shall be permitted to name, change or revoke the Participant’s designation of a
Beneficiary in writing on a form and in the manner prescribed by the Corporation; provided,
however, that the designation on file with the Corporation at the time of the Participant’s death
shall be controlling. Should a Participant fail to make a valid Beneficiary designation or leave
no named Beneficiary surviving, any benefits due shall be paid to such Participant’s spouse, if
living; or if not living, then any benefits due shall be paid to such Participant’s estate. A
Participant may designate a primary beneficiary and a contingent beneficiary; provided, however,
that the Corporation may reject any such instrument tendered for filing if it contains successive
beneficiaries or contingencies unacceptable to it. If all Beneficiaries who survive Participant
shall die before receiving the full amounts payable hereunder, then the payments shall be paid to
the estate of the Beneficiary last to die.

 

 

     2.4 “Code” means the Internal Revenue Code of 1986, including any subsequent
amendments.

     2.5 “Corporation” means Brady Corporation.

     2.6 “Distribution Date” means the date specified by the Participant pursuant to
Section 6.2 upon which distribution shall be made or commenced following the Participant’s
Separation from Service or In-Service Payment Event Date, as the case may be. The Distribution
Date selected by the Participant must be on the first day of a calendar quarter and may be no later
than 12 months after the Participant’s Separation from Service or In-Service Payment Event Date,
whichever is the cause of the distribution. If the distribution is payable other than in a single
installment, subsequent installments shall be paid on anniversaries of the Distribution Date.

     2.7 “In-Service Payment Event Date” means the date, if any, specified by the
Participant pursuant to Section 6.2 as the reference date following which distribution of his
Account shall begin. An In-Service Payment Event Date may be no earlier than January 1, 2007.

     2.8 “Participant” means a director of Brady Corporation currently eligible to make
deferrals (an “Active Participant”) and any former director who previously participated in the Plan
and is entitled to benefits.

     2.9 “Payment Event” means the earlier of the date of a Participant’s Separation From
Service or the date the Participant specifies as his In-Service Payment Event Date.

     2.10 “Plan” means the Brady Corporation Directors’ Deferred Compensation Plan, as set
forth herein and as it may be amended from time to time.

     2.11 “Plan Year” means the calendar year.

     2.12 “Separation from Service” means expiration or termination of the arrangement with
the Corporation pursuant to which the Participant performed services as a director of the
Corporation if such expiration or termination constitutes a good faith and complete termination of
the relationship and all other independent contractor relationships the Participant has with the
Corporation. A good faith and complete termination of a relationship shall not be deemed to have
occurred if the Corporation anticipates a renewal of a contractual relationship or anticipates that
the Participant shall become an employee of the Corporation. For this purpose, the Corporation is
considered to anticipate the renewal of a contractual relationship with the Participant if it
intends to contract again for the services provided under the expired arrangement, and neither the
Corporation nor the Participant has eliminated the Participant as a possible provider of services
under any such new arrangement. Further, the Corporation is considered to intend to contract again
for the services provided under an expired arrangement if the Corporation’s doing so is conditioned
only upon incurring a need for the services, the availability of funds or both. The foregoing
requirements are deemed satisfied if no amount will be paid to the Participant before a date at
least 12 months after the day on which the arrangement expires pursuant to which the Participant
performed services for the Corporation (or, in the case of more than one arrangement, all such
arrangements expire) and no amount payable to the Participant on that date will be paid to the
Participant if, after the expiration of the arrangement (or arrangements) and before that date, the
Participant performs services for the Corporation as a director or other independent contractor or
an employee). If a Participant provides services both as an employee of the Corporation and as a
member of the board of directors of the Corporation, the services provided as an employee are not
taken into account in determining whether the Participant has a Separation from Service as a
director for purposes of this Plan because this Plan is not aggregated with any plan in which the
Participant participates as an employee pursuant to IRS Regulation Section 1.409A-1(c)(2)(ii).

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     2.13 “Unforeseeable Emergency” means a severe financial hardship to a Participant
resulting from an illness or accident of the Participant or the Participant’s spouse or dependent
(as defined in Section 152(a) of the Code), loss of the Participant’s property due to casualty
(including the need to rebuild a home following damage to a home not otherwise covered by
insurance, for example, as a result of a natural disaster), or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of the Participant.
For example, the imminent foreclosure of or eviction from the Participant’s primary residence may
constitute an Unforeseeable Emergency. In addition, the need to pay for medical expenses,
including non-refundable deductibles, as well as for the costs of prescription drug medication, may
constitute an Unforeseeable Emergency. Finally, the need to pay for funeral expenses of a spouse
or a dependent (as defined in Code section 152(a)) may also constitute an Unforeseeable Emergency.
Except as otherwise provided above, the purchase of a home and the payment of college tuition are
not Unforeseeable Emergencies. Whether a Participant is faced with an Unforeseeable Emergency is
to be determined based on the relevant facts and circumstances of each case.

ARTICLE III

DEFERRALS

     3.1 Deferral Elections. An Active Participant may elect to defer a specified
percentage of his fees for services performed as a director of the Corporation during a Plan Year
by completing and filing such forms as required by the Corporation prior to the first day of the
Plan Year. A Participant’s deferrals shall be taken at a uniform percentage rate from each of the
payments made to him by the Corporation during the Plan Year. Compensation deferred shall be
retained by the Corporation, credited to the Participant’s Account pursuant to Section 4.1 and paid
in accordance with the terms and conditions of the Plan. A director who is not already eligible to
participate in any other deferred compensation plan of the account balance type sponsored by the
Corporation who becomes an Active Participant for the first time during a Plan Year (i.e., first
becomes a director) may within 30 days after the effective date of participation make an election
to defer a specified percentage of compensation to be paid to him for services to be performed
subsequent to the deferral election.

     3.2 Continued Effect of Elections. An Active Participant’s deferral election with
respect to a Plan Year under Section 3.1 shall be irrevocable after the last date upon which it may
be filed pursuant to Section 3.1 and shall continue in effect each subsequent Plan Year until
prospectively revoked or amended in writing. For a revocation or amendment to be effective with
respect to payments during a Plan Year, it must be filed by the last date for which an effective
deferral election is permitted to be filed with respect to those payments under Section 3.1.

     3.3 Prior Deferral Elections. Any deferral election made prior to calendar year 2005
under an individual agreement shall be treated as a deferral election described in Section 3.1 and
shall continue in effect until modified as described in Section 3.2 above unless modified earlier
pursuant to Section 8.12(a) below.

     3.4 Unforeseeable Emergency. In the event that a Participant makes application for a
hardship distribution under Section 6.3 and the Administrator determines that an Unforeseeable
Emergency exists, all deferral elections otherwise in effect under this Article III and any other
nonqualified deferred compensation plan of the account balance type sponsored by the Corporation
shall immediately terminate upon such determination. To resume deferrals thereafter, a Participant
must make an election satisfying the provisions of Section 3.1, as the case may be, as those
provisions apply to someone who is already an Active Participant in the Plan.

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ARTICLE IV

ACCOUNTS

     4.1 Credits to Account. Bookkeeping amounts equal to the amounts deferred by a
Participant pursuant to Section 3.1 shall be credited to such Participant’s Deferral Account as
soon as practicable after the deferred compensation would otherwise have been paid to such
Participant in the absence of deferral.

     4.2 Valuation of Account.

     (a) The Participant’s Account shall be credited or charged with deemed earnings or
losses as if it were invested in accordance with paragraph (b) below.

     (b) (i) The investment funds available hereunder for the deemed investment of the
Account shall be the Brady Stock Fund and such other funds as the Administrator shall from
time to time determine. However, in no event shall the Corporation be required to make any
such investment in the Brady Stock Fund or any other investment fund and, to the extent such
investments are made, such investments shall remain an asset of the Corporation subject to
the claims of its general creditors.

     (ii) On the date credited to the Participant’s Account, deferrals shall be
deemed to be invested in one or more of the investment funds designated by the
Participant for such deemed investment. Once made, the Participant’s investment
designation shall continue in effect for all future deferrals until changed by the
Participant. Any such change may be prospectively elected by the Participant at the
times established by the Administrator, which shall be no less frequently than
quarterly, and shall be effective only for deferrals, credited from and after its
effective date. Until such time as the Administrator takes action to the contrary,
such changes may be elected at the same times as changes may be elected with respect
to the Brady Matched 401(k) Plan.

     (iii) The portion of a Participant’s Account invested in the Brady Stock Fund
shall be called the Brady Stock Sub-account. The remaining portion of the
Participant’s Account shall be referred to as the General Investment Sub-account.

     (iv) A Participant’s balance in the Brady Stock Fund shall be determined as
though the Participant’s deferrals allocated to that Fund are invested in shares of
Class A non-voting common stock of Brady Corporation by purchase at the fair market
value price of such stock on the date the deferrals are credited to the
Participant’s Brady Stock Fund Sub-account.

     (v) The value of the Brady Stock Sub-account on any particular date will be
based upon the value of the shares of Class A non-voting common stock of Brady
Corporation which the sub-account is deemed to hold on that date. The shares of
such stock deemed to be held in such sub-account shall be credited with dividends at
the time they are credited with respect to actual shares of Class A non-voting
common stock of Brady Corporation and such dividends shall be deemed to be used to
purchase additional shares of Class A non-voting common stock of Brady Corporation
on the day following the crediting of such dividends at the then fair market value
price of such stock. The sub-account shall also be credited from time to time with
additional shares of Class A non-voting common stock of Brady Corporation equal in
number to the number of shares

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granted in any stock dividend or split to which the holder of a like number of
shares of Class A non-voting common stock would be entitled. All other
distributions with respect to shares of Class A non-voting common stock of Brady
Corporation shall be similarly applied. In the event of a distribution of preferred
stock, such preferred stock shall be valued at its par value (or its voluntary
liquidating price, if it does not have a par value).

     (vi) The valuation of the funds held in the General Investment Sub-account shall
be accomplished in the same manner as though the deemed investment in such funds had
actually been made and are valued at their fair market value price on valuation
dates hereunder.

     (vii) A Participant’s Account shall be valued as of December 31 each year and at
such other times established by the Administrator, which shall be no less frequently
than quarterly. Until such time as the Administrator takes action to the contrary,
such valuation shall be at the same time as valuations made of Brady matched 401(k)
plan assets.

     (viii) All elections and designations under this section shall be made in
accordance with procedures prescribed by the Administrator. The Administrator may
prescribe uniform percentages for such elections and designations.

     (ix) A Participant may prospectively elect to reallocate his Account balance
among the investment funds at the times established by the Administrator, which
shall be no less frequently than quarterly. Until such time as the Administrator
takes action to the contrary, such changes may be elected at the same times as
changes may be elected with respect to the Brady Matched 401(k) Plan.
Notwithstanding any other provision of this Plan to the contrary, a Participant may
not make (i) any election or transaction in the Brady Stock Fund at a time when the
Participant is in possession of any material non-public information or at a time not
permitted under the Corporation’s policy on insider trading or (ii) an opposite way
election with respect to the Brady Stock Fund within six months of a prior election
regarding the Brady Stock Fund.

     (x) Notwithstanding subparagraph (ix) above, from and after May 1, 2006, a
Participant may not shift any amounts from his Brady Stock Sub-account to his
General Investment Sub-account or vice-versa. The preceding sentence shall not
apply to a Participant who has had a Separation from Service prior to May 1, 2006.
A Participant shall, on or after February 16, 2006 and prior to May 1, 2006, be
entitled to reallocate up to 50% of the balance of the portion of his Account
attributable to pre-2004 deferrals from investments in the Brady Stock Fund to the
other investment funds available hereunder; and, thereafter, the portion of such
account attributable to pre-2004 deferrals held in the Brady Stock Fund must remain
in the Brady Stock Fund but the director may continue to make new investment choices
from among available investment funds with respect to remaining portions of that
account. The preceding sentence shall not apply to a Participant who has a
Separation from Service before reallocation under such sentence has taken place.

     (c) The Corporation shall provide annual reports to each Participant showing (a) the
value of the Account as of the most recent December 31st, (b) the amount of
deferral made by the Participant for the Plan Year ending on such date and (c) the amount of
any investment gain or loss and the costs of administration credited or debited to the
Participant’s Account.

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     (d) Notwithstanding any other provision of this Agreement that may be interpreted to
the contrary, the deemed investments are to be used for measurement purposes only and
shall not be considered or construed in any manner as an actual investment
of the Participant’s Account balance in any such fund. In the event that Brady Corporation
or the trustee of any grantor trust which Brady Corporation may choose to establish to
finance some or all of its obligations hereunder, in its own discretion, decides to invest
funds in any or all of the funds, the Participant shall have no rights in or to such
investments themselves. Without limiting the foregoing, the Participant’s Account balance
shall at all times be a bookkeeping entry only and shall not represent any investment made
on the Participant’s behalf by the Corporation or any trust; the Participant shall at all
times remain an unsecured creditor of the Corporation.

ARTICLE V

VESTING

     5.1 Full Vesting. A Participant shall be fully vested and nonforfeitable at all times
in his or her Account hereunder.

ARTICLE VI

MANNER AND TIMING OF DISTRIBUTION

     6.1 Payment of Benefits. After a Participant’s Payment Event the Participant’s
Account shall be paid to the Participant (or in the event of the Participant’s death, to the
Participant’s Beneficiary). Payment shall be made in a Single Sum or Installments as specified in
the Participant’s payment election pursuant to Section 6.2:

     (i) Single Sum. A single sum distribution of the value of the balance
of the Account on the Distribution Date following the Participant’s Payment Event.
If the Participant receives a single sum distribution before Separation from Service
with the result that additional amounts are subsequently deposited in the
Participant’s Account, a distribution shall be made on each succeeding Distribution
Date of the entire value of the then balance of the Account.

     (ii) Installments. The value of the balance of the Account shall be
paid in annual installments on the Distribution Date each year with the first of
such installments to be paid on the Distribution Date following the Participant’s
Payment Event. Annual installments shall be paid in one of the alternative methods
specified below over the number of years selected by the Participant in the payment
election made pursuant to Section 6.2, but not to exceed 10. The earnings (or
losses) provided for in Section 4.2 shall continue to accrue on the balance
remaining in the Account during the period of installment payments. The alternative
methods available are as follows:

     (A) Fractional Method. The annual installment shall be
calculated by multiplying the value of the Account by a fraction, the
numerator of which is one, and the denominator of which is the remaining
number of annual payments due the Participant. By way of example, if the
Participant elects a 10 year annual installment method, the first payment
shall be one-tenth (1/10) of the Account balance. The following year, the
payment shall be one-ninth (1/9) of the Account

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balance. Further, regardless of the method selected by the
Participant, the final installment payment will include 100% of the then
remaining Account value.

     (B) Percentage or Fixed Dollar Method. The annual installment
shall be calculated by multiplying the value of the Account, in the case of
the percentage method, by the percentage selected by the Participant and
paying out the resulting amount or, in the case of the fixed dollar method,
by paying out the fixed dollar amount selected by the Participant for the
number of years selected by the Participant. However, in the event the
dollar amount selected is more than the value of the Account in any given
year, the entire value of the Account will be distributed. Further,
regardless of the method selected by the Participant, the final installment
payment will include 100% of the then remaining Account value.

     (iii) In Cash or In Stock. Prior to May 1, 2006 all payments shall be
made in cash, except that amounts held in the Brady Stock Sub-account attributable
to pre-2004 deferrals shall be distributed by means of Class A non-voting common
stock of Brady Corporation. From and after May 1, 2006, payments shall be made in
cash and/or Class A non-voting common stock of Brady Corporation pursuant to the
following:

     (A) If distribution is made in a single sum, the value of the portion
of the Participant’s Account which consists of the General Investment
Sub-account shall be paid in cash while the value of the portion of the
Account which consists of the Brady Stock Sub-account shall be paid by
distributing the number of shares of Class A non-voting stock of Brady
Corporation which represent the number of deemed shares held in the Brady
Stock Sub-Account, except, however, that any fractional shares shall be
valued and distributed in cash.

     (B) If distribution is made in installments, a portion of each
installment shall be distributed in cash and a portion in Class A non-voting
shares of common stock of Brady Corporation. The portion to be distributed
in cash shall be that portion of the total installment payment which is the
same percentage as derived by dividing the value of the Balance in the
General Investment Sub-account by the value of the total Account balance and
the portion to be distributed in stock shall be the same percentage as
determined by dividing the value of the balance of the Brady Stock
Sub-account by the value of the total Account balance. The number of shares
of Class A non-voting shares of common stock of Brady Corporation to be
distributed shall be the number having the same value as the portion of the
installment to be paid in such stock, except, however, that any fractional
shares shall be distributed in cash.

     6.2 Payment Election. An individual who first becomes a Participant at the beginning
of a Plan Year shall, prior to his date of participation, complete a payment election form
specifying the form of payment applicable to such Participant’s Account under the Plan, whether an
In-Service Payment Event Date shall apply and the applicable Distribution Date. An individual who
first becomes a Participant other than on the first day of a Plan Year shall, no later than 30 days
after the effective date of participation, complete a payment election form specifying the form of
payment applicable to such Participant’s Account, whether an In-Service Payment Event Date shall
apply and the applicable Distribution Date; provided, however, that if such Participant is already
a participant in any other nonqualified plan or plans sponsored by the Corporation of the account
balance type, the most recent payment election with respect to any one of those plans shall be the
form of payment election deemed elected under this Plan regardless of whether the individual elects
a different form of payment during that

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initial 30 day period, there shall be no In-Service Payment Event Date, and the Distribution
Date shall be the same distribution date which would apply under that other plan. A “payment
election form” shall mean the form established from time to time by the Administrator which a
Participant completes, signs and returns to the Administrator to make an election under the Plan.
To the extent authorized by the Administrator, such form may be provided electronically and, in
such case, need not be signed by the Participant. A Participant may change the form of payment, or
change a previously elected In-Service Payment Event Date and/or applicable Distribution Date by
completing and filing a new payment election form with the Corporation, and the payment election
form on file with the Corporation as of the date of the Participant’s Payment Event shall be
controlling. Notwithstanding the foregoing, a payment election form changing the Participant’s
form of payment or changing a previously elected In-Service Payment Date and/or applicable
Distribution Date shall not be effective if the Participant has a Payment Event within twelve
months after the date on which the election change is filed with the Corporation. Any change in the
In-Service Payment Event Date must have the effect of delaying the In-Service Payment Event Date to
a date which is at least five (5) years after the In-Service Payment Event Date previously in
effect. Any change in payment method must have the effect of delaying the commencement of payments
to a date which is at least five (5) years after the initially scheduled commencement date of
payment previously in effect. Any change in the Distribution Date must have the effect of delaying
the commencement of payments to a date which is at least five (5) years after the initially
scheduled Distribution Date. For purposes of compliance with Code Section 409A, a series of
installment payments is designated as a single payment rather than a right to a series of separate
payments; therefore, a Participant who has elected (or is deemed to have elected) any option under
Section 6.1(a)(i) or (ii) may substitute any of the other options for the option originally
selected as long as the foregoing one-year and five year rules are satisfied. A switch from the
percentage method to the fixed dollar method or vice versa and a switch from either of those
methods to the fractional method or vice versa is considered a substitution of a new option for the
original option for purposes of this rule even if the number of yearly installments is not changed.
The five year delay rule does not apply if the revised payment method applies only upon the
Participant’s death or disability. For this purpose, “disability” means that the Participant is
unable to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months.

     6.3 Financial Hardship. A partial or total distribution of the Participant’s Account
shall be made prior to a Payment Event upon the Participant’s request and a demonstration by the
Participant of severe financial hardship as a result of an Unforeseeable Emergency. Such
distribution shall be made in a single sum as soon as administratively practicable following the
Administrator’s determination that the foregoing requirements have been met. In any case, a
distribution due to Unforeseeable Emergency may not be made to the extent that such emergency is or
may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation
of the Participant’s assets, to the extent the liquidation of such assets would not cause severe
financial hardship, or by cessation of deferrals under Section 3.1 and any other nonqualified
deferred compensation plan of the account balance type sponsored by the Corporation. Distributions
because of an Unforeseeable Emergency must be limited to the amount reasonably necessary to satisfy
the emergency need (which may include amounts necessary to pay any Federal, state, or local income
taxes or penalties reasonably anticipated to result from the distribution). Determinations of
amounts reasonably necessary to satisfy the emergency need must take into account any additional
compensation that is available because of cancellation of a deferral election under Section 3.1 and
any other nonqualified deferred compensation plan of the account balance type sponsored by the
Corporation upon a payment due to an Unforeseeable Emergency. The payment may be made from any
arrangement in which the Participant participates that provides for payment upon an Unforeseeable
Emergency, provided that the arrangement under which the payment was made must be designated at the
time of payment.

     6.4 Delayed Distribution.

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     (a) A payment otherwise required under this Article VI shall be delayed if the
Corporation reasonably anticipates that the making of the payment will violate a term of a
loan agreement to which the Corporation is a party, or other similar contract to which the
Corporation is a party, and such violation will cause material harm to the Corporation;
provided, however, that payments shall be made on the earliest date on which the Corporation
reasonably anticipates that the making of the payment will not cause such violation, or such
violation will not cause material harm to the Corporation, and provided that the facts and
circumstances indicate that the Corporation entered into the loan agreement (including such
covenant) or other similar contract for legitimate reasons, and not to avoid the
restrictions on deferral elections and subsequent deferral elections under Code Section
409A.

     (b) A payment otherwise required under this Article VI shall be delayed if the
Corporation reasonably determines that the making of the payment will jeopardize the ability
of the Corporation to continue as a going concern; provided, however, that payments shall be
made on the earliest date on which the Corporation reasonably determines that the making of
the payment will not jeopardize the ability of the Corporation to continue as a going
concern.

     (c) A payment otherwise required under this Article VI shall be delayed upon such other
events and conditions as the Internal Revenue Service may prescribe in generally applicable
guidance published in the Internal Revenue Bulletin.

     6.5 Inclusion in Income Under Section 409A. Notwithstanding any other provision of
this Article VI, in the event this Plan fails to satisfy the requirements of Code Section 409A and
regulations thereunder with respect to any Participant, there shall be distributed to such
Participant as promptly as possible after the Administrator becomes aware of such fact of
noncompliance such portion of the Participant’s Account balance hereunder as is included in income
as a result of the failure to comply, but no more. Any such distribution shall be taken on a pro
rata basis from the Participant’s General Investment Sub-account and Brady Stock Sub-account in the
manner described in Section 6.1(a)(iv)(B).

     6.6 Domestic Relations Order. Notwithstanding any other provision of this Article VI,
payments shall be made from an account of a Participant in this Plan to such individual or
individuals (other than the Participant) and at such times as are necessary to comply with a
domestic relations order (as defined in Code Section 414(p)(1)(B)). Any such distribution shall be
taken on a pro rata basis from the Participant’s General Investment Sub-account and Brady Stock
Sub-account in the manner described in Section 6.1(a)(iv)(B).

     6.7 De Minimis Amounts. Notwithstanding any other provision of this Article VI, a
Participant’s entire Account balance under this Plan and all other nonqualified deferred
compensation plans of the account balance type shall automatically be distributed to the
Participant on or before the later of December 31 of the calendar year in which occurs the
Participant’s Separation from Service or the 15th day of the third month following the
Participant’s Separation from Service if the total amount in such Account balance at the time of
distribution, when aggregated with all other amounts payable to the Participant under all
arrangements benefiting the Participant described in Section 1.409A-1(c) or any successor thereto,
do not exceed the amount described in Code Section 402(g)(1)(B). The foregoing lump sum payment
shall be made automatically and any other distribution elections otherwise applicable with respect
to the individual in the absence of this provision shall not apply.

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ARTICLE VII

ADMINISTRATION

     7.1 Administrator. The Plan shall be administered by the Administrator, which shall
be the Corporation’s Board of Directors. The Administrator shall have all authority that may be
appropriate for administering the Plan, including the authority to adopt rules and regulations for
the conduct of its affairs and for implementing, amending and carrying out the Plan, interpreting
the provisions of the Plan and determining a Participant’s entitlement to benefits hereunder. The
Administrator shall be entitled to rely upon the Corporation’s records as to information pertinent
to calculations or determinations made pursuant to the Plan.

     The Administrator may also delegate any of its clerical or other administrative duties to one
or more officers or employees of the Corporation, who may assist the Administrator in the
performance of any of its functions hereunder. In the event of such delegation, a reference to the
Administrator shall be deemed to refer to such officer(s) or employee(s).

     7.2 Authority of Administrator. The Administrator shall have full and complete
discretionary authority to determine eligibility for benefits under the Plan, to construe the terms
of the Plan and to decide any matter presented through the claims procedure. Any final
determination by the Administrator shall be binding on all parties and afforded the maximum
deference allowed by law. If challenged in court, such determination shall not be subject to
de novo review and shall not be overturned unless proven to be arbitrary and capricious
based upon the evidence considered by the Administrator at the time of such determination.

     7.3 Administrator Actions. The Administrator may authorize one or more of its members
to execute on its behalf instructions or directions to any interested party, and any such
interested party may rely upon the information contained therein. The members may also act at a
meeting or by unanimous written consent. A majority of the members shall constitute a quorum for
the transaction of business and shall have full power to act hereunder. All decisions shall be
made by vote of the majority present at any meeting at which a quorum is present, except for
actions in writing without a meeting, which must be unanimous.

     7.4 Minor or Incompetent Payees. If a person to whom a benefit is payable is a minor
or is otherwise incompetent by reason of a physical or mental disability, the Corporation may cause
the payments due to such person to be made to another person for the first person’s benefit without
any responsibility to see to the application of such payment. Such payments shall operate as a
complete discharge of the obligations to such person under the Plan.

     7.5 No Liability. Except as otherwise provided by law, neither the Administrator, nor
any member thereof, nor any director, officer or employee of the Corporation involved in the
administration of the Plan shall be liable for any error of judgment, action or failure to act
hereunder or for any good faith exercise of discretion, excepting only liability for gross
negligence or willful misconduct. The Corporation shall hold harmless and defend any individual in
the employment of the Corporation and any director of the Corporation against any claim, action or
liability asserted against him in connection with any action or failure to act regarding the Plan,
except as and to the extent that any such liability may be based upon the individual’s own gross
negligence or willful misconduct. This indemnification shall not duplicate but may supplement any
coverage available under any applicable insurance.

-10-

 

     7.6 Claims Procedure.

     (a) If the Participant or the Participant’s Beneficiary (hereinafter referred to as a
“Claimant”) is denied all or a portion of an expected benefit under the Plan for any reason,
he or she may file a claim with the Administrator or its designee. The Administrator or its
designee shall notify the Claimant within 60 days of allowance or denial of the claim,
unless the Claimant receives written notice prior to the end of the sixty (60) day period
stating that special circumstances require an extension of the time for decision and
specifying the expected date of decision. The notice of the such decision shall be in
writing, sent by mail to the Claimant’s last known address, and if a denial of the claim,
must contain the following information:

     (i) the specific reasons for the denial;

     (ii) specific reference to pertinent provisions of the Plan on which the denial
is based;

     (iii) if applicable, a description of any additional information or material
necessary to perfect the claim, an explanation of why such information or material
is necessary, and an explanation of the claims review procedure; and

     (iv) a description of the Plan’s claims review procedure, including a statement
of the Claimant’s right to bring a civil action under Section 502 of ERISA if the
Claimant’s claim is denied upon review.

     (b) A Claimant is entitled to request a review of any denial of his claim. The request
for review must be submitted in writing to the Administrator within 60 days after receipt of
the notice of the denial. The timely filing of such a request is necessary to preserve any
legal recourse which may be available to the Claimant and, absent the submission of request
for review within the 60-day period, the claim will be deemed to be conclusively denied.
Upon submission of a written request for review, the Claimant or his representative shall be
entitled to review all pertinent documents, and to submit issues and comments in writing for
consideration by the Administrator. The Administrator shall fully and fairly review the
matter and shall consider all information submitted in the review request, without regard to
whether or not such information was submitted or considered in the initial claim
determination. The Administrator shall promptly respond to the Claimant, in writing, of its
decision within 60 days after receipt of the review request. However, due to special
circumstances, if no response has been provided within the first 60 days, and notice of the
need for additional time has been furnished within such period, the review and response may
be made within the following 60 days. The Administrator’s decision shall include specific
reasons for the decision, including references to the particular Plan provisions upon which
the decision is based, notification that the Claimant can receive or review copies of all
documents, records and information relevant to the claim, and information as to the
Claimant’s right to file suit under Section 502(a) of ERISA.

     (c) If a determination of disability for purposes of Section 6.1(b) or 6.2 becomes
necessary and if such determination is considered to be with respect to a claim for benefits
based on disability for purposes of 29 CFR Section 2560.503-1, then the Administrator shall
adopt and administer a special procedure for considering such disability claims meeting the
requirements of 29 CFR Section 2560.503-1 for disability benefit claims.

     7.7 Conflict of Interest. No person who is covered under the Plan may vote or decide
upon any matter relating solely to himself or vote in any case in which his individual right to any
benefit under

-11-

 

the Plan is particularly involved. Decisions shall be made by remaining members of the
Corporation’s Board of Directors.

ARTICLE VIII

MISCELLANEOUS

     8.1 Amendment or Termination. The Corporation (through its Board of Directors or
authorized officers or employees) reserves the right to alter or amend the Plan, or any part
thereof, in such manner as it may determine, at any time and for any reason. Further, the Board of
Directors of the Corporation reserves the right to terminate the Plan, at any time and for any
reason. Notwithstanding the foregoing, in no event shall any amendment or termination deprive any
Participant or Beneficiary of any amounts credited to him under this Plan as of the date of such
amendment or termination; provided, however, that the Corporation may prospectively change the
manner in which earnings are credited or discontinue the crediting of earnings and, further, the
Corporation may make any amendment it deems necessary or desirable for purposes of compliance with
the requirements of Code Section 409A and regulations thereunder.

     If the Plan is amended to freeze benefit accruals, no additional contributions shall be
credited to any Participant Account hereunder. Following such a freeze of benefit accruals,
Participants’ Accounts shall be paid at such time and in such form as provided under Article VI of
the Plan. If the Corporation terminates the Plan and if the termination is of the type described
in regulations issued by the Internal Revenue Service pursuant to Code Section 409A, then the
Corporation shall distribute the then existing Account balances of Participants and beneficiaries
in a lump sum within the time period specified in such regulations and, following such
distribution, there shall be no further obligation to any Participant or beneficiary under this
Plan. However, if the termination is not of the type described in such regulations, then following
Plan termination Participants’ Accounts shall be paid at such time and in such form as provided
under Article VI of the plan.

     8.2 Applicable Law. This Plan shall be governed by the laws of the State of
Wisconsin, except to the extent preempted by the provisions of ERISA or other applicable federal
law.

     8.3 Relationship to Other Programs. Participation in the Plan shall not affect a
Participant’s rights to participate in and receive benefits under any other plans of the
Corporation, nor shall it affect the Participant’s rights under any other agreement entered into
with the Corporation, unless expressly provided otherwise by such plan or agreement. Any amount
credited under or paid pursuant to this Plan shall not be treated as any type of compensation or
otherwise taken into account in the determination of the Participant’s benefits under any other
plans of the Corporation, unless expressly provided otherwise by such plan.

     8.4 Non-Assignability by Participant. No Participant or Beneficiary shall have any
right to commute, sell, assign, pledge, convey, or otherwise transfer any rights or claims to
receive benefits hereunder, nor shall such rights or claims be subject to garnishment, attachment,
execution or levy of any kind except to the extent otherwise required by law.

     8.5 No Right to Continued Service. Neither participation in this Plan, nor the
payment of any benefit hereunder, shall be construed as giving to a Participant any right to be
retained in the service of the Corporation, or limiting in any way the right of the Corporation to
terminate the Participant’s service at any time.

-12-

 

     8.6 Assignability by Corporation. The Corporation shall have the right to assign all
of its right, title and obligation in and under this Plan upon a merger or consolidation in which
the Corporation is not the surviving entity or to the purchaser of substantially its entire
business or assets or the business or assets pertaining to a major product line, provided such
assignee or purchaser assumes and agrees to perform after the effective date of such assignment all
of the terms, conditions and provisions imposed by this Plan upon the Corporation. Upon such
assignment, all of the rights, as well as all obligations, of the Corporation under this Plan shall
thereupon cease and terminate.

     8.7 Unsecured Claim; Grantor Trust. The right of a Participant to receive payment
hereunder shall be an unsecured claim against the general assets of the Corporation, and no
provisions contained herein, nor any action taken hereunder shall be construed to give any
individual at any time a security interest in any asset of the Corporation, of any affiliated
corporation, or of the stockholders of the Corporation. The liabilities of the Corporation to a
Participant hereunder shall be those of a debtor pursuant to such contractual obligations as are
created hereunder and to the extent any person acquires a right to receive payment from the
Corporation hereunder, such right shall be no greater than the right of any unsecured general
creditor of the Corporation. The Corporation may establish a grantor trust (but shall not be
required to do so) to which the Corporation may in its discretion contribute (subject to the claims
of the general creditors of the Corporation) the amounts credited to the Account. If a grantor
trust is so established, payment by the trust of the amounts due the Participant or his Beneficiary
hereunder shall be considered a payment by the Corporation for purposes of this Plan.

     8.8 Notices or Filings. Any notice or filing required or permitted to be given to the
Administrator hereunder shall be sufficient if in writing and hand-delivered, or sent by registered
or certified mail, to the address below:

Corporate Treasurer

Brady Corporation

P.O. Box 571

Milwaukee, WI 53201-0571

     Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail,
as of the date shown on the postmark on the receipt for registration or certification.

     Any notice or filing required or permitted to be given to a Participant hereunder shall be
sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the
Participant.

     8.9 Special rules for 2005-2007. Notwithstanding the usual rules required regarding
the deferral elections and distribution elections:

     (a) A Participant may on or before March 15, 2005 make a new deferral election to apply
to amounts which would otherwise be paid in calendar year 2005; provided that such amounts
have not been paid or became payable at the time of the election. Such election shall
remain in effect for future years until modified pursuant to Section 3.2.

     (b) On or before December 31, 2007, a Participant may elect an In-Service Payment Event
Date and/or make an election as to distribution of his Account from among the choices
described at Section 6.1 hereof without complying with the rules described in Section 6.2
hereof as long as the effect of the election is not to accelerate payments into 2006 or to
defer payments which would otherwise have been made in 2006 and not to accelerate payments
into 2007 or to defer payments which would otherwise have been made in 2007. Such election
shall become effective after the last day upon which it is permitted to be made or, if
earlier, the first day of the calendar year in which payments under the election are
scheduled to commence. In order to change any such election after December 31, 2007, the
requirements of Section 6.2 hereof must

-13-

 

be satisfied. Any individual who has on or before December 31, 2006 elected an
In-Service Payment Event Date of January 1, 2007 and a Distribution Date of April 1, may on
or before December 31, 2007 elect to change the Distribution Date to be applicable in
calendar year 2008 and subsequent years from April 1 to January 1.

     IN WITNESS WHEREOF, the Corporation has caused its duly authorized officer to execute this
Plan document on its behalf this 17th day of September, 2007, to replace any prior version of this
Plan previously adopted by the Corporation.

	 	 	 	 	 	 
	 	BRADY CORPORATION

 	 
	 	By:  	 /s/ Frank M. Jaehnert	 
	 	  	 	 
	 	 	Attest:  	 /s/ David Mathieson	 
	 

-14-exv10w3

 

Exhibit 10.3

BRADY CORPORATION RESTORATION PLAN

Restated Effective as of January 1, 2008

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE I	 	INTRODUCTION	 	 	1	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	1.1	 	Establishment and Effective Date	 	 	1	 
	 	 	1.2	 	Purpose	 	 	1	 
	 	 	1.3	 	Section 409A	 	 	1	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE II	 	DEFINITIONS	 	 	2	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	2.1	 	Account	 	 	2	 
	 	 	2.2	 	Additional Employer Contribution	 	 	2	 
	 	 	2.3	 	Additional Matching Contribution	 	 	2	 
	 	 	2.4	 	Affiliate	 	 	2	 
	 	 	2.5	 	Beneficiary	 	 	2	 
	 	 	2.6	 	Board	 	 	2	 
	 	 	2.7	 	Code	 	 	2	 
	 	 	2.8	 	Committee	 	 	2	 
	 	 	2.9	 	Compensation	 	 	2	 
	 	 	2.10	 	Elective Deferral	 	 	3	 
	 	 	2.11	 	Elective Deferral Account	 	 	3	 
	 	 	2.12	 	Eligible Employee	 	 	3	 
	 	 	2.13	 	Employee	 	 	3	 
	 	 	2.14	 	Employer	 	 	3	 
	 	 	2.15	 	Employer Contribution	 	 	3	 
	 	 	2.16	 	Employer Contribution Account	 	 	3	 
	 	 	2.17	 	Excess Compensation	 	 	3	 
	 	 	2.18	 	Matching Contribution	 	 	3	 
	 	 	2.19	 	Matching Contribution Account	 	 	3	 
	 	 	2.20	 	Participant	 	 	3	 
	 	 	2.21	 	Plan	 	 	3	 
	 	 	2.22	 	Plan Year	 	 	3	 
	 	 	2.23	 	Qualified 401(k) Plan	 	 	3	 
	 	 	2.24	 	Separation from Service	 	 	3	 
	 	 	2.25	 	Specified Employee	 	 	6	 
	 	 	2.26	 	Unforeseeable Emergency	 	 	7	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE III	 	PARTICIPATION	 	 	8	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	3.1	 	Eligibility to Participate	 	 	8	 
	 	 	3.2	 	Continuation of Eligibility	 	 	8	 

i

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE IV	 	DEFERRALS	 	 	9	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	4.1	 	Elective Deferrals	 	 	9	 
	 	 	4.2	 	Additional Rules Governing Deferral Elections	 	 	9	 
	 	 	4.3	 	Matching Contribution	 	 	10	 
	 	 	4.4	 	Employer Contribution	 	 	10	 
	 	 	4.5	 	Additional Matching Contribution	 	 	10	 
	 	 	4.6	 	Additional Employer Contribution	 	 	10	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE V	 	ACCOUNTS AND CREDITS	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	5.1	 	Credits to Accounts	 	 	11	 
	 	 	5.2	 	No Funding	 	 	11	 
	 	 	5.3	 	Deemed Investment of Accounts	 	 	11	 
	 	 	5.4	 	Reports to Participants	 	 	12	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE VI	 	VESTING	 	 	13	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE VII	 	MANNER AND TIMING OF DISTRIBUTION	 	 	14	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	7.1	 	Payment of Benefits	 	 	14	 
	 	 	7.2	 	Payment Election	 	 	15	 
	 	 	7.3	 	Financial Hardship	 	 	16	 
	 	 	7.4	 	Delayed Distribution	 	 	16	 
	 	 	7.5	 	Inclusion in Income Under Section 409A	 	 	17	 
	 	 	7.6	 	Domestic Relations Order	 	 	17	 
	 	 	7.7	 	De Minimis Amounts	 	 	18	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE VIII	 	PLAN OPERATION AND ADMINISTRATION	 	 	19	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	8.1	 	Administrator	 	 	19	 
	 	 	8.2	 	Committee	 	 	19	 
	 	 	8.3	 	Authority to Act	 	 	19	 
	 	 	8.4	 	Information from Participants	 	 	19	 
	 	 	8.5	 	Committee Discretion	 	 	19	 
	 	 	8.6	 	Committee Members’ Conflict of Interest	 	 	20	 
	 	 	8.7	 	Governing Law	 	 	20	 
	 	 	8.8	 	Expenses	 	 	20	 
	 	 	8.9	 	Minor or Incompetent Payees	 	 	20	 
	 	 	8.10	 	Withholding	 	 	20	 
	 	 	8.11	 	Indemnification	 	 	21	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE IX	 	CLAIMS PROCEDURE	 	 	22	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	9.1	 	Claims	 	 	22	 

ii

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	9.2	 	Review	 	 	22	 
	 	 	9.3	 	Disability	 	 	23	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE X	 	AMENDMENT AND TERMINATION	 	 	24	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE XI	 	MISCELLANEOUS PROVISIONS	 	 	25	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	11.1	 	Headings	 	 	25	 
	 	 	11.2	 	No Contract of Employment	 	 	25	 
	 	 	11.3	 	Rights of Participants and Beneficiaries	 	 	25	 
	 	 	11.4	 	Nonalienation of Benefits	 	 	25	 
	 	 	11.5	 	Tax Treatment	 	 	25	 
	 	 	11.6	 	Other Plans and Agreements	 	 	25	 
	 	 	11.7	 	Number and Gender	 	 	26	 
	 	 	11.8	 	Plan Provisions Controlling	 	 	26	 
	 	 	11.9	 	Severability	 	 	26	 
	 	 	11.10	 	Evidence Conclusive	 	 	26	 
	 	 	11.11	 	Status of Plan Under ERISA	 	 	26	 
	 	 	11.12	 	Name and Address Changes	 	 	27	 
	 	 	11.13	 	Assignability by Corporation	 	 	27	 
	 	 	11.14	 	Special rule for 2005-2007	 	 	27	 

iii

 

ARTICLE I

INTRODUCTION

	1.1	 	Establishment and Effective Date
	 
	 	 	Brady Corporation established the Brady Corporation Restoration Plan effective as of January
1, 2000, and it is hereby restated effective as of January 1, 2008. This document describes
how this Plan has been administered for periods after 2004 and prior to January 1, 2008 and
how it shall be administered for periods after 2007.
	 
	1.2	 	Purpose
	 
	 	 	The Plan is intended to restore to key management employees of Brady and its affiliates
income deferral opportunities and employer contributions they would have had under the
Company’s tax qualified Brady Matched 401(k) Plan and Brady Funded Retirement Plan but for
the limitations of the Internal Revenue Code of 1986, as amended and to provide certain
additional benefits.
	 
	1.3	 	Section 409A
	 
	 	 	This document is intended to comply with the provisions of Section 409A of the Internal
Revenue Code and shall be interpreted accordingly. If any provision or term of this
document would be prohibited by or inconsistent with the requirements of Section 409A of the
Code, then such provision or term shall be deemed to be reformed to comply with Section 409A
of the Code.

 

 

ARTICLE II

DEFINITIONS

The following terms, when used in the Plan with initial capital letters, shall have the meaning
given to them in this Article.

	2.1	 	Account shall mean the account maintained to record a Participant’s interest in the Plan and
shall be composed of the following subaccounts: Elective Deferral Account, Matching
Contribution Account and Employer Contribution Account.
	 
	2.2	 	Additional Employer Contribution shall mean the amount credited to a Participant pursuant to
Section 4.6.
	 
	2.3	 	Additional Matching Contribution shall mean the amount credited to a Participant pursuant to
Section 4.5.
	 
	2.4	 	Affiliate shall mean each incorporated or unincorporated trade or business in which Brady
Corporation directly or indirectly owns, as applicable, eighty percent (80%) of the voting
stock or eighty percent (80%) of the capital or profits interest.
	 
	2.5	 	Beneficiary means the person, persons, or entity designated by the Participant to receive any
benefits payable under the Plan on or after the Participant’s death. Each Participant shall
be permitted to name, change or revoke the Participant’s designation of a Beneficiary in
writing on a form and in the manner prescribed by the Employer; provided, however, that the
designation on file with the Employer at the time of the Participant’s death shall be
controlling. Should a Participant fail to make a valid Beneficiary designation or leave no
named Beneficiary surviving, any benefits due shall be paid to such Participant’s spouse, if
living; or if not living, then any benefits due shall be paid to such Participant’s estate. A
Participant may designate a primary beneficiary and a contingent beneficiary; provided,
however, that the Employer may reject any such instrument tendered for filing if it contains
successive beneficiaries or contingencies unacceptable to it. If all Beneficiaries who
survive the Participant shall die before receiving the full amounts payable hereunder, then
the payments shall be paid to the estate of the Beneficiary last to die.
	 
	2.6	 	Board shall mean the Board of Directors of Brady Corporation.
	 
	2.7	 	Code shall mean the Internal Revenue Code of 1986, as amended, and any regulations issued
thereunder.
	 
	2.8	 	Committee shall mean the Compensation Committee of the Board.
	 
	2.9	 	Compensation shall mean the total compensation payable to a Participant by the Employer for
any period (prior to elective deferrals under this Plan or any other plan or deferral
agreement) required to be reported as wages on the Employee’s Form W-2 for income tax
purposes, but reduced by all of the following items (even if includable in

2

 

	 	 	gross income): reimbursements or other expense allowances, fringe benefits (cash and
non-cash), moving expenses and welfare benefits.
	 
	2.10	 	Elective Deferral shall mean the portion of a Participant’s Compensation that is reduced and
credited to his Elective Deferral Account pursuant to his election under Section 4.1.
	 
	2.11	 	Elective Deferral Account shall mean the account maintained to record a Participant’s
interest in the Plan attributable to his Elective Deferrals.
	 
	2.12	 	Eligible Employee shall mean an Employee eligible under Section 3.1 and 3.2(a).
	 
	2.13	 	Employee shall mean an employee of the Employer.
	 
	2.14	 	Employer shall mean Brady Corporation and any Affiliate that adopts the Plan with the
approval of the Board.
	 
	2.15	 	Employer Contribution shall mean the amount credited to a Participant pursuant to Section
4.4.
	 
	2.16	 	Employer Contribution Account shall mean the account maintained to record a Participant’s
interest in the Plan attributable to Employer Contributions and Additional Employer
Contributions on his behalf.
	 
	2.17	 	Excess Compensation shall mean the portion of Compensation earned by a Participant during a
Plan Year after the date the Compensation he has earned during the Plan Year equals the limit
in Code Section 401(a)(17) for such Plan Year.
	 
	2.18	 	Matching Contribution shall mean the amount credited to a Participant pursuant to Section
4.3.
	 
	2.19	 	Matching Contribution Account shall mean the account maintained to record a Participant’s
interest in the Plan attributable to Matching Contributions and Additional Matching
Contributions on his behalf.
	 
	2.20	 	Participant shall mean (i) an Eligible Employee under Section 3.1 and 3.2(a) or (ii) a former
Eligible Employee who has an Account under the Plan.
	 
	2.21	 	Plan shall mean the Brady Corporation Restoration Plan, as set forth in this document, as the
same may be amended or restated from time to time.
	 
	2.22	 	Plan Year shall mean the calendar year.
	 
	2.23	 	Qualified 401(k) Plan shall mean the Brady Matched 401(k) Plan (or any successor plan thereto
qualified under Code §§ 401(a) and 401(k)).
	 
	2.24	 	Separation from Service shall have the meaning set forth in IRS Regulation Section 1.409A-1
the requirements of which are summarized in part as follows:

3

 

	 	(a)	 	In General. The Participant shall have a Separation from Service with
the Employer if the Participant dies, retires, or otherwise has a termination of
employment with the Employer. However, for purposes of this Section 2.24, the
employment relationship is treated as continuing intact while the individual is on
military leave, sick leave, or other bona fide leave of absence if the period of such
leave does not exceed six months, or if longer, so long as the individual retains a
right to reemployment with the Employer under an applicable statute or by contract. For
purposes of this paragraph (a) of this Section 2.24, a leave of absence constitutes a
bona fide leave of absence only if there is a reasonable expectation that the
Participant will return to perform services for the Employer. If the period of leave
exceeds six months and the individual does not retain a right to reemployment under an
applicable statute or by contract, the employment relationship is deemed to terminate
on the first date immediately following such six-month period. Notwithstanding the
foregoing, where a leave of absence is due to any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than six months, where such impairment causes the
Participant to be unable to perform the duties of his or her position of employment or
any substantially similar position of employment, a 29-month period of absence may be
substituted for such six-month period.
	 
	 	(b)	 	Termination of Employment. Whether a termination of employment has
occurred is determined based on whether the facts and circumstances indicate that the
Employer and Participant reasonably anticipated that no further services would be
performed after a certain date or that the level of bona fide services the Participant
would perform after such date (whether as an employee or as an independent contractor)
would permanently decrease to no more than 20 percent of the average level of bona fide
services performed (whether as an employee or an independent contractor) over the
immediately preceding 36-month period (or, the full period of services to the Employer
if the Participant has been providing services to the Employer less than 36 months).
Facts and circumstances to be considered in making this determination include, but are
not limited to, whether the Participant continues to be treated as an employee for
other purposes (such as continuation of salary and participation in employee benefit
programs), whether similarly situated service providers have been treated consistently,
and whether the Participant is permitted, and realistically available, to perform
services for other service recipients in the same line of business. The Participant is
presumed to have Separated from Service where the level of bona fide services performed
decreases to a level equal to 20 percent or less of the average level of services
performed by the employee during the immediately

4

 

	 	 	 	preceding 36-month period. The Participant will be presumed not to have Separated from Service where the level of bona
fide services performed continues at a level that is 50 percent or more of the average
level of service performed by the Participant during the immediately preceding 36-month
period. No presumption applies to a decrease in the level of bona fide services
performed to a level that is more than 20 percent and less than 50 percent of the
average level of bona fide services performed during the immediately preceding 36-month
period. The presumption is rebuttable by demonstrating that the Employer and the Participant reasonably anticipated that as of a certain date
the level of bona fide services would be reduced permanently to a level less than or
equal to 20 percent of the average level of bona fide services provided during the
immediately preceding 36-month period or the full period of services to the Employer
if the Participant has been providing services to the Employer less than 36 months
(or that the level of bona fide services would not be so reduced). For example, the
Participant may demonstrate that the Employer and the Participant reasonably
anticipated that the Participant would cease providing services, but that, after the
original cessation of services, business circumstances such as termination of the
Participant’s replacement caused the Participant to return to employment. Although
the Participant’s return to employment may cause the Participant to be presumed to
have continued in employment because the Participant is providing services at a rate
equal to the rate at which the Participant was providing services before the
termination of employment, the facts and circumstances in this case would
demonstrate that at the time the Participant originally ceased to provide services,
the Employer reasonably anticipated that the Participant would not provide services
in the future. For purposes of this paragraph (b), for periods during which the
Participant is on a paid bona fide leave of absence (as defined in paragraph (a) of
this Section 2.24) and has not otherwise terminated employment pursuant to paragraph
(a) of this Section 2.24, the Participant is treated as providing bona fide services
at a level equal to the level of services that the Participant would have been
required to perform to receive the compensation paid with respect to such leave of
absence. Periods during which the Participant is on an unpaid bona fide leave of
absence (as defined in paragraph (a) of this Section 2.24) and has not otherwise
terminated employment pursuant to paragraph (a) of this Section 2.24, are
disregarded for purposes of this paragraph (b) of this Section 2.24 (including for
purposes of determining the applicable 36-month (or shorter) period).
	 
	 	(c)	 	Asset Purchase Transactions. Where as part of a sale or other
disposition of assets by the Employer as seller to an unrelated service recipient
(buyer), a Participant of the Employer would otherwise experience a Separation from
Service with the Employer, the Employer and the buyer may retain the discretion to
specify, and may specify, whether a Participant providing services to the Employer
immediately before the asset purchase transaction and providing services to the buyer
after and in connection with the asset purchase transaction has experienced a
Separation from Service, provided that the asset purchase transaction results from bona
fide, arm’s length negotiations, all service providers providing services to the
Employer immediately before the asset purchase transaction and providing services to
the buyer after and in connection with the asset purchase transaction are treated
consistently (regardless of position at the Employer) for purposes of applying the
provisions of any nonqualified deferred compensation plan, and such treatment is
specified in writing no later than the closing date of the asset purchase transaction.
For purposes of this paragraph (c), references to a sale or other disposition of
assets, or an asset purchase transaction, 

5

 

	 	 	 	refer only to a transfer of substantial assets, such as a plant or division or substantially all the assets of a trade or
business.
	 
	 	(d)	 	Dual Status. If a Participant provides services both as an employee of
the Employer and as an independent contractor of the Employer, the Participant must
separate from service both as an employee and as an independent contractor to be
treated as having Separated from Service. If a Participant ceases providing services
as an independent contractor and begins providing services as an employee, or ceases
providing services as an employee and begins providing services as an independent
contractor, the Participant will not be considered to have a Separation from Service
until the Participant has ceased providing services in both capacities.
Notwithstanding the foregoing, if a Participant provides services both as an employee
of the Employer and a member of the board of directors of the Employer, the services
provided as a director are not taken into account in determining whether the
Participant has a Separation from Service as an employee for purposes of this Plan
unless this Plan is aggregated with any plan in which the Participant participates as a
director under IRS Regulation Section 1.409A-1(c)(2)(ii).

	2.25	 	Specified Employee shall have the meaning set forth in IRS Regulation Section 1.409A-1 the
requirements of which are summarized in part as follows:

	 	(a)	 	In General. “Specified Employee” means a Participant who as of the
date of his separation from service is a “key employee” as defined in Code Section
416(i) (disregarding Section 416(i)(5)), i.e., an employee who at any time during the
12 month period ending on an identification date is an officer of the Employer or one
of its affiliates having an annual compensation as defined in IRS Regulation Section
1.409A-1(i)(2) greater than $130,000, a 5% owner of the Employer or one of its
affiliates or a 1% owner of the Employer or one of its affiliates having compensation
of more than $150,000. The $130,000 amount described in the preceding sentence shall
be adjusted for cost of living increases in such amounts and at such times as specified
by the Internal Revenue Service. Further, no more than 50 employees (or, if lesser,
the greater of 3 or 10% of the employees) shall be treated as officers. The foregoing
definition shall be interpreted at all times in a manner consistent with such
regulations as may be adopted from time to time by the Internal Revenue Service for
purposes of applying the key employee definition of Section 416(i) to the requirements
of Code Section 409A. If a person is a key employee as of an identification date, the
person is treated as a Specified Employee for the 12-month period beginning on the
first day of the fourth month following the identification date. The “identification
date” is December 31.
	 
	 	(b)	 	In the event of a public offering, merger, acquisition, spin-off,
reorganization or other corporate transaction, “Specified Employees” shall be
determined as provided in IRS Reg. Section 1.409A-(1)(i)(6).

6

 

	2.26	 	Unforeseeable Emergency means a severe financial hardship to a Participant resulting from an
illness or accident of the Participant or the Participant’s spouse or dependent (as defined in
Section 152(a) of the Code), loss of the Participant’s property due to casualty (including the
need to rebuild a home following damage to a home not otherwise covered by insurance, for example, as a result of a natural disaster), or other
similar extraordinary and unforeseeable circumstances arising as a result of events beyond
the control of the Participant. For example, the imminent foreclosure of or eviction from
the Participant’s primary residence may constitute an Unforeseeable Emergency. In addition,
the need to pay for medical expenses, including non-refundable deductibles, as well as for
the costs of prescription drug medication, may constitute an Unforeseeable Emergency.
Finally, the need to pay for funeral expenses of a spouse or a dependent (as defined in Code
section 152(a)) may also constitute an Unforeseeable Emergency. Except as otherwise
provided above, the purchase of a home and the payment of college tuition are not
Unforeseeable Emergencies. Whether a Participant is faced with an Unforeseeable Emergency
is to be determined based on the relevant facts and circumstances of each case.

7

 

ARTICLE III

PARTICIPATION

	3.1	 	Eligibility to Participate
	 
	 	 	An Employee shall be eligible to elect deferrals and receive Employer contributions in
accordance with the provisions of Article IV beginning on the date the Committee advises the
Employee he is eligible because the Committee in its discretion has determined that the
Employee may reasonably be anticipated to earn Compensation from the Employer in excess of
the limit described in Code Section 401(a)(17).
	 
	3.2	 	Continuation of Eligibility

	 	(a)	 	An Employee shall continue to be eligible to elect deferrals and receive
Employer contributions in accordance with the provisions of Article IV only for so long
as he continues in employment with the Employer.
	 
	 	(b)	 	An individual who has a Separation from Service shall cease to be eligible and
shall again be eligible to elect deferrals and receive Employer contributions in
accordance with the provisions of Article IV only in accordance with Section 3.1.

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ARTICLE IV

DEFERRALS

	4.1	 	Elective Deferrals

	 	(a)	 	An Eligible Employee may elect an Elective Deferral of up to four percent (4%)
of his Excess Compensation for services performed during a Plan Year by completing and
filing such forms as may be required by the Employer.
	 
	 	(b)	 	An Eligible Employee’s Elective Deferral election under paragraph (a) of this
Section shall apply to and reduce his Excess Compensation, i.e., the portion of his
Compensation earned during a Plan Year after the date the Compensation he has earned
during the Plan Year equals the limit in Code Section 401(a)(17) for such Plan Year.

	4.2	 	Additional Rules Governing Deferral Elections

	 	(a)	 	An Eligible Employee’s election under Section 4.1 shall (i) if made within the
thirty (30) day period following the date he is first eligible to participate in the
Plan, be effective for that portion of his Excess Compensation to be paid for services
performed subsequent to the election, and (ii) if not made within said thirty (30) day
period, be effective for Excess Compensation paid for services performed during the
Plan Year following the date the election is received by the Employer, or its designee.
	 
	 	(b)	 	An Eligible Employee’s election for a Plan Year under this Article IV shall be
irrevocable after the last day upon which such election is permitted to be made for
such Plan Year and shall continue in effect for subsequent Plan Years until changed or
revoked pursuant to paragraph (c) below.
	 
	 	(c)	 	An Eligible Employee may change or revoke his election which would otherwise be
effective for a Plan Year by completing and filing such forms as may be required by the
Employer by the last day of the preceding Plan Year.
	 
	 	(d)	 	Notwithstanding paragraphs (a), (b) and (c), in the event that a Participant
makes application for a hardship distribution under Section 7.3 and the Administrator
determines that an Unforeseeable Emergency exists, his deferral election otherwise in
effect under this Article IV and any other nonqualified deferred compensation plan of
the account balance type shall immediately terminate upon such determination. To
resume deferrals thereafter, a Participant must make an election satisfying the
provisions of paragraph (c).
	 
	 	(e)	 	Notwithstanding paragraphs (a), (b) and (c), if an Eligible Employee receives a
withdrawal of his elective contributions under the Qualified 401(k) Plan or any other
401(k) plan (i.e., a qualified cash or deferred arrangement) of the Employer (or any
affiliate treated under the Code as a single employer with the Employer 

9

 

	 	 	 	for purposes of the 401(k) plan) due to financial hardship pursuant to IRS
Regulation Section 1.40(k)-1(d)(3) or its successor, his deferral election under
this Section 4.1 shall be revoked automatically (effective on the date such hardship
withdrawal is paid). In addition, such Eligible Employee shall not be eligible to
have another deferral election in effect until the first day of the Plan Year which
begins after a six month suspension period that begins on the first day of the
calendar month following the date the hardship withdrawal is paid. Such Eligible
Employee may then resume deferrals by making an election, pursuant to the rules of
paragraph (c) above, effective for any Plan Year which begins after the end of such
suspension period.

	4.3	 	Matching Contribution
	 
	 	 	An Eligible Employee shall be credited with a Matching Contribution for a Plan Year in an
amount equal to the amount of the Elective Deferral made on the Eligible Employee’s behalf
for the Plan Year.
	 
	4.4	 	Employer Contribution
	 
	 	 	An Eligible Employee shall be credited with an Employer Contribution for a Plan Year in an
amount equal to 4% of the Eligible Employee’s Excess Compensation for the Plan Year;
provided the Eligible Employee remains in the Employer’s employ on the last day of such Plan
Year.
	 
	4.5	 	Additional Matching Contribution
	 
	 	 	There shall be credited to the Participant’s Matching Contribution Account for a Plan Year
an amount in addition to amounts credited under Section 4.3 for the same year. The amount
credited under this Section 4.5 shall be equal to .04(X-(Y-Z)) where X is the limit in Code
Section 401(a)(17) for such Plan Year, Y is the Participant’s Compensation for the Plan Year
as defined in Section 2.9 and Z is the amount of elective deferrals for the Plan Year under
all nonqualified deferred compensation plans and agreements (including this Plan) of the
Employer covering the Participant. No amount shall be credited under this Section if X does
not exceed the remainder of Y minus Z.
	 
	4.6	 	Additional Employer Contribution
	 
	 	 	As of the last day of a Plan Year, there shall be credited to the Participant’s Employer
Contribution Account an amount in addition to amounts credited under Section 4.4 for the
same year. The amount credited under this Section 4.6 shall be equal to .04(X-(Y-Z)) where
X is the limit in Code Section 401(a)(17) for such Plan Year, Y is the Participant’s
Compensation for the Plan Year as defined in Section 2.9 and Z is the amount of elective
deferrals for the Plan Year under all nonqualified deferred compensation plans and
agreements (other than this Plan) of the Employer covering the Participant. No amount shall
be credited under this Section if X does not exceed the remainder of Y minus Z.”

10

 

ARTICLE V

ACCOUNTS AND CREDITS

	5.1	 	Credits to Accounts

	 	(a)	 	An amount equal to the amount by which a Participant’s Compensation has been
reduced pursuant to his deferral election under Section 4.1 shall be credited to his
Elective Deferral Account.
	 
	 	(b)	 	Matching Contributions and Additional Matching Contributions on a Participant’s
behalf shall be credited to his Matching Contribution Account.
	 
	 	(c)	 	Employer Contributions and Additional Employer Contributions on a Participant’s
behalf shall be credited to his Employer Contribution Account.
	 
	 	(d)	 	Said credits shall be made at times established by the Committee but no later
than 60 days after the last day of the Plan Year to which they relate.
	 
	 	(e)	 	Each Account shall also be credited or charged with deemed earnings and losses
as if it were invested in accordance with Section 5.3.

	5.2	 	No Funding

	 	(a)	 	The right of any individual to receive payment under the provisions of this
Plan shall be an unsecured claim against the general assets of the Employer, and no
provisions contained in this Plan, nor any action taken pursuant to this Plan, shall be
construed to give any individual at any time a security interest in any asset of the
Employer, of any affiliated company, or of the stockholders of the Employer. The
liabilities of the Employer to any individual pursuant to this Plan shall be those of a
debtor pursuant to such contractual obligations as are created by this Plan and, to the
extent any person acquires a right to receive payment from the Employer under this
Plan, such right shall be no greater than the right of any unsecured general creditor
of the Employer.
	 
	 	(b)	 	The Employer may establish a grantor trust (but shall not be required to do so)
to which shall be contributed (subject to the claims of the general creditors of the
Employer) the amounts credited to the Accounts. If a grantor trust is so established,
except as specifically provided otherwise by the terms of the trust agreement for the
trust, payment by the trust of the amounts due to a Participant or his Beneficiary
under the Plan shall be considered a payment by the Employer for purposes of the Plan.

	5.3	 	Deemed Investment of Accounts

	 	(a)	 	The Committee shall select one or more investment funds for the deemed
investment of Accounts. However, in no event shall the Employer be required to

11

 

	 	 	 	make any such investment in the investment funds, and to the extent such investments are made, such investments shall remain an asset of the Employer subject
to the claims of its general creditors.
	 
	 	(b)	 	On the date credited to the respective Account, a Participant’s Elective
Deferrals, Matching Contributions, Additional Matching Contributions, Employer
Contributions and Additional Employer Contributions shall be deemed to be invested in
one or more of the investment funds designated by the Participant for such deemed
investment. Once made, the Participant’s investment designation shall continue in
effect for all future Elective Deferrals, Matching Contributions, Additional Matching
Contributions, Employer Contributions and Additional Employer Contributions until
changed by the Participant. Any such change may be elected by the Participant at the
times established by the Committee, which shall be no less frequently than quarterly,
and shall be effective only for Elective Deferrals, Matching Contributions, Additional
Matching Contributions, Employer Contributions and Additional Employer Contributions
credited from and after its effective date.
	 
	 	(c)	 	A Participant may elect to reallocate the balance of his Accounts deemed to be
invested in the investment funds under this Section at the times established by the
Committee, which shall be no less frequently quarterly.
	 
	 	(d)	 	All elections and designations under this Section shall be made in accordance
with procedures prescribed by the Committee. The Committee may prescribe uniform
percentages for such elections and designations.
	 
	 	(e)	 	Any distribution of a Participant’s Account which is not a distribution of the
entire account shall be taken pro rata from each of the investment funds in which the
account is deemed to be invested.

	5.4	 	Reports to Participants
	 
	 	 	The Employer shall provide annual reports to each Participant showing (a) the value of the
Account as of the most recent December 31st (b) the amount of contributions made by the
Employer for the year ending on such date and (c) the amount of any investment earnings or
loss credited or debited to the Participant’s Account.

12

 

ARTICLE VI

VESTING

     A Participant shall be fully vested and nonforfeitable at all times in all of his Accounts
herein.

13

 

ARTICLE VII

MANNER AND TIMING OF DISTRIBUTION

	7.1	 	Payment of Benefits

	 	(a)	 	After a Participant’s Separation from Service the Participant’s Account shall
be paid to the Participant (or in the event of the Participant’s death, to the
Participant’s Beneficiary). Payment shall be made in one of the following forms as
specified in the Participant’s payment election pursuant to Section 7.2:

	 	(i)	 	Single Sum. A single sum distribution of the value of
the balance of the Account on the first day of the second month following the
Participant’s Separation from Service; or
	 
	 	(ii)	 	Installments. This subparagraph (ii) shall only be
applicable after April 30, 2006. The value of the balance of the Account shall
be paid in annual installments with the first of such installment to be paid on
the first day of the second month following the Participant’s Separation from
Service and with subsequent annual installments to be paid on an anniversary of
the payment of the first installment. Annual installments shall be paid in one
of the alternative methods specified below over the number of years selected by
the Participant in the payment election made pursuant to Section 7.2, but not
to exceed 10. The earnings (or losses) provided for in Section 5.1(e) shall
continue to accrue on the balance remaining in the Account during the period of
installment payments. The alternative methods available are as follows:

     (A) Fractional Method. The annual installment shall be
calculated by multiplying the most recent value of the Account by a
fraction, the numerator of which is one, and the denominator of which is the
remaining number of annual payments due the Participant. By way of example,
if the Participant elects a 10 year annual installment method, the first
payment shall be one-tenth (1/10) of the Account balance. The following
year, the payment shall be one-ninth (1/9) of the Account balance.

     (B) Percentage or Fixed Dollar Method. The annual installment
shall be calculated by multiplying the most recent value of the Account, in
the case of the percentage method, by the percentage selected by the
Participant and paying out the resulting amount or, in the case of the fixed
dollar method, by paying out the fixed dollar amount selected by the
Participant for the number of years selected by the Participant. However,
in the event the dollar amount selected is more than the value of the
Account in any given year, the entire value of the Account will be
distributed. Further, regardless of the method selected by the Executive,

14

 

the final installment payment will include 100% of the then remaining
Account value.

	 	(b)	 	In the case of a Participant who is a Specified Employee, payment pursuant to
paragraph (a) above shall commence no earlier than the first day of the seventh month
following the Participant’s Separation from Service. This delay in distribution rule
does not apply if the payment is being made as a result of the Participant’s death or
disability. For this purpose, “disability” means that the Participant:

	 	(i)	 	is unable to engage in any substantial gainful activity by
reason of any medically determinable or physical or mental impairment which can
be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, or
	 
	 	(ii)	 	is, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continued period of not less than 12 months, receiving income replacement
benefits for a period of not less than three months under an accident and
health plan covering the employees of the Employer or one of its affiliates in
which the Participant is covered.

	7.2	 	Payment Election
	 
	 	 	An individual who first becomes a Participant at the beginning of a Plan Year shall, prior
to his date of participation, complete a payment election form specifying the form of
payment applicable to such Participant’s Account under the Plan. Absent an actual election
by such Participant by the effective date of participation, the Participant shall be deemed
to have elected the five (5) annual installment payment form. An individual who first
becomes a Participant other than on the first day of a Plan Year shall, no later than 30
days after the effective date of participation, complete a payment election form specifying
the form of payment applicable to such Participant’s Account. In the event such a
Participant does not make an actual election within such 30 day period, the Participant
shall be deemed to have elected the five (5) annual installment payment form; provided,
however, that if such Participant is already a participant in any other nonqualified plan or
plans sponsored by the Employer of the account balance type, the most recent payment
election with respect to any one of those plans shall be the payment election form deemed
elected under this Plan regardless of whether the individual elects a different payment
election form during that initial 30 day period. Elections shall be made on a “payment
election form” — the form established from time to time by the Committee which a
Participant completes, signs and returns to the Committee to make an election under the
Plan. To the extent authorized by the Committee, such form may be provided electronically
and, in such case, need not be signed by the Participant. A Participant may change the form
of payment by completing and filing a new payment election form with the Committee, and the
payment election form on file with the Committee as of the date of the Participant’s
Separation from Service shall be controlling. Notwithstanding the

15

 

	 	 	foregoing, a payment election form changing the Participant’s form of payment shall not
be effective if the Participant has a Separation from Service within twelve months after the
date on which the election change is filed with the Committee. Any change in payment method
must have the effect of delaying the commencement of payments to a date which is at least
five (5) years following the initially scheduled commencement date of payment previously in
effect. For purposes of compliance with Code Section 409A, a series of installment payments
is designated as a single payment rather than a right to a series of separate payments;
therefore, a Participant who has elected (or is deemed to have elected) any option available
under Section 7.1(a)(i) or (ii) may substitute any of the other options for the option
originally selected as long as the foregoing one-year and five year rules are satisfied. A
switch from the percentage method to the fixed dollar method or vice versa and a switch from
either of those methods to the fractional method or vice versa is considered a substitution
of a new option for the original option for purposes of this rule even if the number of
yearly installments is not changed. The five year delay rule does not apply if the revised
payment method applies only upon the Participant’s death or disability. For this purpose,
disability has the same meaning as in Section 7.1(b). In the event that the Participant’s
new payment election would not be effective under the foregoing rules, the payment election
previously in effect shall be controlling.
	 
	7.3	 	Financial Hardship
	 
	 	 	A partial or total distribution of the Participant’s Account shall be made prior to
Separation from Service upon the Participant’s request and a demonstration by the
Participant of severe financial hardship as a result of an Unforeseeable Emergency. Such
distribution shall be made in a single sum as soon as administratively practicable following
the Committee’s determination that the foregoing requirements have been met. In any case, a
distribution due to Unforeseeable Emergency may not be made to the extent that such
emergency is or may be relieved through reimbursement or compensation from insurance or
otherwise, by liquidation of the Participant’s assets, to the extent the liquidation of such
assets would not cause severe financial hardship, or by cessation of deferrals under Article
IV and any other nonqualified deferred compensation plan of the account balance type
sponsored by the Employer. Distributions because of an Unforeseeable Emergency must be
limited to the amount reasonably necessary to satisfy the emergency need (which may include
amounts necessary to pay any Federal, state, or local income taxes or penalties reasonably
anticipated to result from the distribution). Determinations of amounts reasonably
necessary to satisfy the emergency need must take into account any additional compensation
that is available because of cancellation of a deferral election under Article IV and any
other nonqualified deferred compensation plan of the account balance type sponsored by the
Employer upon a payment due to an Unforeseeable Emergency. The payment may be made from any
arrangement in which the Participant participates that provides for payment upon an
Unforeseeable Emergency, provided that the arrangement under which the payment was made must
be designated at the time of payment.
	 
	7.4	 	Delayed Distribution

16

 

	 	(a)	 	A payment otherwise required to be made pursuant to the provisions of this
Article VII shall be delayed if the Employer reasonably anticipates that the
Employer’s deduction with respect to such payment would be limited or eliminated by
application of Code Section 162(m); provided, however that such payment shall be
made on the earliest date on which the Employer anticipates that the deduction of
the payment of the amount will not be limited or eliminated by application of Code
Section 162(m). In any event, such payment shall be made no later than the last day
of the calendar year in which the Participant has a Separation from Service or, in
the case of a Specified Employee, the last day of the calendar year in which occurs
the six (6) month anniversary of such Separation from Service.
	 
	 	(b)	 	A payment otherwise required under this Article VII shall be delayed if the
Employer reasonably determines that the making of the payment will jeopardize the
ability of the Employer to continue as a going concern; provided, however, that
payments shall be made on the earliest date on which the Employer reasonably determines
that the making of the payment will not jeopardize the ability of the Employer to
continue as a going concern.
	 
	 	(c)	 	A payment otherwise required under this Article VII shall be delayed if the
Employer reasonably anticipates that the making of the payment will violate federal
securities laws or other applicable law; provided, however, that payments shall
nevertheless be made on the earliest date on which the Employer reasonably anticipates
that the making of the payment will not cause such violation. (The making of a payment
that would cause inclusion in gross income or the applicability of any penalty
provision or other provision of the Code is not treated as a violation of applicable
law.)
	 
	 	(d)	 	A payment otherwise required under this Article VII shall be delayed upon such
other events and conditions as the Internal Revenue Service may prescribe in generally
applicable guidance published in the Internal Revenue Bulletin.

	7.5	 	Inclusion in Income Under Section 409A
	 
	 	 	Notwithstanding any other provision of this Article VII, in the event this Plan fails to
satisfy the requirements of Code Section 409A and regulations thereunder with respect to any
Participant, there shall be distributed to such Participant as promptly as possible after
the Administrator becomes aware of such fact of noncompliance such portion of the
Participant’s Account balance hereunder as is included in income as a result of the failure
to comply, but no more.
	 
	7.6	 	Domestic Relations Order
	 
	 	 	Notwithstanding any other provision of this Article VII, payments shall be made from the
Account of a Participant in this Plan to such individual or individuals (other than the

17

 

	 	 	Participant) and at such times as are necessary to comply with a domestic relations order
(as defined in Code Section 414(p)(1)(B)).
	 
	7.7	 	De Minimis Amounts
	 
	 	 	Notwithstanding any other provision of this Article VII hereof, a Participant’s Account
balance under this Plan and all other nonqualified deferred compensation plans of the
account balance type shall automatically be distributed to the Participant on or before the
later of December 31 of the calendar year in which occurs the Participant’s Separation from
Service or the 15th day of the third month following the Participant’s Separation
from Service if the total amount in such Account balance at the time of distribution, when
aggregated with all other amounts payable to the Participant under all arrangements
benefiting the Participant described in IRS Regulations Section 1.409A-1(c) (or any
successor thereto), do not exceed the amount described in Code Section 402(g)(1)(B). The
foregoing lump sum payment shall be made automatically and any other distribution elections
otherwise applicable with respect to the individual in the absence of this provision shall
not apply.

18

 

ARTICLE VIII

PLAN OPERATION AND ADMINISTRATION

	8.1	 	Administrator
	 
	 	 	The Committee shall be the plan administrator and shall be responsible for and perform the
duties imposed on a plan administrator.
	 
	8.2	 	Committee
	 
	 	 	The Committee shall have the power and duty to administer the Plan in accordance with its
terms, including, but not limited to, the following:

	 	(a)	 	to make and enforce such rules and regulations as it may deem necessary or
desirable for the efficient administration of the Plan;
	 
	 	(b)	 	to interpret the Plan, including the right to remedy possible ambiguities,
inconsistencies or omissions;
	 
	 	(c)	 	to decide all questions related to participation in, and payment of amounts
under, the Plan, including all factual questions related thereto; and
	 
	 	(d)	 	to maintain all necessary records for the administration of the Plan.

	8.3	 	Authority to Act
	 
	 	 	Brady Corporation or the Committee may authorize one or more of Brady Corporation’s
employees, members, representatives or agents, as applicable, to execute on its behalf
instructions or directions to any interested party, and any such interested party may rely
thereupon and the information contained therein.
	 
	8.4	 	Information from Participants
	 
	 	 	Each Participant and Beneficiary shall furnish the Committee in the form prescribed by it
and at its request, such personal data, affidavits, authorizations to obtain information, or
other information as the Committee deems necessary or desirable for the administration of
the Plan.
	 
	8.5	 	Committee Discretion
	 
	 	 	The Committee has full and complete discretionary authority to determine eligibility for
benefits, to construe the terms of the Plan and to decide any matter presented through the
claims review procedure. Any final determination by the Committee (including claims
decisions made pursuant to Article IX) shall be binding on all parties and afforded the
maximum deference allowed by law. If challenged in court, such determination shall not be
subject to de novo review and shall not be overturned unless proven to be
arbitrary and

19

 

	 	 	capricious upon the evidence considered by the Committee at the time of such determination.
	 
	8.6	 	Committee Members’ Conflict of Interest
	 
	 	 	A member of the Committee who is covered hereunder may not vote or decide upon any matter
relating solely to himself or vote in any case in which his individual right to any benefit
under the Plan is particularly involved. Decisions shall be made by remaining Committee or
Board members even if there is no quorum under normal Committee or Board rules.
	 
	8.7	 	Governing Law
	 
	 	 	This Plan shall be construed in accordance with the laws of the State of Wisconsin to the
extent not preempted by the provisions of the Employee Retirement Income Security Act of
1974, as amended, or other federal law.
	 
	8.8	 	Expenses
	 
	 	 	All expenses and costs incurred in connection with the administration and operation of the
Plan shall be borne by the Employer and/or the Trust.
	 
	8.9	 	Minor or Incompetent Payees
	 
	 	 	If a person to whom a benefit is payable is a minor or is otherwise incompetent by reason of
a physical or mental disability, the Committee may cause the payments due to such person to
be made to another person for the first person’s benefit without any responsibility to see
to the application of such payment. Such payments shall operate as a complete discharge of
the obligations to such person under the Plan.
	 
	8.10	 	Withholding
	 
	 	 	The Employer shall comply with all applicable tax and governmental withholding requirements.
To the extent required by law, the Employer shall withhold any taxes required to be
withheld by the federal or any state or local government from payments made hereunder or
from any other amounts paid to a Participant by the Employer. If FICA taxes must be
withheld in connection with amounts credited hereunder before payments are otherwise due
hereunder and if there are no other wages from which to withhold them, the Employer shall
pay such FICA taxes generated by such payment (and taxes under Code Section 3401 triggered
thereby and additional taxes under Section 3401 attributable to pyramiding of Section 3401
wages and taxes) but no more and the Participant’s Account hereunder shall be reduced by an
amount equal to the payments made by the Employer.

20

 

	8.11	 	Indemnification
	 
	 	 	Except as otherwise provided by law, neither the Board nor the Committee nor any individual
member of the Board or the Committee, nor the Employer, nor any officer, shareholder or employee of the Employer shall be liable for any error of judgment, action or
failure to act hereunder or for any good faith exercise of discretion, excepting only
liability for gross negligence or willful misconduct. Such individuals and entities shall
be indemnified and held harmless by the Employer against any and all claims, damages,
liabilities, costs and expenses (including attorneys’ fees) arising by reason of any good
faith error of omission or commission with respect to any responsibility, duty or action
hereunder. Nothing herein contained shall preclude the Employer from purchasing insurance
to cover potential liability of one or more persons who serve in an administrative capacity
with respect to the Plan.

21

 

ARTICLE IX

CLAIMS PROCEDURE

	9.1	 	Claims
	 
	 	 	If the Participant or the Participant’s Beneficiary (hereinafter referred to as a
“Claimant”) is denied all or a portion of an expected benefit under the Plan for any reason,
he or she may file a claim with the Committee or its designee. The Committee or its
designee shall notify the Claimant within 60 days of allowance or denial of the claim,
unless the Claimant receives written notice prior to the end of the sixty (60) day period
stating that special circumstances require an extension of the time for decision and
specifying the expected date of decision. The notice of the such decision shall be in
writing, sent by mail to the Claimant’s last known address, and if a denial of the claim,
must contain the following information:

	 	(a)	 	the specific reasons for the denial;
	 
	 	(b)	 	specific reference to pertinent provisions of the Plan on which the denial is
based;
	 
	 	(c)	 	if applicable, a description of any additional information or material
necessary to perfect the claim, an explanation of why such information or material is
necessary, and an explanation of the claims review procedure; and
	 
	 	(d)	 	a description of the Plan’s claims review procedure, including a statement of
the Claimant’s right to bring a civil action under Section 502 of ERISA if the
Claimant’s claim is denied upon review.

	9.2	 	Review
	 
	 	 	A Claimant is entitled to request a review of any denial of his claim. The request for
review must be submitted in writing to the Committee within 60 days after receipt of the
notice of the denial. The timely filing of such a request is necessary to preserve any
legal recourse which may be available to the Claimant and, absent the submission of request
for review within the 60-day period, the claim will be deemed to be conclusively denied.
Upon submission of a written request for review, the Claimant or his representative shall be
entitled to review all pertinent documents, and to submit issues and comments in writing for
consideration by the Committee. The Committee shall fully and fairly review the matter and
shall consider all information submitted in the review request, without regard to whether or
not such information was submitted or considered in the initial claim determination. The
Committee shall promptly respond to the Claimant, in writing, of its decision within 60 days
after receipt of the review request. However, due to special circumstances, if no response
has been provided within the first 60 days, and notice of the need for additional time has
been furnished within such period, the review and response may be made within the following
60 days. The Committee’s decision shall include specific reasons for the decision,
including references to the particular Plan provisions upon which the decision is based,
notification that the Claimant can receive or review

22

 

	 	 	copies of all documents, records and information relevant to the claim, and information as
to the Claimant’s right to file suit under Section 502(a) of ERISA.
	 
	9.3	 	Disability
	 
	 	 	If a determination of disability for purposes of Section 7.1(b) or 7.2 becomes necessary and
if such determination is considered to be with respect to a claim for benefits based on
disability for purposes of 29 CFR Section 2560.503-1, then the Committee shall adopt and
administer a special procedure for considering such disability claims meeting the
requirements of 29 CFR Section 2560.503-1 for disability benefit claims.

23

 

ARTICLE X

AMENDMENT AND TERMINATION

     Brady Corporation (through its Board of Directors or authorized officers or employees and/or
the Committee) reserves the right to alter or amend the Plan, or any part thereof, in such manner
as it may determine, at any time and for any reason. Further, the Board of Directors of Brady
Corporation reserves the right to terminate the Plan, at any time and for any reason.
Notwithstanding the foregoing, in no event shall any amendment or termination deprive any
Participant or Beneficiary of any amounts credited to him under this Plan as of the date of such
amendment or termination; provided, however, that Brady Corporation may prospectively change the
manner in which earnings are credited or discontinue the crediting of earnings and, further, Brady
Corporation may make any amendment it deems necessary or desirable for purposes of compliance with
the requirements of Code Section 409A and regulations thereunder.

     If the Plan is amended to freeze benefit accruals, no additional deferrals or contributions
shall be credited to any Participant Account hereunder. Following such a freeze of benefit
accruals, Participants’ Accounts shall be paid at such time and in such form as provided under
Article VII of the Plan. If the Employer terminates the Plan and if the termination is of the type
described in regulations issued by the Internal Revenue Service pursuant to Code Section 409A, then
the Employer shall distribute the then existing Account balances of Participants and beneficiaries
in a lump sum within the time period specified in such regulations and, following such
distribution, there shall be no further obligation to any Participant or beneficiary under this
Plan. However, if the termination is not of the type described in such regulations, then following
Plan termination Participants’ Accounts shall be paid at such time and in such form as provided
under Article VII of the plan.

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ARTICLE XI

MISCELLANEOUS PROVISIONS

	11.1	 	Headings
	 
	 	 	The headings of the Plan have been inserted for convenience of reference and shall be
ignored in the construction of the provisions herein.
	 
	11.2	 	No Contract of Employment
	 
	 	 	The existence of the Plan shall not create or change any contract, express or implied,
between the Employer and its employees and shall not affect the Employer’s right to take any
action with respect to its employees.
	 
	11.3	 	Rights of Participants and Beneficiaries
	 
	 	 	The interest and rights of a Participant and Beneficiary under the Plan shall be those of a
general unsecured creditor of the Employer, and with respect to the creditors of the
Employer, no Participant or Beneficiary shall have any preferred claims on, or any
beneficial ownership in, the assets of the Employer, including any assets in which the
Employer may invest to aid in meeting its obligations under the Plan.
	 
	11.4	 	Nonalienation of Benefits
	 
	 	 	All benefits payable hereunder are for the sole use and benefit of the Participants and
their Beneficiaries and, to the extent permitted by law, shall be free, clear and discharged
of and from, and are not to be in any way liable for, debts, contracts or agreements, now
contracted or which may hereafter be contracted and from all claims and liabilities now or
hereafter incurred by any Participant or Beneficiary covered by this Plan. No Participant
or Beneficiary covered by this Plan shall have the right to anticipate, surrender, encumber,
alienate or assign, whether voluntarily or involuntarily, any of the benefits to become due
hereunder unto any person or person upon any terms whatsoever, and any attempt to do so
shall be void.
	 
	11.5	 	Tax Treatment
	 
	 	 	There is no commitment or guarantee with respect to the tax treatment to be accorded to a
Participant or Beneficiary under the Plan.
	 
	11.6	 	Other Plans and Agreements

	 	(a)	 	Participation in the Plan shall not affect a Participant’s rights to
participate in and receive benefits under any other plans of the Employer, nor shall it
affect his rights under any other agreement entered into with the Employer, unless
explicitly provided otherwise by such agreement.

25

 

	 	(b)	 	Any amount credited under or paid pursuant to the Plan shall not be treated as
wages, salary or any other type of compensation or otherwise taken into account in the
determination of the Participant’s benefits under any other plans of the Employer,
unless explicitly provided otherwise by such plan.

	11.7	 	Number and Gender
	 
	 	 	The use of the singular shall be interpreted to include the plural and the plural the
singular, as the context shall require. The use of the masculine, feminine or neuter shall
be interpreted to include the masculine, feminine or neuter, as the context shall require.
	 
	11.8	 	Plan Provisions Controlling
	 
	 	 	In the event of any conflict between the provisions of the Plan and the provisions of a
summary or description of the Plan or the terms of any agreement or instrument related to
the Plan, the provisions of the Plan shall be controlling.
	 
	11.9	 	Severability
	 
	 	 	If any provisions of the Plan shall be held illegal or invalid for any reason, such
illegality or invalidity shall not affect the remaining parts of the Plan, but this Plan
shall be construed and enforced as if the illegal and invalid provisions had never been
included herein.
	 
	11.10	 	Evidence Conclusive
	 
	 	 	The Employer, the Committee and any person or persons involved in the administration of the
Plan shall be entitled to rely upon any certification, statement, or representation made or
evidence furnished by any person with respect to any facts required to be determined under
any of the provisions of the Plan, and shall not be liable on account of the payment of any
monies or the doing of any act or failure to act in reliance thereon. Any such
certification, statement, representation, or evidence, upon being duly made or furnished,
shall be conclusively binding upon the person furnishing it but not upon the Employer, the
Committee or any other person involved in the administration of the Plan. Nothing herein
contained shall be construed to prevent any of such parties from contesting any such
certification, statement, representation, or evidence or to relieve any person from the duty
of submitting satisfactory proof of any fact.
	 
	11.11	 	Status of Plan Under ERISA
	 
	 	 	The Plan is intended to be an unfunded plan maintained by an Employer primarily for the
purpose of providing deferred compensation for a select group of management or highly
compensated employees, as described in Section 201(2), Section 301(a)(3), Section 401(a)(1)
and Section 4021(b)(6) of the Employee Retirement Income Security Act of 1974, as amended.

26

 

	11.12	 	Name and Address Changes
	 
	 	 	Each Participant shall keep his name and address on file with the Employer and shall
promptly notify the Employer of any changes in his name or address. All notices required or
contemplated by this Plan shall be deemed to have been given to a Participant if mailed with
adequate postage prepaid thereon addressed to him at his last address on file with the
Employer. If any check in payment of a benefit hereunder (which was mailed to the last
address of the payee as shown on the Employer’s records) is returned unclaimed, further
payments shall be discontinued unless evidence is furnished that the recipient is still
alive.
	 
	11.13	 	Assignability by Corporation
	 
	 	 	The Employer shall have the right to assign all of its right, title and obligation in and
under this Plan upon a merger or consolidation in which the Employer is not the surviving
entity or to the purchaser of substantially its entire business or assets or the business or
assets pertaining to a major product line, provided such assignee or purchaser assumes and
agrees to perform after the effective date of such assignment all of the terms, conditions
and provisions imposed by this Plan upon the Employer. Upon such assignment, all of the
rights, as well as all obligations, of the Employer under this Plan shall thereupon cease
and terminate.
	 
	11.14	 	Special rule for 2005-2007.
	 
	 	 	Notwithstanding the usual rules regarding distribution elections contained in Article VII, a
Participant, on or before December 31, 2007, may make an election as to distribution of his
Account from among the choices described in Section 7.1 hereof without complying with the
rules described in Section 7.2 hereof as long as the effect of the election is not to
accelerate payments into 2006 or to defer payments which would otherwise have been made in
2006 or to accelerate payments into 2007 or to defer payments which would otherwise have
been made in 2007. Such election shall become effective after the last day upon which it is
permitted to be made. In order to change any such election after it has become effective,
the requirements of Section 7.2 hereof must be satisfied.

     IN WITNESS WHEREOF, the Employer has caused its duly authorized officer to execute this Plan
document on its behalf this 17th day of September, 2007.

	 	 	 	 	 
	 	BRADY CORPORATION 

 	 
	 	By:  	 /s/ Frank M. Jaehnert	 
	 	 	Attest:  	 /s/ David Mathieson	 
	 	 	 	 
	 

27

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