<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
--- OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended April 30, 1997
--------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
--- OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
------- -------
Commission File Number 0-12730
W. H. BRADY CO.
---------------
(Exact name of registrant as specified in its charter)
Wisconsin 39-0178960
--------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6555 West Good Hope Road, Milwaukee, Wisconsin 53223
----------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(414) 358-6600
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
As of June 3, 1997, there were outstanding 20,161,253 shares of Class
A Common Stock and 1,769,314 shares of Class B Common Stock. The Class B
Common Stock, all of which is held by an affiliate of the Registrant, is the
only voting stock.
<PAGE> 2
FORM 10-Q
W. H. BRADY CO.
INDEX
Page
----
PART I. Financial Information
Item 1. Financial Statements
Unaudited Condensed Consolidated Balance Sheets 3
Unaudited Condensed Consolidated Statements of
Income and Earnings Retained in the Business 4
Unaudited Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. Other Information
Item 4. Results of Votes of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 10
<PAGE> 3
W. H. BRADY CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
<TABLE>
<CAPTION>
ASSETS April 30, 1997 July 31, 1996
------ -------------- -------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 52,049 $ 49,281
Accounts receivable, less allowance for losses ($1,998 and $1,992, respectively) 64,989 53,679
Inventories 47,492 40,697
Prepaid expenses and other current assets 11,672 12,454
---------- ---------
Total current assets 176,202 156,111
Other assets:
Intangibles - net 39,306 34,212
Other 6,230 5,863
---------- ---------
45,536 40,075
Property, plant and equipment:
Cost:
Land 5,174 4,735
Buildings and improvements 38,286 34,484
Machinery and equipment 80,018 78,680
Construction in progress 2,253 4,383
---------- ---------
125,731 122,282
Less accumulated depreciation 61,869 56,633
---------- ---------
Net property, plant and equipment 63,862 65,649
---------- ---------
Total $ 285,600 $ 261,835
========== =========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
----------------------------------------
Current liabilities:
Accounts payable $ 17,569 $ 13,922
Wages and amounts withheld from employees 17,220 14,144
Taxes, other than income taxes 2,485 1,790
Accrued income taxes 5,830 5,419
Other current liabilities 9,230 10,620
Current maturities on long-term debt 289 528
---------- ---------
Total current liabilities 52,623 46,423
Long-term debt, less current maturities 3,559 1,809
Other liabilities 27,098 24,340
---------- ---------
Total liabilities 83,280 72,572
Stockholders' investment:
Preferred stock 2,855 2,855
Class A nonvoting common stock - Issued and outstanding 20,150,653 201 201
and 20,094,100 shares, respectively
Class B voting common stock - issued and outstanding 1,769,314 shares 18 18
Additional paid-in capital 9,010 8,415
Earnings retained in the business 187,621 173,491
Cumulative translation adjustments 2,615 4,283
---------- ---------
Total stockholders' investment 202,320 189,263
---------- ---------
Total $ 285,600 $ 261,835
========== =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
3
<PAGE> 4
W. H. BRADY CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND EARNINGS RETAINED IN THE
BUSINESS
(Dollars in Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
(Unaudited)
Three Months Ended Nine Months Ended
April 30 April 30
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net sales $ 108,254 $ 94,652 $ 315,373 $ 261,695
Operating expenses:
Cost of products sold 47,846 44,710 143,265 122,002
Research and development 4,284 2,494 11,834 7,999
Selling, general and administrative 41,723 34,868 124,079 102,810
---------- -------- ---------- ---------
Total operating expenses 93,853 82,072 279,178 232,811
Operating income: 14,401 12,580 36,195 28,884
Investment and other income - net 463 337 908 4,009
Interest expense (66) (64) (209) (181)
---------- -------- ---------- ---------
Income before income taxes 14,798 12,853 36,894 32,712
Income taxes 5,360 4,967 14,084 12,616
---------- -------- ---------- ---------
Net income $ 9,438 $ 7,886 $ 22,810 $ 20,096
Earnings retained in business at beginning of period 181,097 $ 162,176 173,491 154,286
Less dividends:
Preferred stock (65) (65) (194) (194)
Common stock (2,849) (2,186) (8,486) (6,377)
---------- -------- ---------- ---------
Earnings retained in business at end of period $ 187,621 $ 167,811 $ 187,621 $ 167,811
========== ======== ========== =========
Net Income Per Common Share:
Net Income - Class A Nonvoting $ 0.43 $ 0.36 $ 1.04 $ 0.91
========== ======== ========== =========
Net Income - Class B Voting $ 0.43 $ 0.36 $ 1.01 $ 0.88
========== ======== ========== =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE> 5
W. H. BRADY CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
(UNAUDITED)
Nine Months Ended
April 30
1997 1996
------- -------
<S> <C> <C>
Operating Activities:
Net Income $ 22,810 $ 20,096
Adjustments to Reconcile Net Income to Net Cash Provided by (Used in) Operating Activities:
Depreciation & Amortization 10,539 6,973
(Gain) on Sale of Property, Plant & Equipment (133) (1,899)
Provision for Losses on Accounts Receivable 585 612
Changes in Operating Assets & Liabilities (Excluding purchases of businesses in 1996):
(Increase) Decrease in Accounts Receivable (11,640) (4,362)
(Increase) Decrease in Inventory (7,094) (5,755)
(Increase) Decrease in Prepaid Expense 235 1,596
Increase (Decrease) in Accounts Payable and Other Liabilities 6,879 (317)
Increase (Decrease) in Income Taxes 228 1,859
--------- ---------
Net Cash Provided by Operating Activities 22,409 18,803
Investing Activities:
Purchases of Property, Plant and Equipment (6,694) (7,494)
Proceeds from Sale of Property, Plant and Equipment - Net 983 3,458
Purchases of Businesses (7,884) (53,963)
Other Investments 297 0
--------- ---------
Net Cash (Used in) Investing Activities (13,298) (57,999)
Financing Activities:
Payment of Dividends (8,680) (6,571)
Proceeds from Issuance of Common Stock 595 322
Principal Payments on Long-Term Debt (458) (537)
Proceeds from Issuance of Long-Term Debt 1,387 0
--------- ---------
Net Cash (Used in) Financing Activities (7,156) (6,786)
Effect of Exchange Rate Changes on Cash 813 (298)
--------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents 2,768 (46,280)
Cash and Cash Equivalents at Beginning of Year 49,281 89,067
--------- ---------
Cash and Cash Equivalents at End of Period $ 52,049 $ 42,787
========= =========
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Year For:
Interest $ 172 $ 147
Income Taxes 15,146 10,500
</TABLE>
See Notes to Condensed Consolidated Financial Statement
5
<PAGE> 6
W.H. BRADY CO. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine Months Ended April 30, 1997
NOTE A - Basis of Presentation
The condensed consolidated financial statements included herein have
been prepared by the Company without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. In the opinion of the
Company, the foregoing statements contain all adjustments, consisting only of
normal recurring accruals except for a restructuring charge in fiscal 1997,
necessary to present fairly the financial position of the Company as of April
30, 1997, and July 3l, 1996, and its results of operations and its cash flows
for the three months and nine months ended April 30, 1997, and l996. The
consolidated balance sheet at July 31, l996, has been taken from the audited
financial statements of that date and condensed.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's latest annual
report.
It is not practical to segregate the amounts of raw material, work in
process or finished goods at the respective interim balance sheet dates.
NOTE B - Net Earnings Per Common Share
Net earnings per common share were computed by dividing net earnings
(after deducting the applicable preferred stock and preferential Class A
Common Stock dividends) by the weighted average number of shares of Class A
and Class B Common Stock outstanding of 21,900,017 for the three months and
nine months ended April 30, 1997, and 21,842,145 for the same period in 1996.
The preferential dividend on the Class A Common Stock of $0.0333 per share
declared on September 17, 1996, has been added to the net earnings per Class A
Common Stock for the nine months ended April 30, 1997. The net earnings per
share of Class A Common Share for the nine months ended April 30, 1996,
includes $0.0333 per share relating to preferential dividends declared in that
period.
NOTE C - Intangible Assets
The excess of cost over fair value of the net assets of business
acquired is amortized using the straight-line method over various periods
ranging from 20 to 40 years. The weighted average amortization period is 35
years.
The carrying value of intangible assets is periodically reviewed by the
Company and impairments are recognized when the expected future operating cash
flows derived from such intangible assets is less than their carrying value.
NOTE D - Acquisition
On April 30, 1997, the Company acquired the common stock of Signals
S.A., a direct marketer located in La Rochelle, France, for cash of
approximately $9,600,000.
6
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
For the three months ended April 30, 1997, revenues of $108,254,000
were 14.4% higher than the same quarter of the previous year. For the nine
months ended April 30, 1997, revenues of $315,373,000 were 20.5% higher than
the same period last year. Sales of the Company's international operations
increased 11.6% for the quarter and 14.0% for the nine months ended April 30,
1997. This increase was a result of real growth through continued market
penetration in Europe and the Far East (14.2% for the quarter and 11.0% for the
nine months) and the acquisition of Techpress II Limited and the startup of the
Company's Korean joint venture (1.6% for the quarter and 5.2% for the nine
months), offsetting the negative effect of fluctuations in the exchange rates
used to translate financial results into U.S. currency (4.2% for the quarter
and 2.2% for the nine months). Sales of the Company's U.S. operations
increased 16.5% for the quarter and 25.7% for the nine months ended April 30,
1997. This increase was a result of the acquisition of Varitronic Systems,
Inc. and The Hirol Company (9.7% for the quarter and 16.5% for the nine months)
and growth in the sales of the Company's core products (6.8% for the quarter
and 9.2% for the nine months).
The cost of products sold as a percentage of sales was 44.2% for the
quarter and 45.4% for the nine months ended April 30, 1997, compared to 47.2%
and 46.6% for the same periods last year. Reduced costs due to changes in
product mix and manufacturing efficiencies from the Company's continuous
improvement efforts were partially offset by increased amortization expenses.
Cost of products sold for the nine months ended April 30, 1997, includes a
charge in the second quarter of $1,200,000 ($715,000 after tax) for
restructuring the Company's European operations and consolidating the Hirol
Division's production operations into the Company's existing operations in the
United States and in the United Kingdom. Selling, general and administrative
expenses as a percentage of sales were 38.5% for the quarter compared to 36.8%
for the same quarter of the previous year. For the nine months ended April 30,
1997, this percentage was 39.3% for both this year and last year. Selling,
general and administrative expenses for the nine months ended April 30, 1997,
includes a charge of $300,000 ($180,000 after tax) in the second quarter for
the restructuring mentioned above. Research and development expenses increased
71.8% for the quarter and 47.9% for the nine months ended April 30, 1997, over
the same periods last year because of higher expenditures for these items in
operations acquired by the Company during the past year.
Operating income was $14,401,000 for the quarter and $36,195,000 for
the nine months ended April 30, 1997, compared to $12,580,000 and $28,884,000
for the same periods last year, representing increases of 14.5% and 25.3%,
respectively, because of the factors cited above.
Investment and other income for the nine months ended April 30, 1997,
decreased $3,101,000 from the same period last year. This decrease is the
result of lower investment income because of lower cash balances as a result of
the acquisitions in the last year and foreign exchange losses. In addition,
investment and other income for the nine months ended April 30, 1996, included
$1,750,000 ($950,000 after tax) from the gain on the sale of a building in
Germany during that period.
Income before income taxes increased 15.1% for the quarter and 12.8%
for the nine months ended April 30, 1997, compared to prior year results.
Excluding the restructuring charge and the gain on the sale of the German
building, income before income taxes increased 24.0% for the nine months ended
April 30, 1997, compared to the prior year.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Net income for the three months ended April 30, 1997, increased 19.7%
to $9,438,000 compared to $7,886,000 for the same quarter of the previous year.
For the nine months ended April 30, 1997, net income increased 13.5% to
$22,810,000 from $20,096,000 for the same period last year. Excluding the
$895,000 restructuring charge in 1997 and the $950,000 gain on the sale of the
building in Germany in 1996, net income increased 23.8% for the nine months
ended April 30, 1997.
Financial Condition
The Company's liquidity remains strong. The current ratio as of April
30, 1997, was 3.3 to 1. Cash and cash equivalents were $52,049,000 at April
30, 1997, compared to $49,281,000 at July 31, 1996. Working capital increased
$13,891,000 during the nine months and equaled $123,579,000 as of April 30,
1997.
The Company has maintained significant cash balances due in large part
to its strong operating cash flow, which totaled $22,409,000 for the nine
months ended April 30, 1997, compared to $18,803,000 for the same period last
year. Capital expenditures were $6,694,000 in the nine months ended April 30,
1997, compared to $7,494,000 in the first nine months last year. Financing
activities, primarily the payment of dividends to the Company's stockholders,
consumed $7,156,000 of cash in the first nine months of fiscal 1997, compared
to $6,786,000 for the same period last year. Increased dividend payments were
partially offset by borrowing by the Company's new Korean joint venture.
Long-term debt as a percentage of long-term debt plus stockholders'
investment was 1.7% at April 30, 1997, compared to 0.9% at July 31, 1996, as a
result of borrowing by the Company's new Korean joint venture.
The Company believes that its cash and cash equivalents and the cash
flow it generates from operating activities are adequate to meet the Company's
current investing and financing needs.
8
<PAGE> 9
PART II. OTHER INFORMATION
ITEM 4. Results of Votes of Security Holders
By unanimous written consent of the holders of the Company's Class B
Voting Common Stock on May 12, 1997, the shareholders voted to adopt the W. H.
Brady Co. 1997 Omnibus Incentive Stock Plan and the W. H. Brady Co. 1997
Nonqualified Stock Option Plan for Non-Employee Directors. The vote in
connection with the adoption of each of these plans was 1,769,314 in favor and
0 against. No proxies were solicited or received in connection with this
meeting. Copies of these plans are attached as Exhibits 10.12 and 10.13,
respectively. See also, Item 5.
ITEM 5. Other Information
On May 12, 1997, the Company's Board of Directors and the holders of
the Company's Class B Voting Common Stock approved the W. H. Brady Co. 1997
Omnibus Incentive Stock Plan, the W. H. Brady Co. 1997 Nonqualified Stock
Option Plan for Non-Employee Directors, and Change of Control Agreements for a
number of the Company's employees. The executive officers of the Company
specified under Item 402 (a) (3) of Item S-K who are parties to Change of
Control Agreements are Katherine M. Hudson, David W. Schroeder, Richard L.
Fisk, David R. Hawke, and Mary T. Arnold. The Change of Control Agreements for
these executive officers are attached as Exhibits 10.14, 10.15, 10.16, 10.17,
and 10.18, respectively. In addition, the Company's Board of Directors
approved a Supplemental Executive Retirement Plan for Richard L. Fisk,
effective May 14, 1997, a copy of which is attached as Exhibit 10.19.
Under the W. H. Brady Co. 1997 Omnibus Incentive Stock Plan, the
Company may grant Nonqualified Stock Options to purchase its Class A Nonvoting
Common Stock and/or shares of Restricted Class A Nonvoting Common Stock to its
employees in order to provide an incentive for employees of the Company and its
affiliates to improve corporate performance on a long-term basis, and to
attract and retain employees by enabling employees to participate in the future
successes of the Company, and by associating the long-term interests of
employees with those of the Company and its shareholders. On May 13, 1997, the
Company made option grants under the W. H. Brady Co. 1997 Omnibus Incentive
Stock Plan in the amount of 200,000 shares to Katherine M. Hudson, and 100,000
shares each to Richard L. Fisk, David R. Hawke, and David W. Schroeder. In
addition, under the W. H. Brady Co. 1997 Nonqualified Stock Option Plan for
Non-Employee Directors, the Company, on May 13, 1997, granted an option to
purchase 2,500 shares of its Class A Nonvoting Common Stock to each of its six
non-employee directors.
The Company's objective in granting the foregoing options under the W.
H. Brady Co. 1997 Omnibus Incentive Stock Plan, entering into the described
Change of Control Agreements and providing the Supplemental Executive
Retirement Plan for Mr. Fisk was to insure the continuity of the Company's
principal executive officer management team. The Company's objective in
granting the options to directors under the W. H. Brady Co. 1997 Nonqualified
Stock Option Plan for Non-Employee Directors was to attract and retain the
services of experienced and knowledgeable independent directors for the benefit
of the Company and its shareholders and to provide additional incentive for
such directors to continue to work for the best interest of the Company and its
shareholders.
9
<PAGE> 10
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.12 W. H. Brady Co. 1997 Omnibus Incentive Stock Plan
10.13 W. H. Brady Co. 1997 Nonqualified Stock Option
Plan for Non-Employee Directors
10.14 Change of Control for Katherine M. Hudson
10.15 Change of Control for David W. Schroeder
10.16 Change of Control for Richard L. Fisk
10.17 Change of Control for David R. Hawke
10.18 Change of Control for Mary T. Arnold
10.19 Supplemental Executive Retirement Plan for
Richard L. Fisk
(b) Reports on Form 8-K.
The Company was not required to file and did not file a
report on form 8-K during the quarter ended April 30, 1997.
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SIGNATURES
W. H. BRADY CO.
Date: June 11, 1997 /s/ K. M. Hudson
----------------- -------------------
K. M. Hudson
President
Date: June 11, 1997 /s/ F. Jaehnert
----------------- -------------------
F. M. Jaehnert
Vice President & Chief
Financial Officer
(Principal Accounting Officer)
10
<PAGE> 1
W. H. BRADY CO.
1997 OMNIBUS INCENTIVE STOCK PLAN
I. INTRODUCTION
1.01 Purpose. This plan shall be known as the W. H. Brady Co. 1997
Omnibus Incentive Stock Plan. The purpose of the Plan is to provide an
incentive for employees of W. H. Brady Co. and its Affiliates to improve
corporate performance on a long-term basis, and to attract and retain employees
by enabling employees to participate in the future successes of the Company,
and by associating the long term interests of employees with those of the
Company and its shareholders. It is intended that the Plan and its operation
comply with the provisions of Rule 16b-3 under the Securities Exchange Act of
1934 (or any successor rule). The Plan is intended to permit the grant of
Nonqualified Stock Options and shares of Restricted Stock. The proceeds
received by the Company from the sale of Company Stock pursuant to the Plan
shall be used for general corporate purposes.
1.02 Effective Date. The effective date of the Plan shall be May
12, 1997, subject to approval of the Plan by holders of a majority of the
outstanding voting common stock of the Company provided that such approval is
given within 12 months of the effective date. Any Award granted prior to such
shareholder approval shall be expressly conditioned upon shareholder approval
of the Plan.
II. PLAN DEFINITIONS
For Plan purposes, except where the context clearly indicates
otherwise, the following terms shall have the meanings set forth below:
(a) "Affiliates" means any "subsidiary corporation" or
"parent corporation" as such terms are defined in
Section 424 of the Code.
(b) "Agreement" means a written agreement (including any
amendment or supplement thereto) between the Company
and a Participant specifying the terms and conditions
of an Award.
(c) "Award" shall mean the grant of any form of Stock
Option or Restricted Stock.
(d) "Board" shall mean the Board of Directors of the
Company.
(e) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
(f) "Committee" shall mean the Committee described in
Section 4.01.
(g) "Company" shall mean W. H. Brady Co., a Wisconsin
corporation.
(h) "Company Stock" shall mean the Company's Class A
Non-Voting Common Stock, $.01 par value, and such
other stock and securities as may be substituted
therefor pursuant to Section 3.02.
<PAGE> 2
(i) "Eligible Employee" shall mean any regular salaried
employee of the Company or an Affiliate, including an
employee who is a member of the Board, who satisfies
the requirements of Section 5.01.
(j) "Exercise Period" shall mean the period of time
provided pursuant to Section 6.05 within which a
Stock Option may be exercised.
(k) "Fair Market Value" on any date shall mean, with
respect to Company Stock, if the stock is then listed
and traded on a registered national securities
exchange, or is quoted in the NASDAQ National Market
System, the average of the high and low sale prices
recorded in composite transactions as reported in the
Wall Street Journal (Midwest Edition) for such date
or, if such date is not a business day or if no sales
of Company Stock shall have been reported with
respect to such date, the next preceding business
date with respect to which sales were reported. In
the absence of reported sales or if the stock is not
so listed or quoted, but is traded in the
over-the-counter market, Fair Market Value shall be
the average of the closing bid and asked prices for
such shares on the relevant date.
(l) "Participant" means an Eligible Employee who has been
granted an Award under this Plan.
(m) "Person" means any individual or entity, and the
heirs, personal representatives, executors,
administrators, legal representatives, successors and
assigns of such Person as the context may require.
(n) "Plan" shall mean the W. H. Brady Co. 1997 Omnibus
Incentive Stock Plan, as set forth herein, as it may
be amended from time to time.
(o) "Restricted Stock" means shares of Company Stock
granted to a Participant under Article VII.
(p) "Stock Option" means an option to purchase a stated
number of shares of Company Stock at the price set
forth in an Agreement.
III. SHARES SUBJECT TO AWARD
3.01 Available Shares. The total number of shares of Company Stock
authorized for issuance shall not exceed two million (2,000,000) shares,
subject to adjustments under Section 3.02. The shares authorized for issuance
under the Plan may consist, in whole or in part, of authorized but unissued
Company Stock, or of treasury stock of the Company. Shares subject to and not
issued under a Stock Option that expires, terminates, is canceled or forfeited
for any reason under the Plan and shares of restricted Company Stock which have
been forfeited for any reason shall again become available for the granting of
Awards.
3.02 Changes in Company Stock. In the event of any change in the
Company Stock resulting from a reorganization, recapitalization, stock split,
stock dividend, merger, consolidation, rights offering or like transaction, the
Committee shall, in its discretion, proportionately and appropriately adjust:
(a) the aggregate number and kind of shares authorized for issuance under the
Plan and (b) in the case of
-2-
<PAGE> 3
previously granted Stock Options, the option price and the number and kind of
shares subject to the Stock Options, without any change in the aggregate
purchase prices to be paid for the Stock Options.
IV. ADMINISTRATION
4.01 Administration by the Committee. The Plan shall be
administered by the Committee. The Committee shall be a committee designated
by the Board to administer the Plan and shall initially be the Compensation
Committee of the Board. The Committee shall be constituted to permit the Plan
to comply with the provisions of Rule 16b-3 under the Securities Exchange Act
of 1934 (or any successor rule). A majority of the members of the Committee
shall constitute a quorum. The approval of such a quorum, expressed by a
majority vote at a meeting held either in person or by conference telephone
call, or the unanimous consent of all members in writing without a meeting,
shall constitute the action of the Committee and shall be valid and effective
for all purposes of the Plan.
4.02 Committee Powers. Subject to Section 9.06, the Committee is
empowered to adopt, amend and rescind such rules, regulations and procedures
and take such other action as it shall deem necessary or proper for the
administration of the Plan and, in its discretion, may modify, extend or renew
any Award theretofore granted. The Committee shall also have authority to
interpret the Plan, and the decision of the Committee on any questions
concerning the interpretation of the Plan shall be final and conclusive. The
express grant in the Plan of any specific power to the Committee shall not be
construed as limiting any power or authority of the Committee. The Committee
shall not incur any liability for any action taken in good faith with respect
to the Plan or any Award.
Subject to the provisions of the Plan, the Committee shall have full
and final authority to:
(a) designate the Eligible Employees to whom Awards shall
be granted;
(b) grant Awards in such form and amount as the Committee
shall determine;
(c) impose such limitations, restrictions and conditions
upon any such Award as the Committee shall deem
appropriate, including conditions (in addition to
those contained in this Plan) on the exercisability
of all or any portion of a Stock Option or on the
transferability or forfeitability of Restricted
Stock;
(d) prescribe the form of Agreement with respect to each
Award;
(e) waive in whole or in part any limitations,
restrictions or conditions imposed upon any such
Award as the Committee shall deem appropriate
(including accelerating the time at which any Stock
Option may be exercised or the time at which
Restricted Stock may become transferable or
nonforfeitable);
(f) determine the extent to which leaves of absence for
governmental or military service, illness, temporary
disability and the like shall not be deemed
interruptions of continuous employment.
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<PAGE> 4
V. PARTICIPATION
5.01 Eligibility. Any employee of the Company and its Affiliates
(including officers and employees who may be members of the Board) who, in the
sole opinion of the Committee, has contributed or can be expected to contribute
to the profits, growth and success of the Company shall be eligible for Awards
under the Plan. A member of the Committee or any person who is expected to
become a member within one year of any Award shall not be an Eligible Employee
if his or her status as an Eligible Employee would prevent the Committee from
being "disinterested" under Rule 16b-3 under the Securities Exchange Act of
1934. From among all such Eligible Employees, the Committee shall determine
from time to time those Eligible Employees to whom Awards shall be granted. No
Eligible Employee shall have any right whatsoever to receive an Award unless so
determined by the Committee.
5.02 No Employment Rights. The Plan shall not be construed as
conferring any rights upon any person for a continuation of employment, nor
shall it interfere with the rights of the Company or any Affiliates to
terminate the employment of any person or to take any other action affecting
such person.
VI. STOCK OPTIONS
6.01 Stock Options; General. Stock Options granted under the Plan
shall be in the form of Nonqualified Stock Options. Each Stock Option granted
under the Plan shall be evidenced by an Agreement which shall contain the terms
and conditions required by this Article VI, and such other terms and
conditions, not inconsistent herewith, as the Committee may deem appropriate in
each case.
6.02 Stock Option Holder's Rights as a Shareholder. The holder of
a Stock Option shall not have any rights as a shareholder with respect to the
shares covered by a Stock Option until such shares have been delivered to him
or her.
6.03 Option Price. The price at which each share of Company Stock
covered by a Stock Option may be purchased shall be not less than 100% of the
Fair Market Value of such stock on the date on which the option is granted.
The option price shall be subject to adjustment as provided in Section 3.02
hereof.
6.04 Date Stock Option Granted. For purposes of the Plan, a Stock
Option shall be considered as having been granted on the date on which the
Committee authorized the grant of the Stock Option except where the Committee
has designated a later date, in which event the later date shall constitute the
date of grant of the Stock Option; provided, however, that notice of the grant
of the Stock Option shall be given to the Participant within a reasonable time.
6.05 Exercise Period. The Committee shall have the power to set
the time or times within which each Option shall be exercisable, and to
accelerate the time or times of exercise; provided, however, that
(a) no Stock Option granted under this Plan to any Person
subject to the reporting requirements of Section
16(b) of the Securities and Exchange Act of 1934 may
be exercised until at least six months from the later
of (i) the date of grant or (ii) shareholder approval
of the Plan, and
-4-
<PAGE> 5
(b) no Stock Option shall be exercisable after the
expiration of ten (10) years from the date the Stock
Option is granted. Each Agreement with respect to a
Stock Option shall state the period or periods of
time within which the Stock Option may be exercised
by the Participant, in whole or in part.
Subject to the foregoing, unless the Agreement with respect to a Stock Option
expressly provides otherwise, a Stock Option shall be exercisable in accordance
with the following schedule:
<TABLE>
<CAPTION>
Years After
Date of Grant Percentage of Shares
------------- --------------------
<S> <C>
Less than 1 0%
1 but less than 2 33-1/3%
2 but less than 3 66-2/3%
3 or more 100%
</TABLE>
6.06 Method of Exercise. Subject to Section 6.05, each Stock
Option may be exercised in whole or in part from time to time as specified in
the Agreements provided, however, that each Participant may exercise a Stock
Option in whole or in part by giving written notice of the exercise to the
Company, specifying the number of shares to be purchased by payment in full of
the purchase price therefor. The purchase price may be paid (a) in cash, (b) by
check, (c) with the approval of the Committee, or if the applicable Agreement
so provides, by delivering shares of Company Stock ("Delivered Stock), or (d)
with a combination of cash, check and Delivered Stock. For purposes of the
foregoing, Delivered Stock shall be valued at its Fair Market Value determined
as of the business day immediately preceding the date of exercise of the Stock
Option. No Participant shall be under any obligation to exercise any Stock
Option hereunder.
6.07 Dissolution or Liquidation. Anything contained herein to the
contrary notwithstanding, on the effective date of any dissolution or
liquidation of the Company, any unexercised Stock Options shall be deemed
cancelled, and the holder of any such unexercised Stock Options shall be
entitled to receive payment under Section 9.04.
VII. RESTRICTED STOCK
7.01 Administration. Shares of Restricted Stock may be issued
either alone or in addition to other Awards granted under the Plan. The
Committee shall determine the Eligible Employees to whom and the time or times
at which grants of Restricted Stock will be made, the number of shares to be
granted, the time or times within which such Awards may be subject to
forfeiture or otherwise restricted and any other terms and conditions of the
Awards. By way of example and not of limitation, the restrictions may provide
that the shares will be forfeited if the Participant's employment with the
Company or its Affiliates terminates before the expiration of a stated term or
if the Company fails to attain specified performance goals or such other
factors or criteria as the Committee shall determine. Subject to Sections 7.02
and 7.03 hereof the provisions of Restricted Stock Awards need not be the same
with respect to each recipient.
-5-
<PAGE> 6
7.02 Certificates. Each individual receiving a Restricted Stock
Award shall be issued a certificate in respect of such shares of Restricted
Stock which certificate shall be held in custody by the Company until the
restrictions thereon shall have lapsed. In addition, each individual receiving
a Restricted Stock Award shall, as a condition of any such Restricted Stock
Award, have delivered to the Company a stock power, endorsed in blank, with
respect to the Company Stock covered by such Award. Each certificate in
respect of shares of Restricted Stock shall be registered in the name of the
Participant to whom such Restricted Stock has been granted and shall bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such Award, substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the W. H. Brady Co. 1997 Omnibus Incentive Stock Plan
and a Restricted Stock Agreement. Copies of such Plan and Agreement
are on file at the offices of W. H. Brady Co."
In addition each certificate in respect of shares of Restricted Stock may bear
such legends and statements as the Committee may deem advisable to assure
compliance with the federal and state laws and regulations.
7.03 Terms and Conditions. Shares of Restricted Stock shall be
subject to the following terms and conditions:
(a) Until the applicable restrictions lapse, the
Participant shall not be permitted to sell, assign,
transfer, exchange, pledge, hypothecate or otherwise
dispose of or encumber shares of Restricted Stock.
(b) Unless and until a forfeiture of the Restricted
Stock, the Participant shall have, with respect to
the shares of Restricted Stock, all of the rights of
a shareholder of the Company, including the right to
vote the shares (if applicable) and the right to
receive any cash dividends. Unless otherwise
determined by the Committee, cash dividends shall be
automatically paid in cash and dividends payable in
Company Stock shall be paid in the form of additional
Restricted Stock.
(c) Except to the extent otherwise provided in the
applicable Restricted Stock Agreement and (d) below,
all shares still subject to restriction shall be
forfeited by the Participant upon termination of a
Participant's employment for any reason.
(d) In the event of hardship or other special
circumstances of a Participant whose employment is
involuntarily terminated (other than for cause), the
Committee may waive in whole or in part any or all
remaining restrictions with respect to such
Participant's shares of Restricted Stock.
(e) If and when the applicable restrictions lapse,
unlegended certificates for such shares shall be
delivered to the Participant.
(f) Each Award shall be confirmed by, and be subject to
the terms of, a Restricted Stock Agreement.
-6-
<PAGE> 7
VIII. WITHHOLDING TAXES
8.01 General Rule. Pursuant to applicable federal and state laws,
the Company is or may be required to collect withholding taxes upon the
exercise of a Stock Option or the lapse of stock restrictions. The Company may
require, as a condition to the exercise of a Stock Option or the issuance of a
stock certificate, that the Participant concurrently pay to the Company (either
in cash or, at the request of Participant, but subject to such rules and
regulations as the Committee may adopt from time to time, in shares of
Delivered Stock) the entire amount or a portion of any taxes which the Company
is required to withhold by reason of such exercise or lapse of restrictions, in
such amount as the Committee or the Company in its discretion may determine.
If and to the extent that withholding of any federal, state or local tax is
required in connection with the exercise of an Option or the lapse of stock
restrictions, the Participant may, subject to such rules and regulations as the
Company may adopt from time to time, elect to have the Company hold back from
the shares to be issued upon the exercise of the Stock Option or the lapse of
stock restrictions, the number of shares of Company Stock having a Fair Market
Value equal to such withholding obligation.
8.02 Special Rule for Insiders. Any such request or election (to
satisfy a withholding obligation using shares) by an individual who is subject
to the provisions of Section 16 of the Securities Exchange Act of 1934 shall be
made in accordance with the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.
IX. GENERAL
9.01 Nontransferability. No Award granted under the Plan shall be
transferable or assignable (or made subject to any pledge, lien, obligation or
liability of a Participant) except by last will and testament or the laws of
descent and distribution. Upon a transfer or assignment pursuant to a
Participant's last will and testament or the laws of descent and distribution,
any Stock Option must be transferred in accordance therewith. During the
Participant's lifetime, Stock Options shall be exercisable only by the
Participant or by the Participant's guardian or legal representative.
9.02 General Restriction. Each Award shall be subject to the
requirement that if at any time the Board or the Committee shall determine, in
its discretion, that the listing, registration, or qualification of securities
upon any securities exchange or under any state or federal law, or the consent
or approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such Stock Option or the
issue or purchase of securities thereunder, such Stock Option may not be
exercised in whole or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Board or the Committee. The Committee shall have the
right to rely on an opinion of its counsel as to whether any such listing,
registration, qualification, consent or approval shall have been effected or
obtained.
9.03 Effect of Termination of Employment, Disability or Death.
Except as otherwise provided by the Committee upon any Award, all rights under
any Stock Option granted to a Participant shall terminate and any Restricted
Stock granted to a Participant shall be forfeited on the date such Participant
ceases to be employed by the Company or its subsidiaries, except that (a) if
the Participant's employment is terminated by the death of the Participant, any
unexercised, unexpired Stock Options granted hereunder to the Participant shall
be 100% vested and fully exercisable, in whole or in part, at any time within
one year after the date of death, by the Participant's personal representative
or by the person to whom the Stock Options are transferred under the
Participant's last will and testament or the applicable laws of descent and
distribution; (b) if the Participant's employment is terminated as a result of
the disability of
-7-
<PAGE> 8
the Participant (a disability means that the Participant is disabled as a
result of sickness or injury, such that he or she is unable to satisfactorily
perform the material duties of his or her job, as determined by the Board of
Directors, on the basis of medical evidence satisfactory to it), any
unexercised, unexpired Stock Options granted hereunder to the Participant shall
become 100% vested and fully exercisable, in whole or in part, at any time
within one year after the date of disability; and (c) if the Participant's
employment is terminated for any reason other than the death or disability of
the Participant, any unexercised, unexpired Stock Options granted hereunder and
exercisable as of the date of such termination of employment shall be
exercisable in whole or in part at any time within 90 days after such date of
termination. If a Participant's employment is terminated because of the
Participant's voluntary separation from the Company, or for cause (as
determined by the Committee in its sole discretion), all of the Participant's
unexercised Stock Options shall expire and all of the Participant's Restricted
Stock shall be forfeited. Notwithstanding the foregoing, no Stock Option shall
be exercisable after the date of expiration of its term.
9.04 Merger, Consolidation or Reorganization. In the event of (a)
the merger or consolidation of the Company with or into another corporation or
corporations in which the Company is not the surviving corporation, (b) the
adoption of any plan for the dissolution of the Company, or (c) the sale or
exchange of all or substantially all the assets of the Company for cash or for
shares of stock or other securities of another corporation, all
then-unexercised Stock Options shall become fully exercisable, and all
restrictions imposed on any then-Restricted Stock shall terminate (such that
any Restricted Stock shall become fully transferable) immediately prior to any
such merger or consolidation in which the Company is not the surviving
corporation. Notwithstanding the foregoing, in the case of then-unexercised
Stock Options held by persons subject to the reporting requirements of Section
16(a) of the 1934 Act, the Committee may elect to cancel any then-unexercised
Stock Option. If any Stock Option is canceled, the Company, or the corporation
assuming the obligations of the Company hereunder, shall pay the Participant an
amount of cash or stock, as determined by the Committee, equal to the Fair
Market Value per share of the Company Stock immediately preceding such
cancellation over the option price, multiplied by the number of shares subject
to such cancelled Stock Option.
9.05 Expiration and Termination of the Plan. This Plan shall
remain in effect until all of the Awards made under the Plan have been
exercised, the restrictions thereon have lapsed or the Awards have expired,
terminated, or been canceled or forfeited. Notwithstanding the foregoing, no
Awards shall be granted under the Plan, after that date which is ten years
after the Plan is approved by the Board; or such earlier date as the Board
determines in its sole discretion.
9.06 Limitation on Awards. No individual Eligible Employee may be
granted an Award or Awards covering more than 300,000 shares of Company Stock
in any calendar year.
9.07 Amendments. The Board may from time to time amend, modify,
suspend or terminate the Plan; provided, however, that no such action shall (a)
impair without the Participant's consent any Award theretofore granted under
the Plan or deprive any Participant of any shares of Company Stock which he may
have acquired through or as a result of the Plan or (b) be made without
shareholder approval where such approval would be required as a condition of
compliance with Rule 16b-3.
9.08 Wisconsin Law. Except as otherwise required by applicable
federal laws, the Plan shall be governed by, and construed in accordance with,
the laws of the State of Wisconsin.
9.09 Unfunded Plan. The Plan, insofar as it provides for Awards,
shall be unfunded and the Company shall not be required to segregate any assets
that may at any time be represented by Awards
-8-
<PAGE> 9
under this Plan. Any liability of the Company to any Person with respect to
any Award under this Plan shall be based solely upon any contractual
obligations that may be created pursuant to this Plan. No such obligation of
the Company shall be deemed to be secured by any pledge of, or other
encumbrance on, any property of the Company.
9.10 Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
9.11 Gender and Number. Except when otherwise required by the
context, words in the masculine gender shall include the feminine, the singular
shall include the plural, and the plural the singular.
-9-
<PAGE> 1
W. H. BRADY CO.
1997 NONQUALIFIED STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE.
The 1997 Stock Option Plan for Non-Employee Directors (the "Plan) is intended
to attract and retain the services of experienced and knowledgeable independent
directors of W. H. Brady Co. (the "Company") for the benefit of the Company and
its shareholders and to provide additional incentive for such directors to
continue to work for the best interest of the Company and its shareholders.
2. SHARES SUBJECT TO THE PLAN.
There are reserved for issuance upon the exercise of options granted under
the Plan 125,000 Class A Non-Voting Common Shares $.01 par value, of the
Company (the "Company Stock"). Such Company Stock may be authorized and
unissued Company Stock or previously outstanding Company Stock then held in the
Company's treasury. If any option granted under the Plan shall expire or
terminate for any reason without having been exercised in full, the Company
Stock subject to the unexercised portion thereof shall again be available for
the purposes of issuance upon the exercise of options granted under the Plan.
3. ADMINISTRATION.
The Plan shall be administered by the Board of Directors of the Company (the
"Board). Subject to the express provisions of the Plan, the Board shall have
authority to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to it, to determine the terms and provisions of the option
grants and agreements (which shall comply with and be subject to the terms and
conditions of the Plan) and to make all other determinations necessary or
advisable for the administration of the Plan. The Board's determination of the
matters referred to in this Paragraph 3 shall be conclusive.
4. ELIGIBILITY.
For purposes of the Plan, "Outside Director" means a member of the Board who
is not an employee of the Company or a subsidiary of the Company. Each
individual who is an Outside Director on the effective date of the Plan shall
automatically be granted an option to purchase 2,500 shares of Company Stock on
the effective date. Each individual who first becomes an Outside Director
after the effective date of the Plan shall automatically be granted an option
to purchase 2,500 shares of Company Stock on the first day of such individual's
first term of office as an Outside Director. On the date of each annual
meeting of the shareholders of the Company subsequent to the effective date of
the Plan, each Outside Director who first became an Outside Director prior to
such annual meeting and who will continue to serve as an Outside Director after
such annual meeting shall automatically be granted an option to purchase 1,000
shares of Company Stock.
Only non-statutory stock options shall be granted under the Plan.
<PAGE> 2
5. OPTION GRANTS.
(a) The purchase price of the Company Stock under each option granted under
the Plan shall be 100% of the Fair Market Value of the Company Stock on the
date such option is granted. For purposes of the Plan "Fair Market Value" on
any date shall mean, with respect to Company Stock, if the stock is then listed
and traded on a registered national securities exchange, or is quoted in the
NASDAQ National Market System, the average of the high and low sale prices
recorded in composite transactions as reported in the Wall Street Journal
(Midwest Edition) for such date or, if such date is not a business day or if no
sales of Company Stock shall have been reported with respect to such date, the
next preceding business date with respect to which sales were reported. In the
absence of reported sales or if the stock is not so listed or quoted, but is
traded in the over-the-counter market, Fair Market Value shall be the average
of the closing bid and asked prices for such shares on the relevant date.
(b) All options shall be exercisable in accordance with the following
schedule:
<TABLE>
<CAPTION>
Years After
Date of Grant Percentage of Shares
------------- --------------------
<S> <C>
Less than 1 0%
1 but less than 2 33-1/3%
2 but less than 3 66-2/3%
3 or more 100%
</TABLE>
The term of each option shall be ten years from the date of grant, or such
shorter period as is prescribed in Paragraphs 5(c) and 5(d). Except as
provided in Paragraphs 5(c) and 5(d), no option may be exercised at any time
unless the holder is then a director of the Company.
Upon exercise, the option price is to be paid in full in cash or, at the
discretion of the Board, in Company Stock owned by the optionee having a Fair
Market Value on the date of exercise equal to the aggregate option price or, at
the discretion of the Board, in a combination of cash and Company Stock. Upon
exercise of an option, the Company shall have the right to retain or sell
without notice sufficient Company Stock to cover government withholding taxes
or deductions, if any, as described in Paragraph 9.
(c) All rights under any option shall terminate on the date such Participant
ceases to be a Director of the Company, except that (a) if the Directorship is
terminated by the death of the Director, any unexercised, unexpired Stock
Options granted hereunder to the Director shall be 100% vested and fully
exercisable, in whole or in part, at any time within one year after the date of
death, by the Director's personal representative or by the person to whom the
options are transferred under the Director's last will and testament or the
applicable laws of descent and distribution; (b) if the Directorship is
terminated as a result of the disability of the Director (a disability means
that the Director is disabled as a result of sickness or injury, such that he
or she is unable to satisfactorily perform the Director duties, as determined
by the Board of Directors, on the basis of medical evidence satisfactory to
it), any unexercised, unexpired options granted hereunder to the Director shall
become 100% vested and fully exercisable, in whole or in part, at any time
within one year after the date of disability; (c) if the Directorship is
terminated and the Director has been a member of the Board of Directors for at
least three years, any unexercised, unexpired options granted hereunder to the
Director shall become 100% vested and fully exercisable, in whole or in part,
at any time within one year after such date of termination; and (d) if the
Directorship is terminated for any reason other than (a), (b) or (c) above, any
unexercised, unexpired options granted
2
<PAGE> 3
hereunder and exercisable as of the date of such termination shall be
exercisable in whole or in part at any time within 90 days after such date of
termination.
(d) In the event of (a) the merger or consolidation of the Company with or
into another corporation or corporations in which the Company is not the
surviving corporation, (b) the adoption of any plan for the dissolution of the
Company, or (c) the sale or exchange of all or substantially all the assets of
the Company for cash or for shares of stock or other securities of another
corporation, all then-unexercised options shall become fully exercisable
immediately prior to any such event in which the Company is not the surviving
corporation.
(e) Nothing in the Plan or in any option granted pursuant to the Plan shall
confer on any individual any right to continue as a director of the Company.
6. TRANSFERABILITY AND SHAREHOLDER RIGHTS OF HOLDERS OF OPTIONS.
No options granted under the Plan shall be transferable otherwise than by
will or by the laws of descent and distribution, and an option may be
exercised, during the lifetime of an optionee, only by the optionee or
optionee's guardian or legal representative. An optionee shall have none of
the rights of a shareholder of the Company until the option has been exercised
and the Company Stock subject to the option has been registered in the name of
the optionee on the transfer books of the Company.
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
Notwithstanding any other provisions of the Plan, the number and class of
shares subject to the options and the option prices of options covered thereby
shall be proportionately adjusted in the event of changes in the outstanding
Company Stock by reason of stock dividends, stock splits, recapitalizations,
mergers, consolidations, combinations or exchanges of shares, split-ups,
split-offs, spin-offs, liquidations or other similar changes in capitalization,
or any distribution to common shareholders other than cash dividends and, in
the event of any such change in the outstanding Company Stock, the aggregate
number and class of shares available under the Plan and the number of shares as
to which options may be granted shall be appropriately adjusted by the Board.
8. AMENDMENT AND TERMINATION.
Unless the Plan shall theretofore have been terminated as hereinafter
provided, the Plan shall terminate on, and no awards of options shall be made
after, the tenth anniversary of the effective date of the Plan; provided,
however, that such termination shall have no effect on options granted prior
thereto. The Plan may be terminated, modified or amended by the shareholders
of the Company. The Board may also terminate the Plan or modify or amend the
Plan in such respects as it shall deem advisable in order to conform to any
change in any law or regulation applicable thereto, or in other respects which
shall not change (i) the total number of shares of Company Stock as to which
options may be granted, (ii) the class of persons eligible to receive options
under the Plan, (iii) the manner of determining the option prices, (iv) the
period during which options may be granted or exercised or (v) the provisions
relating to the administration of the Plan by the Board.
3
<PAGE> 4
9. WITHHOLDING.
Upon the issuance of Company Stock as a result of the exercise of an option,
the Company shall have the right to retain or sell without notice sufficient
Company Stock to cover the amount of any tax required by any government to be
withheld or otherwise deducted and paid with respect to such Company Stock
being issued, remitting any balance to the optionee; provided, however, that
the optionee shall have the right to provide the Company with the funds to
enable it to pay such tax.
10. EFFECTIVENESS OF THE PLAN.
The Plan shall become effective on the day following the date the Plan is
approved by the vote of the holders of a majority of the outstanding voting
common stock of the shareholders. The Board may in its discretion authorize
the granting of options which shall be expressly subject to the conditions that
(i) the Company Stock reserved for issue under the Plan shall have been duly
listed, upon official notice of issuance, upon each stock exchange in the
United States upon which the Company Stock is traded and (ii) a registration
statement under the Securities Act of 1933 with respect to such shares shall
have become effective.
4
<PAGE> 1
W. H. BRADY CO.
CHANGE OF CONTROL AGREEMENT
AGREEMENT, made as of the 13th day of May, 1997, between W. H. Brady Co.,
a Wisconsin corporation, ("Company") and Katherine M. Hudson ("Executive").
WHEREAS, the Executive is now serving as an executive of the Company in a
position of importance and responsibility; and
WHEREAS, the Executive possesses intimate knowledge of the business and
affairs of the Company and its policies, markets and financial and human
resources, and the Executive has acquired certain confidential information and
data with respect to the Company; and
WHEREAS, the Company wishes to continue to receive the benefit of the
Executive's knowledge and experience and, as an inducement for continued
service, is willing to offer the Executive certain payments due to severance as
a result of change of control as set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the Executive and Company agree as follows:
Section 1. Definitions.
(a) Change of Control. For purposes of this Agreement, a "Change of
Control" shall occur if and when any person or group of persons (as defined in
Section 13(d)(3) of the Securities and Exchange Act of 1934) other than the
members of the family of William H. Brady, Jr. and their descendants, or trusts
for their benefit, and the W. H. Brady Foundation, Inc., collectively, directly
or indirectly controls in excess of 50% of the voting common stock of the
Company.
(b) Termination Due to Change of Control. A "Termination Due to Change of
Control" shall occur if within the 12 month period beginning with the date a
Change of Control occurs (i) the Executive's employment with the Company is
involuntarily terminated (other than by reason of death, disability or Cause)
or (ii) the Executive's employment with the Company is voluntarily terminated
by the Executive subsequent to (A) a 10% or more diminution in the total of the
Executive's annual base salary (exclusive of fringe benefits) and the
Executive's target bonus in comparison with the Executive's annual base salary
and target bonus immediately prior to the date the Change of Control occurs,
(B) a significant diminution in the responsibilities or authority of the
Executive in comparison with the Executive's responsibility and authority
immediately prior to the date the Change of Control occurs or (C) the
imposition of a requirement by the Company that the Executive relocate to a
principal work location more than 50 miles from the Executive's principal work
location immediately prior to the date the Change of Control occurs.
(c) "Cause" means (i) the Executive's willful and continued failure to
substantially perform the Executive's duties with the Company (other than any
such failure resulting from physical or mental incapacity) after written demand
for performance is given to the Executive by the Company which specifically
identifies the manner in which the Company believes the Executive has not
substantially
<PAGE> 2
performed and a reasonable time to cure has transpired, (ii) the Executive's
conviction of (or plea of nolo contendere for the commission of) a felony, or
(iii) the Executive's commission of an act of dishonesty or of any willful act
of misconduct which results in or could reasonably be expected to result in
significant injury (monetarily or otherwise) to the Company, as determined in
good faith by the Board of Directors of the Company.
(d) "Beneficiary" means any one or more primary or secondary
beneficiaries designated in writing by the Executive on a form provided by the
Company to receive any benefits which may become payable under this Agreement on
or after the Executive's death. The Executive shall have the right to name,
change or revoke the Executive's designation of a Beneficiary on a form provided
by the Company. The designation on file with the Company at the time of the
Executive's death shall be controlling. Should the Executive fail to make a
valid Beneficiary designation or leave no named Beneficiary surviving, any
benefits due shall be paid to the Executive's spouse, if living; or if not
living, then to the Executive's estate.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
Section 2. Payments Upon Termination Due to Change of Control.
(a) Following Termination Due to Change of Control, the Executive
shall be paid an amount equal to two times her annual base salary (exclusive of
incentive compensation and fringe benefits) paid the Executive by the Company in
effect immediately prior to the date the Change of Control occurs. Such amount
shall be paid in 24 monthly installments beginning on the 15th day of the month
following the month in which the Executive's employment with the Company
terminates.
(b) If the scheduled payments under paragraph (a) above would result
in disallowance of any portion of the Company's deduction therefore under
Section 162(m) of the Code, the payments called for under paragraph (a) shall be
limited to the amount which is deductible, with the balance to be paid as soon
as deductible by the Company. However, in such event, the Company shall pay the
Executive on a quarterly basis an amount of interest based on the prime rate
recomputed each quarter on the unpaid scheduled payments.
Section 3. Excise Tax, Attorney Fees.
(a) If the payments under Section 2 in combination with any other
payments which the Executive has the right to receive from the Company (the
"Total Payments") would result in the Executive incurring an excise tax as a
result of Section 280(G) of the Code, the Company will reimburse the Executive
for such Excise Tax.
(b) If the Executive is required to file a lawsuit to enforce her
rights under this Agreement, the Executive's Restricted Stock Agreement dated
August 1, 1997 or the Executive's Nonqualified Retention Stock Option Agreement
dated May 13, 1997, and the Executive prevails in such lawsuit, the Company will
reimburse the Executive for her attorney fees incurred up to a maximum of
$25,000.00.
Section 4. Death After the Executive has Begun Receiving Payments.
Should the Executive die after Termination Due to Change of Control, but before
receiving all payments due the Executive hereunder, any remaining payments due
shall be made to the Executive's Beneficiary.
-2-
<PAGE> 3
Section 5. Confidential Information Agreement. The Executive has
obligations under the separate Confidential Information Agreement between the
Executive and the Company which continue beyond the Executive's termination of
employment. The payments to be made hereunder are conditioned upon the
Executive's compliance with the terms of the Confidential Information
Agreement. The payments made hereunder shall reduce any obligation of the
Company to make payments to the Executive under Section 3 of the Confidential
Information Agreement. In the event the Executive violates the provisions of
the Confidential Information Agreement, no further payments shall be due
hereunder and the Executive shall be obligated to repay all previous payments
received hereunder in the same manner as provided in Section 4 of the
Confidential Information Agreement.
Section 6. Miscellaneous.
(a) Non-Assignability. This Agreement is personal to the Executive
and, without the prior written consent of the Company, shall not be assignable
by the Executive otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be binding upon the Company and
its successors and assigns and shall also be enforceable by the Executive's
legal representatives.
(b) Successors. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean
both the Company as defined above and any such successor that assumes and agrees
to perform this Agreement, by operation of law or otherwise.
(c) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Wisconsin, without
reference to principles of conflict of laws, to the extent not preempted by
federal law. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.
(d) Notices. All notices and other communications under this
Agreement shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive: Katherine M. Hudson
10537 N. Riverlake Dr.
Mequon, WI 53092
If to the Company: W. H. Brady Co.
6555 West Good Hope Road
Milwaukee, WI 53223
Attention: Corporate Secretary
or to such other address as either party furnishes to the other in writing in
accordance with this paragraph. Notices and communications shall be effective
when actually received by the addressee.
-3-
<PAGE> 4
(e) Construction. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement. If any provision of this Agreement shall
be held invalid or unenforceable in part, the remaining portion of such
provision, together with all other provisions of this Agreement, shall remain
valid and enforceable and continue in full force and effect to the fullest
extent consistent with law.
(f) No Guarantee of Employment. Nothing contained in this Agreement
shall give the Executive the right to be retained in the employment of the
Company or affect the right of the Company to dismiss the Executive.
(g) Amendment; Entire Agreement. This Agreement may not be amended
or modified except by a written agreement executed by the parties hereto or
their respective successors and legal representatives. This Agreement contains
the entire agreement between the parties on the subjects covered and replaces
all prior writings, proposals, specifications or other oral or written materials
relating thereto.
(h) Impact on Other Plans. No amounts paid to the Executive under
this Agreement will be taken into account as "wages", "salary", "base pay" or
any other type of compensation when determining the amount of any payment or
allocation, or for any other purpose, under any other qualified or nonqualified
plan or agreement of the Company, except as otherwise may be specifically
provided by such plan or agreement.
(i) Other Agreements. This Agreement supersedes any other severance
arrangement between the Company and the Executive. This Agreement does not
confer any payments or benefits other than the payments described in Section 2
hereof.
(j) Withholding. To the extent required by law, the Company shall
withhold any taxes required to be withheld with respect to this Agreement by the
federal, state or local government from payments made hereunder or from other
amounts paid to the Executive by the Company.
(k) Facility of Payment. If the Executive or, if applicable, the
Executive's Beneficiary, is under legal disability, the Company may direct that
payments be made to a relative of such person for the benefit of such person,
without the intervention of any legal guardian or conservator, or to any legal
guardian or conservator of such person. Any such distribution shall constitute
a full discharge with respect to the Company and the Company shall not be
required to see to the application of any distribution so made.
Section 7. Claims Procedure.
(a) Claim Review. If the Executive or the Executive's Beneficiary (a
"Claimant") believes that he or she has been denied all or a portion of a
benefit under this Agreement, he or she may file a written claim for benefits
with the Company. The Company shall review the claim and notify the Claimant of
the Company's decision within 60 days of receipt of such claim, unless the
Claimant receives written notice prior to the end of the 60 day period stating
that special circumstances require an extension of the time for decision. The
Company's 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 specific reasons
for the denial, reference to pertinent provisions of this Agreement on which the
denial is based, a designation of any additional material necessary to perfect
the claim, and an explanation of the claim review procedure.
-4-
<PAGE> 5
(b) Appeal Procedure to the Board. A Claimant is entitled to request a
review of any denial by the full Board by written request to the Chair of the
Board within 60 days of receipt of the denial. Absent a request for review
within the 60-day period, the claim will be deemed to be conclusively denied.
The Board shall afford the Claimant the opportunity to review all pertinent
documents and submit issues and comments in writing and shall render a review
decision in writing, all within 60 days after receipt of a request for review
(provided that, in special circumstances the Board may extend the time for
decision by not more than 60 days upon written notice to the Claimant.) The
Board's review decision shall contain specific reasons for the decision and
reference to the pertinent provisions of this Agreement.
IN WITNESS WHEREOF, the Executive has signed this Agreement and, pursuant to
the authorization of the Board, the Company has caused this Agreement to be
signed, all as of the date first set forth above.
/s/ Katherine M. Hudson
------------------------------------------------
Executive - Katherine M. Hudson
W. H. BRADY CO.
By: /s/ Katherine M. Hudson
-----------------------------------------
Attest:/s/ Peter J. Lettenberger
-----------------------------------------
-5-
<PAGE> 1
W. H. BRADY CO.
CHANGE OF CONTROL AGREEMENT
AGREEMENT, made as of the 13th day of May, 1997, between W. H.
Brady Co., a Wisconsin corporation, ("Company") and David W. Schroeder
("Executive").
WHEREAS, the Executive is now serving as an executive of the Company
in a position of importance and responsibility; and
WHEREAS, the Executive possesses intimate knowledge of the business
and affairs of the Company and its policies, markets and financial and human
resources, and the Executive has acquired certain confidential information and
data with respect to the Company; and
WHEREAS, the Company wishes to continue to receive the benefit of the
Executive's knowledge and experience and, as an inducement for continued
service, is willing to offer the Executive certain payments due to severance as
a result of change of control as set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth herein, the Executive and Company agree as follows:
Section 1. Definitions.
(a) Change of Control. For purposes of this Agreement, a "Change
of Control" shall occur if and when any person or group of persons (as defined
in Section 13(d)(3) of the Securities and Exchange Act of 1934) other than the
members of the family of William H. Brady, Jr. and their descendants, or trusts
for their benefit, and the W. H. Brady Foundation, Inc., collectively, directly
or indirectly controls in excess of 50% of the voting common stock of the
Company.
(b) Termination Due to Change of Control. A "Termination Due to
Change of Control" shall occur if within the 12 month period beginning with the
date a Change of Control occurs (i) the Executive's employment with the Company
is involuntarily terminated (other than by reason of death, disability or
Cause) or (ii) the Executive's employment with the Company is voluntarily
terminated by the Executive subsequent to (A) a 10% or more diminution in the
total of the Executive's annual base salary (exclusive of fringe benefits) and
the Executive's target bonus in comparison with the Executive's annual base
salary and target bonus immediately prior to the date the Change of Control
occurs, (B) a significant diminution in the responsibilities or authority of
the Executive in comparison with the Executive's responsibility and authority
immediately prior to the date the Change of Control occurs or (C) the
imposition of a requirement by the Company that the Executive relocate to a
principal work location more than 50 miles from the Executive's principal work
location immediately prior to the date the Change of Control occurs.
(c) "Cause" means (i) the Executive's willful and continued
failure to substantially perform the Executive's duties with the Company (other
than any such failure resulting from physical or mental incapacity) after
written demand for performance is given to the Executive by the Company which
specifically identifies the manner in which the Company believes the Executive
has not substantially
<PAGE> 2
performed and a reasonable time to cure has transpired, (ii) the Executive's
conviction of (or plea of nolo contendere for the commission of) a felony, or
(iii) the Executive's commission of an act of dishonesty or of any willful act
of misconduct which results in or could reasonably be expected to result in
significant injury (monetarily or otherwise) to the Company, as determined in
good faith by the Board of Directors of the Company.
(d) "Beneficiary" means any one or more primary or secondary
beneficiaries designated in writing by the Executive on a form provided by the
Company to receive any benefits which may become payable under this Agreement
on or after the Executive's death. The Executive shall have the right to name,
change or revoke the Executive's designation of a Beneficiary on a form
provided by the Company. The designation on file with the Company at the time
of the Executive's death shall be controlling. Should the Executive fail to
make a valid Beneficiary designation or leave no named Beneficiary surviving,
any benefits due shall be paid to the Executive's spouse, if living; or if not
living, then to the Executive's estate.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
Section 2. Payments Upon Termination Due to Change of Control.
(a) Following Termination Due to Change of Control, the Executive
shall be paid an amount equal to two times his annual base salary (exclusive of
incentive compensation and fringe benefits) paid the Executive by the Company
in effect immediately prior to the date the Change of Control occurs. Such
amount shall be paid in 24 monthly installments beginning on the 15th day of
the month following the month in which the Executive's employment with the
Company terminates.
(b) If the scheduled payments under paragraph (a) above would
result in disallowance of any portion of the Company's deduction therefore
under Section 162(m) of the Code, the payments called for under paragraph (a)
shall be limited to the amount which is deductible, with the balance to be paid
as soon as deductible by the Company. However, in such event, the Company
shall pay the Executive on a quarterly basis an amount of interest based on the
prime rate recomputed each quarter on the unpaid scheduled payments.
Section 3. Excise Tax, Attorney Fees.
(a) If the payments under Section 2 in combination with any other
payments which the Executive has the right to receive from the Company (the
"Total Payments") would result in the Executive incurring an excise tax as a
result of Section 280(G) of the Code, the Company will reimburse the Executive
for such Excise Tax.
(b) If the Executive is required to file a lawsuit to enforce his
rights under this Agreement, the Executive's Restricted Stock Agreement dated
August 1, 1997 or the Executive's Nonqualified Retention Stock Option Agreement
dated May 13, 1997, and the Executive prevails in such lawsuit, the Company
will reimburse the Executive for his attorney fees incurred up to a maximum of
$25,000.00.
Section 4. Death After the Executive has Begun Receiving Payments. Should
the Executive die after Termination Due to Change of Control, but before
receiving all payments due the Executive hereunder, any remaining payments due
shall be made to the Executive's Beneficiary.
-2-
<PAGE> 3
Section 5. Confidential Information Agreement. The Executive has
obligations under the separate Confidential Information Agreement between the
Executive and the Company which continue beyond the Executive's termination of
employment. The payments to be made hereunder are conditioned upon the
Executive's compliance with the terms of the Confidential Information
Agreement. The payments made hereunder shall reduce any obligation of the
Company to make payments to the Executive under Section 3 of the Confidential
Information Agreement. In the event the Executive violates the provisions of
the Confidential Information Agreement, no further payments shall be due
hereunder and the Executive shall be obligated to repay all previous payments
received hereunder in the same manner as provided in Section 4 of the
Confidential Information Agreement.
Section 6. Miscellaneous.
(a) Non-Assignability. This Agreement is personal to the
Executive and, without the prior written consent of the Company, shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns and shall also be enforceable by the
Executive's legal representatives.
(b) Successors. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean
both the Company as defined above and any such successor that assumes and
agrees to perform this Agreement, by operation of law or otherwise.
(c) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Wisconsin, without
reference to principles of conflict of laws, to the extent not preempted by
federal law. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.
(d) Notices. All notices and other communications under this
Agreement shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive: David W. Schroeder
10629 N. Gazebo Hill Parkway
Mequon, WI 53092
If to the Company: W. H. Brady Co.
6555 West Good Hope Road
Milwaukee, WI 53223
Attention: Corporate Secretary
or to such other address as either party furnishes to the other in writing in
accordance with this paragraph. Notices and communications shall be effective
when actually received by the addressee.
-3-
<PAGE> 4
(e) Construction. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement. If any provision of this Agreement
shall be held invalid or unenforceable in part, the remaining portion of such
provision, together with all other provisions of this Agreement, shall remain
valid and enforceable and continue in full force and effect to the fullest
extent consistent with law.
(f) No Guarantee of Employment. Nothing contained in this
Agreement shall give the Executive the right to be retained in the employment
of the Company or affect the right of the Company to dismiss the Executive.
(g) Amendment; Entire Agreement. This Agreement may not be
amended or modified except by a written agreement executed by the parties
hereto or their respective successors and legal representatives. This
Agreement contains the entire agreement between the parties on the subjects
covered and replaces all prior writings, proposals, specifications or other
oral or written materials relating thereto.
(h) Impact on Other Plans. No amounts paid to the Executive
under this Agreement will be taken into account as "wages", "salary", "base
pay" or any other type of compensation when determining the amount of any
payment or allocation, or for any other purpose, under any other qualified or
nonqualified plan or agreement of the Company, except as otherwise may be
specifically provided by such plan or agreement.
(i) Other Agreements. This Agreement supersedes any other
severance arrangement between the Company and the Executive. This Agreement
does not confer any payments or benefits other than the payments described in
Section 2 hereof.
(j) Withholding. To the extent required by law, the Company shall
withhold any taxes required to be withheld with respect to this Agreement by
the federal, state or local government from payments made hereunder or from
other amounts paid to the Executive by the Company.
(k) Facility of Payment. If the Executive or, if applicable, the
Executive's Beneficiary, is under legal disability, the Company may direct that
payments be made to a relative of such person for the benefit of such person,
without the intervention of any legal guardian or conservator, or to any legal
guardian or conservator of such person. Any such distribution shall constitute
a full discharge with respect to the Company and the Company shall not be
required to see to the application of any distribution so made.
Section 7. Claims Procedure.
(a) Claim Review. If the Executive or the Executive's Beneficiary
(a "Claimant") believes that he or she has been denied all or a portion of a
benefit under this Agreement, he or she may file a written claim for benefits
with the Company. The Company shall review the claim and notify the Claimant
of the Company's decision within 60 days of receipt of such claim, unless the
Claimant receives written notice prior to the end of the 60 day period stating
that special circumstances require an extension of the time for decision. The
Company's 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 specific reasons
for the denial, reference to pertinent provisions of this Agreement on which
the denial is based, a designation of any additional material necessary to
perfect the claim, and an explanation of the claim review procedure.
-4-
<PAGE> 5
(b) Appeal Procedure to the Board. A Claimant is entitled to
request a review of any denial by the full Board by written request to the
Chair of the Board within 60 days of receipt of the denial. Absent a request
for review within the 60-day period, the claim will be deemed to be
conclusively denied. The Board shall afford the Claimant the opportunity to
review all pertinent documents and submit issues and comments in writing and
shall render a review decision in writing, all within 60 days after receipt of
a request for review (provided that, in special circumstances the Board may
extend the time for decision by not more than 60 days upon written notice to
the Claimant.) The Board's review decision shall contain specific reasons for
the decision and reference to the pertinent provisions of this Agreement.
IN WITNESS WHEREOF, the Executive has signed this Agreement and,
pursuant to the authorization of the Board, the Company has caused this
Agreement to be signed, all as of the date first set forth above.
/s/ David W. Schroeder
---------------------------------------
Executive - David W. Schroeder
W. H. BRADY CO.
By: /s/ Katherine M. Hudson
----------------------------
Attest: /s/ Peter J. Lettenberger
-----------------------------
-5-
<PAGE> 1
W. H. BRADY CO.
CHANGE OF CONTROL AGREEMENT
AGREEMENT, made as of the 13th day of May, 1997, between W. H. Brady
Co., a Wisconsin corporation, ("Company") and Richard L. Fisk ("Executive").
WHEREAS, the Executive is now serving as an executive of the Company
in a position of importance and responsibility; and
WHEREAS, the Executive possesses intimate knowledge of the business
and affairs of the Company and its policies, markets and financial and human
resources, and the Executive has acquired certain confidential information and
data with respect to the Company; and
WHEREAS, the Company wishes to continue to receive the benefit of the
Executive's knowledge and experience and, as an inducement for continued
service, is willing to offer the Executive certain payments due to severance as
a result of change of control as set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the Executive and Company agree as follows:
Section 1. Definitions.
(a) Change of Control. For purposes of this Agreement, a "Change of
Control" shall occur if and when any person or group of persons (as defined in
Section 13(d)(3) of the Securities and Exchange Act of 1934) other than the
members of the family of William H. Brady, Jr. and their descendants, or trusts
for their benefit, and the W. H. Brady Foundation, Inc., collectively, directly
or indirectly controls in excess of 50% of the voting common stock of the
Company.
(b) Termination Due to Change of Control. A "Termination Due to
Change of Control" shall occur if within the 12 month period beginning with the
date a Change of Control occurs (i) the Executive's employment with the Company
is involuntarily terminated (other than by reason of death, disability or Cause)
or (ii) the Executive's employment with the Company is voluntarily terminated by
the Executive subsequent to (A) a 10% or more diminution in the total of the
Executive's annual base salary (exclusive of fringe benefits) and the
Executive's target bonus in comparison with the Executive's annual base salary
and target bonus immediately prior to the date the Change of Control occurs, (B)
a significant diminution in the responsibilities or authority of the Executive
in comparison with the Executive's responsibility and authority immediately
prior to the date the Change of Control occurs or (C) the imposition of a
requirement by the Company that the Executive relocate to a principal work
location more than 50 miles from the Executive's principal work location
immediately prior to the date the Change of Control occurs.
(c) "Cause" means (i) the Executive's willful and continued failure
to substantially perform the Executive's duties with the Company (other than any
such failure resulting from physical or mental incapacity) after written demand
for performance is given to the Executive by the Company which specifically
identifies the manner in which the Company believes the Executive has not
substantially
<PAGE> 2
performed and a reasonable time to cure has transpired, (ii) the Executive's
conviction of (or plea of nolo contendere for the commission of) a felony, or
(iii) the Executive's commission of an act of dishonesty or of any willful act
of misconduct which results in or could reasonably be expected to result in
significant injury (monetarily or otherwise) to the Company, as determined in
good faith by the Board of Directors of the Company.
(d) "Beneficiary" means any one or more primary or secondary
beneficiaries designated in writing by the Executive on a form provided by the
Company to receive any benefits which may become payable under this Agreement on
or after the Executive's death. The Executive shall have the right to name,
change or revoke the Executive's designation of a Beneficiary on a form provided
by the Company. The designation on file with the Company at the time of the
Executive's death shall be controlling. Should the Executive fail to make a
valid Beneficiary designation or leave no named Beneficiary surviving, any
benefits due shall be paid to the Executive's spouse, if living; or if not
living, then to the Executive's estate.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
Section 2. Payments Upon Termination Due to Change of Control.
(a) Following Termination Due to Change of Control, the Executive
shall be paid an amount equal to two times his annual base salary (exclusive of
incentive compensation and fringe benefits) paid the Executive by the Company
in effect immediately prior to the date the Change of Control occurs. Such
amount shall be paid in 24 monthly installments beginning on the 15th day of
the month following the month in which the Executive's employment with the
Company terminates.
(b) If the scheduled payments under paragraph (a) above would result
in disallowance of any portion of the Company's deduction therefore under
Section 162(m) of the Code, the payments called for under paragraph (a) shall
be limited to the amount which is deductible, with the balance to be paid as
soon as deductible by the Company. However, in such event, the Company shall
pay the Executive on a quarterly basis an amount of interest based on the prime
rate recomputed each quarter on the unpaid scheduled payments.
Section 3. Excise Tax, Attorney Fees.
(a) If the payments under Section 2 in combination with any other
payments which the Executive has the right to receive from the Company (the
"Total Payments") would result in the Executive incurring an excise tax as a
result of Section 280(G) of the Code, the Company will reimburse the Executive
for such Excise Tax.
(b) If the Executive is required to file a lawsuit to enforce his
rights under this Agreement, the Executive's Restricted Stock Agreement dated
August 1, 1997 or the Executive's Nonqualified Retention Stock Option Agreement
dated May 13, 1997, and the Executive prevails in such lawsuit, the Company will
reimburse the Executive for his attorney fees incurred up to a maximum of
$25,000.00.
Section 4. Death After the Executive has Begun Receiving Payments. Should
the Executive die after Termination Due to Change of Control, but before
receiving all payments due the Executive hereunder, any remaining payments due
shall be made to the Executive's Beneficiary.
-2-
<PAGE> 3
Section 5. Confidential Information Agreement. The Executive has
obligations under the separate Confidential Information Agreement between the
Executive and the Company which continue beyond the Executive's termination of
employment. The payments to be made hereunder are conditioned upon the
Executive's compliance with the terms of the Confidential Information
Agreement. The payments made hereunder shall reduce any obligation of the
Company to make payments to the Executive under Section 3 of the Confidential
Information Agreement. In the event the Executive violates the provisions of
the Confidential Information Agreement, no further payments shall be due
hereunder and the Executive shall be obligated to repay all previous payments
received hereunder in the same manner as provided in Section 4 of the
Confidential Information Agreement.
Section 6. Miscellaneous.
(a) Non-Assignability. This Agreement is personal to the
Executive and, without the prior written consent of the Company, shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns and shall also be enforceable by the
Executive's legal representatives.
(b) Successors. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would have been required to perform it if
no such succession had taken place. As used in this Agreement, "Company"
shall mean both the Company as defined above and any such successor that
assumes and agrees to perform this Agreement, by operation of law or otherwise.
(c) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Wisconsin, without
reference to principles of conflict of laws, to the extent not preempted by
federal law. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.
(d) Notices. All notices and other communications under this
Agreement shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive: Richard L. Fisk
33 Park Avenue
Madison, CT 06442
If to the Company: W. H. Brady Co.
6555 West Good Hope Road
Milwaukee, WI 53223
Attention: Corporate Secretary
or to such other address as either party furnishes to the other in writing in
accordance with this paragraph. Notices and communications shall be effective
when actually received by the addressee.
-3-
<PAGE> 4
(e) Construction. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement. If any provision of this Agreement
shall be held invalid or unenforceable in part, the remaining portion of such
provision, together with all other provisions of this Agreement, shall remain
valid and enforceable and continue in full force and effect to the fullest
extent consistent with law.
(f) No Guarantee of Employment. Nothing contained in this Agreement
shall give the Executive the right to be retained in the employment of the
Company or affect the right of the Company to dismiss the Executive.
(g) Amendment; Entire Agreement. This Agreement may not be amended
or modified except by a written agreement executed by the parties hereto or
their respective successors and legal representatives. This Agreement contains
the entire agreement between the parties on the subjects covered and replaces
all prior writings, proposals, specifications or other oral or written
materials relating thereto.
(h) Impact on Other Plans. No amounts paid to the Executive under
this Agreement will be taken into account as "wages", "salary", "base pay" or
any other type of compensation when determining the amount of any payment or
allocation, or for any other purpose, under any other qualified or nonqualified
plan or agreement of the Company, except as otherwise may be specifically
provided by such plan or agreement.
(i) Other Agreements. This Agreement supersedes any other severance
arrangement between the Company and the Executive. This Agreement does not
confer any payments or benefits other than the payments described in Section 2
hereof.
(j) Withholding. To the extent required by law, the Company shall
withhold any taxes required to be withheld with respect to this Agreement by
the federal, state or local government from payments made hereunder or from
other amounts paid to the Executive by the Company.
(k) Facility of Payment. If the Executive or, if applicable, the
Executive's Beneficiary, is under legal disability, the Company may direct that
payments be made to a relative of such person for the benefit of such person,
without the intervention of any legal guardian or conservator, or to any legal
guardian or conservator of such person. Any such distribution shall constitute
a full discharge with respect to the Company and the Company shall not be
required to see to the application of any distribution so made.
Section 7. Claims Procedure.
(a) Claim Review. If the Executive or the Executive's Beneficiary (a
"Claimant") believes that he or she has been denied all or a portion of a
benefit under this Agreement, he or she may file a written claim for benefits
with the Company. The Company shall review the claim and notify the Claimant
of the Company's decision within 60 days of receipt of such claim, unless the
Claimant receives written notice prior to the end of the 60 day period stating
that special circumstances require an extension of the time for decision. The
Company's 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 specific reasons
for the denial, reference to pertinent provisions of this Agreement on which
the denial is based, a designation of any additional material necessary to
perfect the claim, and an explanation of the claim review procedure.
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<PAGE> 5
(b) Appeal Procedure to the Board. A Claimant is entitled to request
a review of any denial by the full Board by written request to the Chair of the
Board within 60 days of receipt of the denial. Absent a request for review
within the 60-day period, the claim will be deemed to be conclusively denied.
The Board shall afford the Claimant the opportunity to review all pertinent
documents and submit issues and comments in writing and shall render a review
decision in writing, all within 60 days after receipt of a request for review
(provided that, in special circumstances the Board may extend the time for
decision by not more than 60 days upon written notice to the Claimant.) The
Board's review decision shall contain specific reasons for the decision and
reference to the pertinent provisions of this Agreement.
IN WITNESS WHEREOF, the Executive has signed this Agreement and,
pursuant to the authorization of the Board, the Company has caused this
Agreement to be signed, all as of the date first set forth above.
Richard L. Fisk
---------------------------
Executive - Richard L. Fisk
W. H. BRADY CO.
By: Katherine M. Hudson
-------------------------
Attest: Peter J. Lettenberger
----------------------
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<PAGE> 1
W. H. BRADY CO.
CHANGE OF CONTROL AGREEMENT
AGREEMENT, made as of the 13th day of May, 1997, between W. H. Brady Co.,
a Wisconsin corporation, ("Company") and David R. Hawke ("Executive").
WHEREAS, the Executive is now serving as an executive of the Company in a
position of importance and responsibility; and
WHEREAS, the Executive possesses intimate knowledge of the business and
affairs of the Company and its policies, markets and financial and human
resources, and the Executive has acquired certain confidential information and
data with respect to the Company; and
WHEREAS, the Company wishes to continue to receive the benefit of the
Executive's knowledge and experience and, as an inducement for continued
service, is willing to offer the Executive certain payments due to severance as
a result of change of control as set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the Executive and Company agree as follows:
Section 1. Definitions.
(a) Change of Control. For purposes of this Agreement, a "Change of
Control" shall occur if and when any person or group of persons (as defined in
Section 13(d)(3) of the Securities and Exchange Act of 1934) other than the
members of the family of William H. Brady, Jr. and their descendants, or trusts
for their benefit, and the W. H. Brady Foundation, Inc., collectively, directly
or indirectly controls in excess of 50% of the voting common stock of the
Company.
(b) Termination Due to Change of Control. A "Termination Due to
Change of Control" shall occur if within the 12 month period beginning with
the date a Change of Control occurs (i) the Executive's employment with
the Company is involuntarily terminated (other than by reason of death,
disability or Cause) or (ii) the Executive's employment with the Company is
voluntarily terminated by the Executive subsequent to (A) a 10% or more
diminution in the total of the Executive's annual base salary (exclusive of
fringe benefits) and the Executive's target bonus in comparison with the
Executive's annual base salary and target bonus immediately prior to the date
the Change of Control occurs, (B) a significant diminution in the
responsibilities or authority of the Executive in comparison with the
Executive's responsibility and authority immediately prior to the date the
Change of Control occurs or (C) the imposition of a requirement by the Company
that the Executive relocate to a principal work location more than 50 miles
from the Executive's principal work location immediately prior to the date the
Change of Control occurs.
(c) "Cause" means (i) the Executive's willful and continued failure to
substantially perform the Executive's duties with the Company (other than any
such failure resulting from physical or mental incapacity) after written demand
for performance is given to the Executive by the Company which specifically
identifies the manner in which the Company believes the Executive has not
substantially
<PAGE> 2
performed and a reasonable time to cure has transpired, (ii) the Executive's
conviction of (or plea of nolo contendere for the commission of) a felony, or
(iii) the Executive's commission of an act of dishonesty or of any willful act
of misconduct which results in or could reasonably be expected to result in
significant injury (monetarily or otherwise) to the Company, as determined in
good faith by the Board of Directors of the Company.
(d) "Beneficiary" means any one or more primary or secondary
beneficiaries designated in writing by the Executive on a form provided by
the Company to receive any benefits which may become payable under this
Agreement on or after the Executive's death. The Executive shall have the
right to name, change or revoke the Executive's designation of a Beneficiary on
a form provided by the Company. The designation on file with the Company at
the time of the Executive's death shall be controlling. Should the Executive
fail to make a valid Beneficiary designation or leave no named Beneficiary
surviving, any benefits due shall be paid to the Executive's spouse, if living;
or if not living, then to the Executive's estate.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
Section 2. Payments Upon Termination Due to Change of Control.
(a) Following Termination Due to Change of Control, the Executive
shall be paid an amount equal to two times his annual base salary (exclusive of
incentive compensation and fringe benefits) paid the Executive by the Company
in effect immediately prior to the date the Change of Control occurs. Such
amount shall be paid in 24 monthly installments beginning on the 15th day of
the month following the month in which the Executive's employment with the
Company terminates.
(b) If the scheduled payments under paragraph (a) above would result
in disallowance of any portion of the Company's deduction therefore under
Section 162(m) of the Code, the payments called for under paragraph (a) shall
be limited to the amount which is deductible, with the balance to be paid as
soon as deductible by the Company. However, in such event, the Company shall
pay the Executive on a quarterly basis an amount of interest based on the
prime rate recomputed each quarter on the unpaid scheduled payments.
Section 3. Excise Tax, Attorney Fees.
(a) If the payments under Section 2 in combination with any other
payments which the Executive has the right to receive from the Company
(the "Total Payments") would result in the Executive incurring an excise tax as
a result of Section 280(G) of the Code, the Company will reimburse the
Executive for such Excise Tax.
(b) If the Executive is required to file a lawsuit to enforce his
rights under this Agreement, the Executive's Restricted Stock Agreement dated
August 1, 1997 or the Executive's Nonqualified Retention Stock Option Agreement
dated May 13, 1997, and the Executive prevails in such lawsuit, the Company
will reimburse the Executive for his attorney fees incurred up to a maximum of
$25,000.00.
Section 4. Death After the Executive has Begun Receiving Payments. Should
the Executive die after Termination Due to Change of Control, but before
receiving all payments due the Executive hereunder, any remaining payments due
shall be made to the Executive's Beneficiary.
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<PAGE> 3
Section 5. Confidential Information Agreement. The Executive has
obligations under the separate Confidential Information Agreement between the
Executive and the Company which continue beyond the Executive's termination of
employment. The payments to be made hereunder are conditioned upon the
Executive's compliance with the terms of the Confidential Information
Agreement. The payments made hereunder shall reduce any obligation of the
Company to make payments to the Executive under Section 3 of the Confidential
Information Agreement. In the event the Executive violates the provisions of
the Confidential Information Agreement, no further payments shall be due
hereunder and the Executive shall be obligated to repay all previous payments
received hereunder in the same manner as provided in Section 4 of the
Confidential Information Agreement.
Section 6. Miscellaneous.
(a) Non-Assignability. This Agreement is personal to the Executive
and, without the prior written consent of the Company, shall not be assignable
by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns and shall also be enforceable by the
Executive's legal representatives.
(b) Successors. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean
both the Company as defined above and any such successor that assumes and
agrees to perform this Agreement, by operation of law or otherwise.
(c) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Wisconsin, without
reference to principles of conflict of laws, to the extent not preempted by
federal law. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.
(d) Notices. All notices and other communications under this
Agreement shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive: David R. Hawke
10719 N. Gazebo Hill
Mequon, WI 53092
If to the Company: W. H. Brady Co.
6555 West Good Hope Road
Milwaukee, WI 53223
Attention: Corporate Secretary
or to such other address as either party furnishes to the other in writing in
accordance with this paragraph. Notices and communications shall be effective
when actually received by the addressee.
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<PAGE> 4
(e) Construction. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement. If any provision of this Agreement
shall be held invalid or unenforceable in part, the remaining portion of such
provision, together with all other provisions of this Agreement, shall remain
valid and enforceable and continue in full force and effect to the fullest
extent consistent with law.
(f) No Guarantee of Employment. Nothing contained in this Agreement
shall give the Executive the right to be retained in the employment of the
Company or affect the right of the Company to dismiss the Executive.
(g) Amendment; Entire Agreement. This Agreement may not be amended or
modified except by a written agreement executed by the parties hereto or their
respective successors and legal representatives. This Agreement contains the
entire agreement between the parties on the subjects covered and replaces all
prior writings, proposals, specifications or other oral or written materials
relating thereto.
(h) Impact on Other Plans. No amounts paid to the Executive under
this Agreement will be taken into account as "wages", "salary", "base pay"
or any other type of compensation when determining the amount of any payment or
allocation, or for any other purpose, under any other qualified or nonqualified
plan or agreement of the Company, except as otherwise may be specifically
provided by such plan or agreement.
(i) Other Agreements. This Agreement supersedes any other severance
arrangement between the Company and the Executive. This Agreement does not
confer any payments or benefits other than the payments described in Section 2
hereof.
(j) Withholding. To the extent required by law, the Company shall
withhold any taxes required to be withheld with respect to this Agreement by
the federal, state or local government from payments made hereunder or from
other amounts paid to the Executive by the Company.
(k) Facility of Payment. If the Executive or, if applicable, the
Executive's Beneficiary, is under legal disability, the Company may direct that
payments be made to a relative of such person for the benefit of such person,
without the intervention of any legal guardian or conservator, or to any legal
guardian or conservator of such person. Any such distribution shall constitute
a full discharge with respect to the Company and the Company shall not be
required to see to the application of any distribution so made.
Section 7. Claims Procedure.
(a) Claim Review. If the Executive or the Executive's Beneficiary (a
"Claimant") believes that he or she has been denied all or a portion of a
benefit under this Agreement, he or she may file a written claim for benefits
with the Company. The Company shall review the claim and notify the Claimant
of the Company's decision within 60 days of receipt of such claim, unless the
Claimant receives written notice prior to the end of the 60 day period stating
that special circumstances require an extension of the time for decision. The
Company's 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 specific reasons
for the denial, reference to pertinent provisions of this Agreement on which
the denial is based, a designation of any additional material necessary to
perfect the claim, and an explanation of the claim review procedure.
-4-
<PAGE> 5
(b) Appeal Procedure to the Board. A Claimant is entitled to request a
review of any denial by the full Board by written request to the Chair of the
Board within 60 days of receipt of the denial. Absent a request for review
within the 60-day period, the claim will be deemed to be conclusively denied.
The Board shall afford the Claimant the opportunity to review all pertinent
documents and submit issues and comments in writing and shall render a review
decision in writing, all within 60 days after receipt of a request for review
(provided that, in special circumstances the Board may extend the time for
decision by not more than 60 days upon written notice to the Claimant.) The
Board's review decision shall contain specific reasons for the decision and
reference to the pertinent provisions of this Agreement.
IN WITNESS WHEREOF, the Executive has signed this Agreement and, pursuant to
the authorization of the Board, the Company has caused this Agreement to be
signed, all as of the date first set forth above.
/s/ David R. Hawke
--------------------------------------------
Executive - David R. Hawke
W. H. BRADY CO.
By: /s/ Katherine M. Hudson
-------------------------------------
Attest: /s/ Peter J. Lettenburger
-------------------------------------
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<PAGE> 1
W. H. BRADY CO.
CHANGE OF CONTROL AGREEMENT
AGREEMENT, made as of the 13th day of May, 1997, between W. H.
Brady Co., a Wisconsin corporation, ("Company") and Mary T. Arnold
("Executive").
WHEREAS, the Executive is now serving as an executive of the Company
in a position of importance and responsibility; and
WHEREAS, the Executive possesses intimate knowledge of the business
and affairs of the Company and its policies, markets and financial and human
resources, and the Executive has acquired certain confidential information and
data with respect to the Company; and
WHEREAS, the Company wishes to continue to receive the benefit of the
Executive's knowledge and experience and, as an inducement for continued
service, is willing to offer the Executive certain payments due to severance as
a result of change of control as set forth herein;
NOW THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the Executive and Company agree as follows:
Section 1. Definitions.
(a) Change of Control. For purposes of this Agreement, a "Change
of Control" shall occur if and when any person or group of persons (as defined
in Section 13(d)(3) of the Securities and Exchange Act of 1934) other than the
members of the family of William H. Brady, Jr. and their descendants, or trusts
for their benefit, and the W. H. Brady Foundation, Inc., collectively, directly
or indirectly controls in excess of 50% of the voting common stock of the
Company.
(b) Termination Due to Change of Control. A "Termination Due to
Change of Control" shall occur if within the 12 month period beginning with the
date a Change of Control occurs (i) the Executive's employment with the Company
is involuntarily terminated (other than by reason of death, disability or
Cause) or (ii) the Executive's employment with the Company is voluntarily
terminated by the Executive subsequent to (A) a 10% or more diminution in the
total of the Executive's annual base salary (exclusive of fringe benefits) and
the Executive's target bonus in comparison with the Executive's annual base
salary and target bonus immediately prior to the date the Change of Control
occurs, (B) a significant diminution in the responsibilities or authority of
the Executive in comparison with the Executive's responsibility and authority
immediately prior to the date the Change of Control occurs or (C) the
imposition of a requirement by the Company that the Executive relocate to a
principal work location more than 50 miles from the Executive's principal work
location immediately prior to the date the Change of Control occurs.
(c) "Cause" means (i) the Executive's willful and continued
failure to substantially perform the Executive's duties with the Company (other
than any such failure resulting from physical or mental incapacity) after
written demand for performance is given to the Executive by the Company which
specifically identifies the manner in which the Company believes the Executive
has not substantially
<PAGE> 2
performed and a reasonable time to cure has transpired, (ii) the Executive's
conviction of (or plea of nolo contendere for the commission of) a felony, or
(iii) the Executive's commission of an act of dishonesty or of any willful act
of misconduct which results in or could reasonably be expected to result in
significant injury (monetarily or otherwise) to the Company, as determined in
good faith by the Board of Directors of the Company.
(d) "Beneficiary" means any one or more primary or secondary
beneficiaries designated in writing by the Executive on a form provided by the
Company to receive any benefits which may become payable under this Agreement
on or after the Executive's death. The Executive shall have the right to name,
change or revoke the Executive's designation of a Beneficiary on a form
provided by the Company. The designation on file with the Company at the time
of the Executive's death shall be controlling. Should the Executive fail to
make a valid Beneficiary designation or leave no named Beneficiary surviving,
any benefits due shall be paid to the Executive's spouse, if living; or if not
living, then to the Executive's estate.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
Section 2. Payments Upon Termination Due to Change of Control.
(a) Following Termination Due to Change of Control, the Executive
shall be paid an amount equal to one times her annual base salary (exclusive of
incentive compensation and fringe benefits) paid the Executive by the Company
in effect immediately prior to the date the Change of Control occurs. Such
amount shall be paid in 12 monthly installments beginning on the 15th day of
the month following the month in which the Executive's employment with the
Company terminates.
(b) If the scheduled payments under paragraph (a) above would
result in disallowance of any portion of the Company's deduction therefore
under Section 162(m) of the Code, the payments called for under paragraph (a)
shall be limited to the amount which is deductible, with the balance to be paid
as soon as deductible by the Company. However, in such event, the Company
shall pay the Executive on a quarterly basis an amount of interest based on the
prime rate recomputed each quarter on the unpaid scheduled payments.
Section 3. Excise Tax, Attorney Fees.
(a) If the payments under Section 2 in combination with any other
payments which the Executive has the right to receive from the Company (the
"Total Payments") would result in the Executive incurring an excise tax as a
result of Section 280(G) of the Code, the Company will reimburse the Executive
for such Excise Tax.
(b) If the Executive is required to file a lawsuit to enforce her
rights under this Agreement and the Executive prevails in such lawsuit, the
Company will reimburse the Executive for her attorney fees incurred up to a
maximum of $25,000.00.
Section 4. Death After the Executive has Begun Receiving Payments. Should
the Executive die after Termination Due to Change of Control, but before
receiving all payments due the Executive hereunder, any remaining payments due
shall be made to the Executive's Beneficiary.
-2-
<PAGE> 3
Section 5. Confidential Information Agreement. The Executive has
obligations under the separate Confidential Information Agreement between the
Executive and the Company which continue beyond the Executive's termination of
employment. The payments to be made hereunder are conditioned upon the
Executive's compliance with the terms of the Confidential Information
Agreement. The payments made hereunder shall reduce any obligation of the
Company to make payments to the Executive under Section 3 of the Confidential
Information Agreement. In the event the Executive violates the provisions of
the Confidential Information Agreement, no further payments shall be due
hereunder and the Executive shall be obligated to repay all previous payments
received hereunder in the same manner as provided in Section 4 of the
Confidential Information Agreement.
Section 6. Miscellaneous.
(a) Non-Assignability. This Agreement is personal to the
Executive and, without the prior written consent of the Company, shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns and shall also be enforceable by the
Executive's legal representatives.
(b) Successors. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean
both the Company as defined above and any such successor that assumes and
agrees to perform this Agreement, by operation of law or otherwise.
(c) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Wisconsin, without
reference to principles of conflict of laws, to the extent not preempted by
federal law. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.
(d) Notices. All notices and other communications under this
Agreement shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive: Mary T. Arnold
S23 W26167 Canterbury Lane
Waukesha, WI 53188
If to the Company: W. H. Brady Co.
6555 West Good Hope Road
Milwaukee, WI 53223
Attention: Corporate Secretary
or to such other address as either party furnishes to the other in writing in
accordance with this paragraph. Notices and communications shall be effective
when actually received by the addressee.
-3-
<PAGE> 4
(e) Construction. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement. If any provision of this Agreement
shall be held invalid or unenforceable in part, the remaining portion of such
provision, together with all other provisions of this Agreement, shall remain
valid and enforceable and continue in full force and effect to the fullest
extent consistent with law.
(f) No Guarantee of Employment. Nothing contained in this
Agreement shall give the Executive the right to be retained in the employment
of the Company or affect the right of the Company to dismiss the Executive.
(g) Amendment; Entire Agreement. This Agreement may not be
amended or modified except by a written agreement executed by the parties
hereto or their respective successors and legal representatives. This
Agreement contains the entire agreement between the parties on the subjects
covered and replaces all prior writings, proposals, specifications or other
oral or written materials relating thereto.
(h) Impact on Other Plans. No amounts paid to the Executive under
this Agreement will be taken into account as "wages", "salary", "base pay" or
any other type of compensation when determining the amount of any payment or
allocation, or for any other purpose, under any other qualified or nonqualified
plan or agreement of the Company, except as otherwise may be specifically
provided by such plan or agreement.
(i) Other Agreements. This Agreement supersedes any other
severance arrangement between the Company and the Executive. This Agreement
does not confer any payments or benefits other than the payments described in
Section 2 hereof.
(j) Withholding. To the extent required by law, the Company shall
withhold any taxes required to be withheld with respect to this Agreement by
the federal, state or local government from payments made hereunder or from
other amounts paid to the Executive by the Company.
(k) Facility of Payment. If the Executive or, if applicable, the
Executive's Beneficiary, is under legal disability, the Company may direct that
payments be made to a relative of such person for the benefit of such person,
without the intervention of any legal guardian or conservator, or to any legal
guardian or conservator of such person. Any such distribution shall constitute
a full discharge with respect to the Company and the Company shall not be
required to see to the application of any distribution so made.
Section 7. Claims Procedure.
(a) Claim Review. If the Executive or the Executive's Beneficiary
(a "Claimant") believes that he or she has been denied all or a portion of a
benefit under this Agreement, he or she may file a written claim for benefits
with the Company. The Company shall review the claim and notify the Claimant
of the Company's decision within 60 days of receipt of such claim, unless the
Claimant receives written notice prior to the end of the 60 day period stating
that special circumstances require an extension of the time for decision. The
Company's 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 specific reasons
for the denial, reference to pertinent provisions of this Agreement on which
the denial is based, a designation of any additional material necessary to
perfect the claim, and an explanation of the claim review procedure.
-4-
<PAGE> 5
(b) Appeal Procedure to the Board. A Claimant is entitled to
request a review of any denial by the full Board by written request to the
Chair of the Board within 60 days of receipt of the denial. Absent a request
for review within the 60-day period, the claim will be deemed to be
conclusively denied. The Board shall afford the Claimant the opportunity to
review all pertinent documents and submit issues and comments in writing and
shall render a review decision in writing, all within 60 days after receipt of
a request for review (provided that, in special circumstances the Board may
extend the time for decision by not more than 60 days upon written notice to
the Claimant.) The Board's review decision shall contain specific reasons for
the decision and reference to the pertinent provisions of this Agreement.
IN WITNESS WHEREOF, the Executive has signed this Agreement and,
pursuant to the authorization of the Board, the Company has caused this
Agreement to be signed, all as of the date first set forth above.
----------------------------------
Executive - Mary T. Arnold
W. H. BRADY CO.
By:
--------------------------
Attest: --------------------------
-5-
<PAGE> 1
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
This Supplemental Executive Retirement Plan (the "SERP") is entered
into this 14th day of May, 1997, between W. H. BRADY CO. (the "Company") and
RICHARD L. FISK ("Executive"):
1. Objectives. This SERP is intended to provide for a payment
after retirement to the Executive, who is currently a Group Vice President of
W. H. Brady Co., in recognition of his past and future years of service with
the Company and the limitations imposed on his and the Company's contributions
to the Company's Profit Sharing Plan.
2. Bookkeeping Account. The Company shall cause a bookkeep-ing
reserve account (the "Account") to be established for the Executive solely as a
device for determining the amounts which may become payable to the Executive
hereunder. Such Account shall not constitute or be treated as a trust fund of
any kind, it being expressly provided that the amounts credited to the Account
shall at all times be and remain the sole property of the Company. The
Executive shall have no proprietary rights of any nature with respect thereto,
unless and until such time as a payment thereof is made to the Executive (or
beneficiary) as provided herein. Amounts shall be credited to the Executive's
Account as follows:
(a) Provided only that the Executive is in the employ-ment of the
Company as of August 1, 1997, $200,000 shall be credited to the Account. If the
Executive is in the employment of the Company as of August 1, 1998, an
additional $200,000 shall be credited to the Account and an additional $200,000
shall be credited to the Account as of August 1, 1999, 2000 and 2001 if the
Executive is in the employment of the Company as of those dates.
<PAGE> 2
(b) Interest shall accrue on the balance in the Executive's
Account at the prime rate (base rate on corporate loans) in effect August 1 of
each year as reported by the principal bank or financial institution with which
the Company is doing busi-ness, and shall be credited to the Account annually as
of August 1 of each year, until all distributions to which the Executive, the
Executive's estate or beneficiary is entitled, shall have been made. However,
the interest rate used shall never be less than six percent (6%) or more than
ten percent (10%). If a lump sum amount distribution is made as of a date other
than August 1, interest shall be credited to the Account as of such payment date
based on the interest rate for the prior August 1.
(c) Notwithstanding paragraph (a), if the Executive dies or is
disabled prior to August 1, 2001 while in the employment of the Company, his
Account shall be credited with the entire $1,000,000. Disability means that the
Executive is disabled as a result of sickness or injury, such that he is unable
to satisfactorily perform the material duties of his job, as determined by the
Board of Directors, on the basis of medical evidence satisfactory to it.
3. Vesting. The Executive shall at all times have a 100% vested
interest in the Account balance established for the Executive under this SERP.
4. Benefit Payment.
(a) Payment shall be made over a 10 year period commenc-ing
on August 1 of the year following the Executive's termination of employment with
the Company (the "First Payment Date"), with the first payment being one-tenth
of the amount credited to the Executive's Account, and thereafter an amount
shall be paid to the Executive as of the first day of each August thereafter in
an
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<PAGE> 3
amount equal, as nearly as possible, to the amount paid on the First Payment
Date plus any interest credited to the Account in the period intervening since
the last payment, until a total of ten payments have been made. Such 10
payments, regardless of the total amount thereof, shall constitute full
payment of all amounts due the Executive under this SERP.
(b) The Executive shall have the right to designate a beneficiary
or beneficiaries to receive a distribution with respect to any potion of such
Executive's Account remaining unpaid at the Executive's death. Such designation
shall be effected by filing written notification with the Company in the form
prescribed by it and may be changed from time to time by similar action. If the
Executive fails to make such a designation, any such distribution shall be paid
to the Executive's estate or its successors. The amount remaining in the
Account shall be paid to the beneficiary or the Executive's estate for the
balance of the applicable ten year period in the same manner and amount as it
would have been paid to the Executive.
(c) The Company may, in its uncontrolled discretion, and in lieu
of the annual payments provided for in this paragraph and upon such terms and
conditions as the Board of Directors of the Company may determine, pay the
Executive or his beneficiary the amount credited to the Account (1) in larger
installments, includ-ing a lump sum, or (2) in some other manner; provided,
however, that the payments cannot be made in smaller amounts or over a period
longer than provided in paragraph 4(a), without the Executive's consent.
5. Claim Procedure. The Company shall provide adequate notice in
writing to the Executive or the Executive's beneficiary (a "Claimant") if any
claim for benefits under this SERP has been
- 3 -
<PAGE> 4
denied setting forth specific reasons for such denial and advising the Claimant
of the procedures to be followed to obtain a full and fair review by the
Company or some other fiduciary named by it of the decision denying the claim.
The Company or such other named fiduciary, acting as administrator for this
SERP, shall have full and complete discretionary authority to construe and
interpret this SERP, to adopt and modify claim procedure rules, and to decide
any matter presented through the claim review procedure. Any final decision on
review by such administrator in good faith and in the exercise of its
discretionary authority shall be final and binding on all parties and not
subject to reversal if challenged in litigation unless proven to be arbitrary
and capricious based on the evidence considered by the administrator at the
time of such final decision.
6. Miscellaneous.
(a) Neither the Company nor the Executive nor any beneficiary
shall have the power to transfer, assign, encumber, commute or anticipate any
amounts payable hereunder.
(b) The Company shall have the right to withhold from any amounts
payable hereunder, or any amounts otherwise payable, any taxes or other amounts
required by any governmental authority to be withheld.
(c) Every person receiving or claiming payments under this SERP
shall be conclusively presumed to be mentally competent until the date on which
the Company receives a written notice, in a form and manner acceptable to it,
that such person is incompetent and that a guardian, conservator, or other
person legally vested with the care of such person's estate has been appointed.
In the event a guardian or conservator of the estate of any person receiving or
claiming payments under this SERP shall be appointed
- 4 -
<PAGE> 5
by a court of competent jurisdiction, payments may be made to such guardian or
conservator provided that proper proof of appointment and continuing
qualification is furnished in a form and manner acceptable to the Company. Any
such payment so made shall be a complete discharge of any liability therefor.
(d) Participation in this SERP or the payment of any benefits
hereunder, shall not be construed as giving to the Executive any right to be
retained in the service of the Company or its subsidiaries, limiting in any way
the right of the Company or its subsidiaries to terminate the Executive's
employment at any time, evidencing any agreement or understanding, express or
implied, that the Company or its subsidiaries will employ the Executive in any
particular position or at any particular rate of compensation and/or
guaranteeing the Executive any right to receive a salary increase in any year,
such increase being granted only at the sole discretion of the Board.
(e) None of the payments made hereunder shall be taken into
account under any other pension, profit sharing or welfare benefit plan or
program of the Company.
(f) The schedule attached is an example of the antici-pated
Contributions, Interest and Payments to be made provided that the Executive's
employment terminates on July 31, 2005.
W. H. BRADY CO.
By Katherine M. Hudson
--------------------------
Richard L. Fisk
---------------------------
Richard L. Fisk
- 5 -
<PAGE> 6
W. H. BRADY CO.
RICHARD L. FISK-SERP
<TABLE>
<CAPTION>
Fiscal
Year Contribution 8% Interest Payment Balance
- ------ ------------ ----------- ------- -------
<S> <C> <C> <C> <C>
8/01/97 $ 200,000 - $ $ 200,000
8/01/98 200,000 $ 16,000 416,000
8/01/99 200,000 33,280 649,280
8/01/00 200,000 51,942 901,222
8/01/01 200,000 72,098 1,173,320
8/01/02 93,865 1,267,185
8/01/03 101,375 1,368,560
8/01/04 109.485 1,478,045
8/01/05 118,244 1,596,289
8/01/05 - 159,629 1,436,660
8/01/06 114,933 274,562 1,277,031
8/01/07 102,162 261,791 1,117,402
8/01/08 89,392 249,021 957,773
8/01/09 76,622 236,251 798,144
8/01/10 63,852 223,481 638,515
8/01/11 51,081 210,710 478,886
8/01/12 38,311 197,940 319,257
8/01/13 25,541 185,170 159,628
8/01/14 12,770 172,398 -0-
---------- --------- ---------
$1,000,000 $1,170,953 $ 2,170,953
========== ========== =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> APR-30-1997
<CASH> 52,049
<SECURITIES> 0
<RECEIVABLES> 66,987
<ALLOWANCES> 1,998
<INVENTORY> 47,492
<CURRENT-ASSETS> 176,202
<PP&E> 125,731
<DEPRECIATION> 61,869
<TOTAL-ASSETS> 285,600
<CURRENT-LIABILITIES> 52,623
<BONDS> 3,559
2,855
0
<COMMON> 219
<OTHER-SE> 199,246
<TOTAL-LIABILITY-AND-EQUITY> 285,600
<SALES> 315,373
<TOTAL-REVENUES> 315,363
<CGS> 143,265
<TOTAL-COSTS> 143,265
<OTHER-EXPENSES> 135,913
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 209
<INCOME-PRETAX> 36,894
<INCOME-TAX> 14,084
<INCOME-CONTINUING> 22,810
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,810
<EPS-PRIMARY> 1.04
<EPS-DILUTED> 1.04
</TABLE>
