APPLIED EXTRUSION TECHNOLOGIES INC /DE
AMENDED AND RESTATED 1999 RETIREMENT PLAN
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<TYPE>EX-10.4
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<FILENAME>dex104.txt
<DESCRIPTION>AMENDED AND RESTATED 1999 RETIREMENT PLAN
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                                                                    Exhibit 10.4

                      APPLIED EXTRUSION TECHNOLOGIES, INC.
                   1999 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
                   (Amended and Restated as of March 29, 2002)

             -------------------------------------------------------

     This plan amends, restates and continues, effective March 29, 2002 (the
"Plan") the 1999 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN made and entered into on
the 30th day of November, 1999 and as amended and restated as of August 14, 2001
by APPLIED EXTRUSION TECHNOLOGIES, INC., a corporation organized and existing
under the laws of the State of Delaware (hereinafter referred to as the
"Company").

                              W I T N E S S E T H:
                              - - - - - - - - - -

     WHEREAS, the Company desires to provide for an unfunded supplemental
executive retirement plan for the benefit of a select group of its management or
highly compensated employees, subject to certain conditions and pursuant to the
terms and provisions specified in this Plan;

     NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the Company hereby establishes the Plan pursuant to the following
terms and provisions.

                                    ARTICLE 1
                                    ---------

                                   DEFINITIONS

     1.1 "Average Compensation" shall mean the average Compensation paid by the
Company to the Participant for those three (3) fiscal years (whether or not
consecutive) of the Company ending on or after the Effective Date in which the
Participant earned the highest Compensation; provided, however, that in no event
shall the Average Compensation be less than the Participant's base salary for
the fiscal year in which the Participant's Termination Date occurs.

     1.2 "Beneficiary" shall mean the person or persons designated by a
Participant, upon such forms as shall be provided by the Company, to receive
payments of the Participant's Normal Retirement Benefit after the Participant's
death. If the Participant shall fail to designate a Beneficiary, or if for any
reason such designation shall be ineffective, or if such Beneficiary shall
predecease the Participant or die simultaneously with him, then the Beneficiary
shall be the Participant's estate.

     1.3 "Benefit Percentage" shall mean a percentage between fifty percent
(50%) to

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seventy-five percent (75%) based on the highest average of any twenty
consecutive daily closing prices of the Corporation's common stock as reported
on NASDAQ at any time between August 14, 2001 and August 14, 2005 (the "Closing
Price") calculated as follows:

          The linear increase from 50% to 75% ratably equal to the Closing
          Price's increase from $7.00 to $14.00;

provided, however, that such percentage shall be no lower than 50% and no higher
than 75%; further provided, that if (i) Participant's employment with the
Company is terminated pursuant to subsections 4(b) (Death), 4(c) (Incapacity),
4(e) (Termination by the Employer Other Than for Death, Incapacity or Cause) or
4(f) (Termination by Executive for Good Reason) of the Participant's Employment
Agreement or (ii) a Change in Control has occurred, the Benefit Percentage shall
be seventy-five percent (75%).

     1.4 "Change in Control" shall have the same meaning as set forth in the
Employment Agreement.

     1.5 "Code" shall mean the Internal Revenue Code of 1986, as amended, and
successor tax laws.

     1.6 "Committee" shall mean the persons designated by the Company as the
Administrative Committee for the Plan pursuant to Section 3.1.

     1.7 "Company" shall mean APPLIED EXTRUSION TECHNOLOGIES, INC., a Delaware
corporation, its successors and assigns.

     1.8 "Compensation" shall mean the base salary and Bonuses paid by the
Company to the Participant for any fiscal year of the Company during which
Participant was employed by the Company.

     1.9 "Disability Benefit Offset Amount" shall mean the amounts (if any) that
the Participant receives concurrently from any disability insurance policy paid
or reimbursed by the Company for the benefit of the Participant.

     1.10 "Effective Date" shall mean April 1, 1999.

     1.11 "Employment Agreement" shall mean, with respect to a Participant, the
Employment Agreement entered into by and between the Company and the Participant
on or after the Effective Date, as amended from time to time.

     1.12 "Normal Monthly Retirement Benefit" means a monthly benefit,
commencing on the Participant's Retirement Payment Commencement Date and
continuing for ten (10) years thereafter, equal to one twelfth of the amount by
which (i) the product of the Participant's Benefit Percentage multiplied by his
or her Average Compensation, exceeds (ii) the Participant's Disability Benefit
Offset Amount, if any.

     1.13 "Normal Retirement Benefit" shall mean Normal Monthly Benefit times
120.

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     1.14 "Participant" shall mean the Chairman of the Board, Chief Executive
Officer, Chief Operating Officer and any other officer of the Company designated
by the Board of Directors or the Stock Option and Compensation Committee of the
Board of Directors of the Company as being eligible to participate in the Plan.
An employee of the Company shall not be eligible to be a Participant unless he
or she is deemed to be among a select group of management or highly compensated
employees of the Company within the meaning of Section 201(2) of ERISA.

     1.15 "Plan" shall mean this amended and restated 1999 Supplemental
Executive Retirement Plan as herein set forth and as it may be amended from time
to time.

     1.16 "Plan Year" shall mean the twelve month period that begins October 1
and ends September 30.

     1.17 "Retirement Payment Commencement Date" shall mean the first day of the
month coincident with or next following the later of (a) the date the
Participant reaches, or would have reached if still living, age sixty (60), and
(b) the Participant's Termination Date.

     1.18 "Termination Date" shall have the same meaning as set forth in
subsection 4(a) of the Participant's Employment Agreement.

     1.19 "Trust" shall mean the Applied Extrusion Technologies, Inc. 1999
Deferred Compensation Trust, dated November 30, 1999, entered into by and
between the Company and Comerica Bank.

     1.20 "Year of Credited Service" shall mean the number of calendar months
during which a Participant was employed by the Company divided by twelve, with
any remainder rounded up to the next whole year.

                                    ARTICLE 2
                                    ---------

                               RETIREMENT BENEFITS

     2.1  Normal Retirement Benefit.
          -------------------------

          (a) A Participant who has completed a total of not less than ten (10)
Years of Credited Service (of which at least four (4) Years of Credited Service
have been completed subsequent to the Effective Date of this Plan) shall be
entitled to receive, on his Retirement Payment Commencement Date, at
Participant's sole discretion, either (i) payment of his Normal Monthly
Retirement Benefit or (ii) a one-time lump sum payment of the Normal Retirement
Benefit.

          (b) For purposes of determining Years of Credited Service pursuant to
subsection 2.1(a) hereof, if a Participant's employment with the Company is
terminated pursuant to subsections 4(b) (Death), 4(c) (Incapacity), 4(e)
(Termination by the Employer Other Than for Death, Incapacity or Cause) or 4(f)
(Termination by Executive for Good Reason) of his or her Employment Agreement,
such Participant shall be deemed to have completed those Years of Credited
Service (or a portion

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thereof) that the Participant would have completed if the Participant had been
continuously employed with the Company through the Expiration Date, as that term
is used under his Employment Agreement.

     2.2 Termination Prior to Completing Requisite Years of Credited Service
         -------------------------------------------------------------------
Employment. If a Participant's employment with the Company terminates for any
----------
reason before the Participant has completed ten (10) Years of Credited Service,
or before he has completed four (4) Years of Credited Service after the
Effective Date of this Plan (in each case taking into account any Years of
Credited Service that the Participant may be deemed to have completed under
Section 2.1(b), hereof), then no benefits shall be paid to the Participant or
any Beneficiary of the Participant pursuant to this Plan.

     2.3 Death Benefit. If the Participant should die before distribution of his
         -------------
entire Normal Retirement Benefit has been made to him, any remaining amounts
shall be distributed to the Participant's Beneficiary in a lump sum payment as
soon as practicable after the Participant's death, provided that notwithstanding
the foregoing, no amount shall be payable hereunder until that date on which the
deceased Participant would have reached age sixty (60) if still living.

     2.4 Change in Control. At any time after a Change in Control has occurred,
         -----------------
a Participant may elect to receive his or her Normal Retirement Benefit (or if
payment thereof has already commenced, any remaining payments of the
Participant's Normal Retirement Benefit) as a lump sum payment.

                                    ARTICLE 3
                                    ---------

                                 ADMINISTRATION

     3.1 Administrative Committee. The Company shall appoint a Committee for the
         ------------------------
administration of the Plan consisting of one or more persons. Any Committee
member may, but need not, be an officer or employee of the Company and each
shall serve until his successor shall be appointed in like manner. Any member of
the Committee may resign by delivering his written resignation to the Company.
The Company may remove any member of the Committee at any time.

     3.2 Powers and Duties. The Committee generally shall be responsible for the
         -----------------
discretionary management, operation, interpretation and administration of the
Plan. The Committee shall:

          (a) Establish procedures for allocation of responsibilities of the
     Plan which are not allocated herein;

          (b) Determine the names of those employees of the Company who are
     eligible to participate and such other matters as may be necessary to
     enable payment under the Plan;

          (c) Construe all terms, provisions, conditions and limitations of the
     Plan;

          (d) Correct any defect, supply any omission or reconcile any
     inconsistency that may appear in the Plan;

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          (e) Determine the amount, manner and time of payment of benefits
     hereunder and prescribe procedures to be followed by Participants to obtain
     benefits; and

          (f) Perform such other functions and take such other actions as may be
     required by the Plan or as may be necessary or advisable to accomplish the
     purposes of the Plan.

The Company shall furnish the Committee with all data and information available
which the Committee may reasonably require in order to perform its functions
hereunder. The Committee may rely without question upon any such data or
information furnished by the Company. Any interpretation or other decision made
by the Committee shall be final, binding and conclusive upon all persons in the
absence of clear and convincing evidence that the Committee acted arbitrarily
and capriciously.

     3.3 Agents. The Committee may appoint a Secretary who may, but need not, be
         ------
a member of the Committee, and may employ such agents for clerical and other
services, and such counsel, accountants and other professional advisors as may
be required for the purpose of administering the Plan. The Committee may rely on
all tables, valuations, reports, certificates and opinions furnished by its
agents.

     3.4 Procedures. A majority of the Committee members shall constitute a
         ----------
quorum for the transaction of business. No action shall be taken except upon a
majority vote of the Committee. An individual shall not vote or decide upon any
matter relating solely to himself or vote in any case in which his individual
right or claim to any benefit under the Plan is particularly involved. In any
case in which a Committee member is so disqualified to act, and the remaining
members cannot agree on an issue, the Company shall appoint a temporary
substitute member to exercise all of the powers of the disqualified member
concerning the matter in which he is disqualified.

     3.5 Claims Procedure. In the event that any Participant or Beneficiary
         ----------------
claims to be entitled to benefits under the Plan and the Committee determines
that such claim should be denied in whole or in part, the Committee shall, in
writing, notify such claimant within ninety (90) days of receipt of such claim
that his claim has been denied, setting forth the specific reasons for such
denial. Such notification shall be written in a manner reasonably expected to be
understood by such Participant or Beneficiary and shall set forth the pertinent
sections of the Plan relied on, and where appropriate, an explanation of how the
claimant can obtain review of such denial. Within sixty (60) days after the
mailing or delivery by the Committee of such notice, such claimant may request,
by mailing or delivery of written notice to the Committee, a review and/or
hearing by the Committee of the decision denying the claim. If the claimant
fails to request such a review and/or hearing within such sixty (60) day period,
it shall be conclusively determined for all purposes of this Plan that the
denial of such claim by the Committee is correct. If such claimant requests a
hearing within such sixty (60) day period, the Committee shall designate a time
(which time shall not be less than seven (7) nor more than sixty (60) days from
the date of such claimant's notice to the Committee) and a place for such
hearing, and shall promptly notify such claimant of such time and place. A
claimant or his authorized representative shall be entitled to inspect all
pertinent Plan documents and to submit issues and comments in writing. If only a
review is requested, the claimant shall have sixty (60) days after filing a
request for review to submit additional written material in support of the
claim. After such review and/or hearing, the Committee shall promptly determine
whether such

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denial of the claim was correct and shall notify such claimant in
writing of its determination with sixty (60) days after such review and/or
hearing or after receipt of any additional information submitted.

     3.6 Indemnification. The Company shall indemnify each Committee member, and
         ---------------
each employee who assists the Committee in connection with his or her employment
duties against any liability or loss sustained by reason of any act or failure
to act made in good faith, including, but not limited to, those in reliance on
certificates, reports, tables, opinions or other communications from any company
or agents chosen by the Committee in good faith. Such indemnification shall
include attorneys' fees and other costs and expenses reasonably incurred in
defense of any action brought by reason of any such act or failure to act.

                                    ARTICLE 4
                                    ---------

                                  MISCELLANEOUS

     4.1 Unfunded Plan. The obligations of the Company under this Plan shall be
         -------------
paid from the general assets of the Company or from the assets of the Trust.
Participants shall have the status of general unsecured creditors of the
Company, and the Plan constitutes a mere promise by the Company to make benefit
payments in the future. It is intended that this Plan shall constitute an
"unfunded" plan for a select group of management or highly compensated employees
under the Employee Retirement Income Security Act of 1974, as amended. Any
assets acquired by the Company relating to this Plan shall be subject to the
claims of the Company's creditors, and shall not be subject to any claims by any
Participant or Beneficiary. The assets of the Trust also shall be subject to the
Company's creditors in the event of the Company's Insolvency, as defined in the
Trust Agreement establishing the Trust. Nothing contained in this Plan shall be
interpreted to grant to any Participant or Beneficiary, any right, title or
interest in any assets of the Company or the Trust.

     4.2 Timing of Company Contributions. For each Plan Year, the Company shall
         -------------------------------
make contributions to the Trust in an amount that the Committee reasonably
determines to be sufficient to fund the benefits that have accrued and have
become vested under this Plan during that Plan Year. Notwithstanding the
foregoing, in the event of a Change in Control, or if the Committee determines,
in the Committee's view, and notifies the Company that a Change in Control is
imminent, the Company shall make a contribution to the Trust in an amount equal
to the aggregate value of all Participants' benefits hereunder, and the Trust
shall distribute those funds in accordance with Section 2.4.

     4.3 Impact on Other Participant Benefits. This Plan shall not be construed
         ------------------------------------
to impact or cause the denial of any benefits to which any Participant may be
entitled under any other welfare or benefit plan of the Company.

     4.4 Other Plans. Payments made to Participants under this Plan shall not be
         -----------
includable as salary or compensation for purposes of determining the amount of
employee benefits under any other retirement, pension, profit-sharing or welfare
benefit plans of the Company.

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     4.5 Governing Law. To the extent not pre-empted by the laws of the United
         -------------
States, the construction, validity and administration of the Plan shall be
governed by the laws of the State of Delaware without reference to the
principles of conflicts of law therein.

     4.6 No Assignment or Other Transfer. The right to receive payment of any
         -------------------------------
benefits under the Plan shall not be subject in any manner to anticipation,
sale, alienation, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors of a Participant or a Participant's Beneficiary.

     4.7 Taxes. The Company shall withhold from any payment due under the Plan
         -----
any taxes it deems to be required to be withheld under applicable Federal, state
or local tax laws or regulations.

     4.8 Severability. If any provision of this Plan is found, held or deemed to
         ------------
be void, unlawful or unenforceable under any applicable statute or other
controlling law, the remainder of the Plan shall continue in full force and
effect.

     4.9 Headings and Subheadings. The headings and subheadings of the Plan are
         ------------------------
for reference only. In the event of a conflict between a heading or subheading
and the content of an article or paragraph, the content shall control.

     4.10 Gender. The masculine, as used herein, shall be deemed to include the
          ------
feminine and the singular to include plural, except where the context requires a
different construction.

     4.11 Amendment and Termination.
          -------------------------

          (a) This Plan may be amended or terminated in any respect at any time
by the Company; provided, however, that no amendment or termination of the Plan
shall be effective to reduce any benefit that accrues before the adoption of
such amendment or termination without the prior written consent of the
Participants whose benefits would be reduced.

          (b) Notwithstanding any provision to the contrary in this Plan, in the
event that as of the last day of any fiscal quarter of the Company that occurs
after the Effective Date, either (i) the Tangible Net Worth of the Company is
less the $25,000,000, or (ii) the Interest Coverage Ratio of the Company shall
be below .9:1, then the Plan immediately shall terminate, and the Company shall
distribute to each Participant his or her Normal Retirement Benefit, in a lump
sum payment, as soon as practicable thereafter. For purposes of this Plan:

               (1) "Tangible Net Worth" shall mean at any date the consolidated
               stockholders' equity of the Company and its subsidiaries
               determined as of such date, less any intangible assets included
               on the balance sheet at the same date;

               (2) "Interest Coverage Ratio" shall mean the Cash Flow of the
               Company for the trailing four quarters divided by the Interest
               Expense of the Company for the trailing four quarters;

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               (3) "Cash Flow" shall mean for any period, (i) the sum (without
               duplication), determined on a consolidated basis for the Company
               and its subsidiaries, of (x) the operating profit of the Company
               and its subsidiaries (calculated before provision for income
               taxes, interest expense, extraordinary and non-recurring items
               and income attributable to equity in affiliates) for such period,
               plus (y) depreciation, amortization and other non-cash items (to
               the extent deducted in determining operating profit) for such
               period minus (ii) proceeds received by the Company and its
               subsidiaries during such period (to the extent included in
               determining operating profit) of any property insurance policy.

               (4) "Interest Expense" shall mean for any period, the sum
               (determined without duplication) of the aggregate amount of
               interest accruing during such period on indebtedness of the
               Company and its subsidiaries (on a consolidated basis), including
               the interest portion of payments under capital lease obligations
               and any capitalized interest, and excluding amortization of debt
               discount and expense.

     4.12 No Employment Contract. This Plan does not constitute a contract of
          ----------------------
employment or impose on any Participant or the Company any obligations to retain
the Participant as an employee, to change the status of the Participant's
employment, or to change the Company's policies regarding termination of
employment.

     IN WITNESS WHEREOF, the Company has caused the Plan to be executed the day
and year first above written.

                                           APPLIED EXTRUSIONS TECHNOLOGIES, INC.


                                           -------------------------------------
                                           By:
                                           Title:

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