<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED MARCH 31, 1994 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 1-5260
ZERO CORPORATION
- - --------------------------------------------------------------------------------
(Exact name of registrant as set forth in its charter)
Delaware 95-1718077
- - --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification Number)
444 South Flower Street, Ste. 2100, Los Angeles, CA 90071-2922
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 213/629-7000
----------------------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, $.01 Par Value New York Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
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
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the registrant's voting common stock held by non-
affiliates was $197,007,000 as of June 17, 1994 (based upon the closing sale
price of $12.38 per share of such stock on the New York Stock Exchange on
June 17, 1994).
Common stock outstanding as of June 17, 1994 -- 15,919,744 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Only those portions of Registrant's Annual Report for the year ended March 31,
1994 attached hereto as Exhibit 13 (the "1994 Annual Report") and the Proxy
Statement for its annual meeting to be held July 27, 1994 (the "1994 Proxy
Statement"), which are specifically referred to in Part I - Items 1 and 3,
Part II - Items 5, 6, 7, and 8 and Part III - Items 10, 11 and 12, are
incorporated herein by reference.
<PAGE>
PART I
Item 1. Business.
ZERO Corporation (the "Company", ZERO, or "Registrant") was incorporated in
Delaware in 1988 as a successor in interest to a California corporation of the
same name that was originally incorporated in 1952. Its executive offices are
located at 444 South Flower Street, Suite 2100, Los Angeles, CA 90071-2922,
telephone (213) 629-7000.
The Company, through nine U.S. companies and one foreign company, considers
itself a leader in the engineering, manufacturing and marketing of engineered
cases, system packaging, and various products used in the airline/air cargo
industry. ZERO's engineered cases include custom and standard deep drawn
aluminum ZERO boxes; ZERO Halliburton (Register Mark) luggage, attaches and
carrying cases; thermoformed and rotationally molded plastic cases and
enclosures; other standard and custom fabricated cases (marketed under the Anvil
Cases (Register Mark) brand name); and specialized case hardware. The Company's
engineered cases are widely used in commercial, industrial and
government/military applications. The Company's system packaging business
involves engineering, manufacturing and/or integrating standard and custom
electronic enclosures and cabinets, and related components such as card cages,
backplanes, and power supplies; and cooling equipment, including motorized
impellers, blowers, fan trays, heat exchangers and air conditioners. The
Company's airline/air cargo products include specialized aluminum, polycarbonate
and fiberglass air cargo containers; patented telescoping baggage/cargo systems;
air cargo restraint systems and hardware; and transit cases engineered to meet
the Air Transport Association's highest specifications. Over fifty percent of
ZERO's net sales in fiscal 1994 were linked to the electronics industry through
customers doing business in the telecommunication/instrumentation, and data
processing/peripherals markets.
ZERO's operations are classified under two business segments: Enclosures and
Accessories, and Other. Information about ZERO's business segments is set forth
in Note 8 "Segment Information" on page 28 of the 1994 Annual Report, which is
incorporated herein by reference.
During the three years ended March 31, 1994, the Company did not derive a
material portion of its sales or net income from its foreign operations nor has
the Company been dependent upon a single customer, or a few customers, the loss
of which would have a material adverse effect on its operations.
Patents, licenses, franchises and concessions are not an important factor in
ZERO's overall production process and are not material to its results of
operation.
Development of new products is not a significant part of the Company's business.
During the year ended March 31, 1994, the Company spent less than 1% of net
sales on research and development activities.
Marketing
In marketing non-consumer oriented products in its two business segments, ZERO
employs manufacturers' representatives, direct salespeople and some distributors
to market its products worldwide. Technical support for these manufacturers'
representatives, salespeople and distributors is provided by engineering
personnel from ZERO's various plants. The Company's standard enclosure products
and accessories are sold through catalogs, advertisements, trade journals and
independent distributors. Nonstandard or specialized enclosure products and
accessories are marketed through manufacturers' representatives and direct
sales. ZERO's consumer oriented products are marketed worldwide through
catalogs, advertisements in selected publications, telemarketing programs, trade
journals and are distributed through established independent dealers who
specialize in the market to which each of ZERO's products is related.
<PAGE>
Competition
While reliable statistics are not available that would permit the Company to
accurately estimate its share of the total market for each of its business
segments, the Company believes it has a significant share of the enclosures and
accessories market that it serves. ZERO competes with a number of other
companies, both larger and smaller. The degree and type of competition that ZERO
encounters varies for both of its business segments.
The Company believes it effectively competes in both of its business segments by
providing engineering expertise, innovative design, superior quality and on-time
delivery at a competitive price. ZERO's ability to successfully compete in the
Enclosures and Accessories segment is also attributable to its broad range of
standard products. Approximately 2,000 dies, capable of producing over 75,000
standard deep drawn aluminum enclosures, provides ZERO with both a cost and
service advantage in a large portion of its metal case and enclosure business.
In addition, ZERO offers thousands of sizes of fabricated cases and hundreds of
standard configurations for system packaging. Competitive strength is also
derived by the Company's ability to modify standard products to satisfy a
virtually limitless number of applications and customer requirements.
Sales and Backlog
ZERO's backlog at March 31, 1994 and 1993 was $40,302,000 and $39,415,000,
respectively. Backlog is based on contracts which were signed as of the
respective dates set forth. Approximately 93% of the backlog at March 31, 1994
is scheduled for delivery during fiscal 1995.
Certain contracts, particularly those with the United States Government and its
contractors, provide for cancellation for convenience of the customer. If such
cancellation occurs, the contractor is paid for costs incurred to date plus the
costs of settling and paying claims of terminated subcontractors, other
settlement expenses and a reasonable profit on its costs. During the five years
ended March 31, 1994, the aggregate amount of orders cancelled for the
convenience of the United States Government has not been material. However, no
assurance can be given that this pattern will continue in the future.
For the year ended March 31, 1994, approximately 12% of Zero's sales were made
to the government/military market.
A majority of ZERO's sales orders are in amounts of less than $10,000 each.
These orders generally are delivered 1 to 6 weeks from the time the order is
booked. Larger orders and custom orders may take several weeks to over a year
depending on the delivery schedule set by the customer. Because of the large
number of customers served (in excess of 19,000), the relatively small size of
each order and the relatively short delivery cycles involved, the Company
believes the risk of any order being cancelled which would have a significant
adverse effect on operations is low.
<PAGE>
Raw Materials
The principal raw materials used by ZERO in manufacturing its products are
aluminum and steel and, to a lesser extent, plastics. Such materials are
purchased under competitive bids at levels sufficient to meet foreseeable
production and delivery schedules. For the year ended March 31, 1994, ZERO
purchased aluminum and steel from over ten principal suppliers. Plastics and
other raw materials and supplies necessary for the production of ZERO's products
are purchased from a variety of suppliers. As of June 17, 1994, the Company was
not experiencing shortages in the supply of its raw materials. Based on market
and economic conditions at that date, ZERO believes that the supply and
availability of these materials will be adequate to support its level of
operations projected through March 31, 1995. However, the Company can make no
assurances that such materials will be available beyond that period, and any
shortage of such materials could have a significant and material adverse impact
on the operations of the Company.
Environmental Matters
ZERO has developed and implemented an environmental program to reduce or
eliminate the use of hazardous material and possible contamination. Through
changes in production processes, capital expenditures, proper training and the
use of state-of-the-art treatment and monitoring equipment, the Company believes
its program is controlling the use and discharge of hazardous materials and is
in substantial compliance with applicable local, state and Federal regulations.
The Company does not expect that any assertions of noncompliance with such laws
will materially adversely affect its earnings or competitive position or will
require any significant capital expenditures during fiscal year 1995.
Information in Note 7 - "Contingent Liabilities" on page 27 of the 1994 Annual
Report addressing environmental matters in which ZERO has been named a
"potentially responsible party" is incorporated herein by reference.
Employees
As of May 31, 1994, ZERO employed 1,684 persons. Employee relations are
considered good. Certain employees at the Company's Samuel Groves & Co. Limited
subsidiary and ZERO Stantron Cabinets division are represented by unions which
are not affiliated with any national unions. In the past ten years the Company
has not experienced a significant work stoppage from a labor dispute.
Item 2. Properties.
As of June 17, 1994, ZERO used manufacturing plants and office buildings
containing an aggregate of approximately 1,389,000 square feet of floor space.
ZERO's plants are located in California (Camarillo, City of Industry, El Monte,
Pacoima, Rancho Dominguez and San Diego); Utah (North Salt Lake); Massachusetts
(Monson); New Jersey (Princeton Junction); Minnesota (Brooklyn Park);
Connecticut (Hartford); Tijuana, Mexico; and Birmingham and Feltham, England.
The plants located in Camarillo, City of Industry, El Monte, Pacoima and San
Diego, California; in Brooklyn Park, Minnesota; in Princeton Junction, New
Jersey; and in North Salt Lake, Utah, are used in the production of enclosures
and accessories. The remaining plants are used by both business segments.
<PAGE>
ZERO owns all its plants and facilities, except for the following leased
properties:
PLANT SQUARE FOOTAGE LEASE EXPIRES
- - --------------------------------------------------------------------------------
Camarillo, CA 36,000 June 30, 1996
Camarillo, CA 22,000 February 28, 1996*
City of Industry, CA 63,000 November 30, 1996*
El Monte, CA 72,000 May 31, 2006
Hartford, Ct 8,000 January 31, 1996
Pacoima, CA 114,000 August 5, 1999*
Rancho Dominguez, CA 33,000 November 30, 1994*
Rancho Dominguez, CA 121,000 September 30, 1999*
Tijuana, Mexico 35,000 January 31, 1995*
Feltham, England 31,000 October 1, 2002
---------
TOTAL 535,000
=========
* Lease contains renewal option.
ZERO's plants and facilities used in operations are generally constructed of
concrete block, brick, concrete tilt-up, steel or a combination thereof. ZERO's
facilities and equipment are well maintained and are believed to be adequate to
support a substantial increase in its operations, assuming a comparable product
mix.
Item 3. Legal Proceedings.
Information concerning legal proceedings in Note 7 - "Contingent Liabilities" on
page 27 of the 1994 Annual Report is incorporated herein by reference.
Item 4. Submission of Matters to a Vote of Security Holders.
Registrant submitted no matters to a vote of its security holders during the
fiscal quarter ended March 31, 1994.
EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
Information regarding the Company's officers as of June 17, 1994 is as follows:
EXECUTIVE
NAME AGE POSITION OFFICER SINCE
- - --------------------------------------------------------------------------------
John B. Gilbert 73 Chairman Emeritus 1952
Wilford D. Godbold Jr. 56 President, Chief Executive
Officer and Director 1982
Howard W. Hill 67 Chairman of the Board 1960
George A. Daniels 56 Vice President and Chief
Financial Officer 1987
James F. Hermanson 57 Vice President 1984
Bernard B. Heiler 48 Vice President of Marketing
and Sales 1992
Anita J. Cutchall 55 Director of Legal Affairs and
Corporate Secretary 1992
<PAGE>
None of the directors or executive officers are related to one another. All
executive officers except Mr. Heiler and Ms. Cutchall have served in their
current capacities or in other managerial positions with the Company for a
minimum of the past five years. Mr Heiler has held his current position with the
Company since October 1992, prior to which he was Vice President of GTE
California, a telephone public utility, from 1984 through 1992, and President of
GTEL, a telecommunications integrator and a subsidiary of GTE, from January 1986
through October 1992. Ms. Cutchall has held her current position with the
Company since August 1992, prior to which she held the same position with
Continental Graphics Corporation, a provider of specialty graphics, commercial
printing and film services, from July 1990 through August 1992, and was Legal
Associate and Corporate Secretary at Triton Group Ltd,. a diversified holding
company, from 1986 through 1990.
PART II
Item 5. Market For Registrant's Common Equity and Related Stockholder Matters.
The information under the caption "Market and Dividend Information" on page 30
of the 1994 Annual Report is incorporated herein by reference. On June 17, 1994
the Company had 6,122 stockholders of record.
Item 6. Selected Financial Data.
The information under the caption "Five Year Consolidated Financial Highlights"
on the inside front cover of the 1994 Annual Report is incorporated herein by
reference.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
The information under the caption "Management's Discussion and Analysis of
Results of Operations and Financial Condition" on page 18 of the 1994 Annual
Report is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
The following consolidated financial statements of the Registrant and its
subsidiaries included in the 1994 Annual Report (on the pages therein shown in
parentheses) are incorporated herein by reference:
Statements of Consolidated Income--Years Ended March 31, 1994, 1993 and 1992.
(Page 19)
Consolidated Balance Sheets--March 31, 1994 and 1993. (Pages 20 and 21)
Statements of Consolidated Stockholders' Equity--Years ended March 31, 1994,
1993 and 1992. (Page 22)
Statements of Consolidated Cash Flows--Years Ended March 31, 1994, 1993 and
1992. (Page 23)
Notes to Consolidated Financial Statements. (Pages 24 to 28, inclusive)
The independent auditors' report and management's report on page 29 of the 1994
Annual Report covering ZERO's consolidated financial statements are also
incorporated herein by reference.
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information under the caption "Election of Directors" in the 1994 Proxy
Statement is incorporated herein by reference.
Information concerning the Company's executive officers is included under the
caption "Executive Officers of the Registrant" following Part I, Item 4 of this
report.
Item 11. Executive Compensation.
The information under the captions "Meetings of the Board of Directors,
Committees of the Board and Directors' Fees" and "Executive Compensation" in the
1994 Proxy Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information under the captions "General Information" and "Voting Securities
and Certain Stockholders" in the 1994 Proxy Statement is incorporated herein by
reference.
Registrant does not know of any arrangement, including any pledge by any person
of securities of Registrant, which may at a subsequent date result in a change
of control of Registrant.
Item 13. Certain Relationships and Related Transactions.
Not applicable.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a)(1). Financial Statements.
Reference is made to Item 8 in Part II of this report, where these statements
are listed.
(a)(2). Financial Statement Schedules.
The following consolidated financial statement schedules of Registrant are
included in Item 14(d) below:
Schedule I--Short-Term Investments as of March 31, 1994.
Schedule VIII--Valuation and Qualifying Accounts for the years ended March
31, 1994, 1993 and 1992.
Schedule IX--Short-Term Bank Borrowings for the years ended March 31, 1994,
1993 and 1992.
Schedule X--Supplementary Income Statement Information for the years ended
March 31, 1994, 1993 and 1992.
<PAGE>
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
(a)(3). Exhibits.
The following exhibits are part of this Form 10-K and are either incorporated by
reference to the prior filings indicated below or are filed herewith under Item
14(c):
3.1 The Restated Certificate of Incorporation filed as Exhibit 3-(3)(a) of
the Company's Form 8-B filed on September 7, 1988.
3.2 Bylaws of ZERO Corporation, as amended on April 22, 1994.
4.2 Specimen form of certificate of common stock $0.01 par value per share
filed as Exhibit 3-(4) of the Company's Form 8-B filed on September 7,
1988.
10.1 Deferred Compensation Plan adopted by the Board of Directors on December
17, 1973 as amended by the Board of Directors on December 11, 1974 filed
as Exhibit 13.10 to the Company's Form 10-K for the year ended March 31,
1975.
10.2 Deferred Compensation Plan as amended through April 1, 1986 filed as
Exhibit 10.13 to the Company's Form 10-K for the year ended March 31,
1986.
10.3 Directors' Deferred Compensation Plan adopted by the Board of Directors
on October 20, 1993.
10.4 Executive Deferred Compensation Plan adopted by the Board of Directors
on October 20, 1993.
10.5 ZERO Corporation Management Bonus Plan adopted by the Board of Directors
on April 22, 1994.
10.6 Articles of Association of the ZERO Corporation Employees Stock Purchase
Plan filed as Exhibit 1 to Form S-8 Registration Statement (File No.
2-26009).
10.7 ZERO Corporation 1988 Stock Option Plan, as amended, filed on Form S-8
Registration Statements (File Nos. 33-44143, 33-27929 and 2-54344).
10.8 ZERO Corporation 1994 Stock Option Plan, filed as Appendix A to the
Company's 1994 Proxy Statement.
10.9 Description of ZERO Corporation Supplemental Executive Retirement Plan
adopted by the Board of Directors on January 19, 1994.
10.10 Description of ZERO Corporation Contract and Joint Supplemental Life
Insurance Plan adopted by the Board of Directors on April 22, 1994.
13 Annual Report for the year ended March 31, 1994 (not deemed filed except
for those portions specifically incorporated by reference herein).
21 Listing of the Company's subsidiaries as of March 31, 1994.
23 Consent of Independent Auditors dated June 27, 1994 to the incorporation
by reference of their reports filed herewith into the Company's Form S-8
Registration Statements (File Nos. 33-53943, 33-44143, 33-27929 and 2-
54344).
<PAGE>
(b). REPORTS ON FORM 8-K.
During the quarter ended March 31, 1994 the Company filed no reports on
Form 8-K.
(c). EXHIBITS.
See listing of exhibits filed herewith on page 16 of this report.
(d). FINANCIAL STATEMENT SCHEDULES.
The financial statement schedules listed in Item 14(a)(2) above are shown on
pages 12 through 15 of this report. The report of the Registrant's independent
auditors, Deloitte & Touche, is set forth on page 11 of this report.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of Registrant
and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- - --------- ----- ----
Vice President and Chief
/s/ GEORGE A. DANIELS Financial Officer June 27, 1994
- - -----------------------
George A. Daniels
Controller and Chief
/s/ ERIC A. SAND Accounting Officer June 27, 1994
- - -----------------------
Eric A. Sand
DIRECTORS:
/s/ GARY M. CUSUMANO Director June 27, 1994
- - -----------------------
Gary M. Cusumano
/s/ BRUCE J. DEBEVER Director June 27, 1994
- - -----------------------
Bruce J. DeBever
/s/ CLINTON G. GERLACH Director June 27, 1994
- - -----------------------
Clinton G. Gerlach
/s/ JOHN B. GILBERT Director June 27, 1994
- - -----------------------
John B. Gilbert
Director and Chief
/s/ WILFORD D. GODBOLD JR. Executive Officer June 27, 1994
- - -----------------------
Wilford D. Godbold Jr.
/s/ BERNARD B. HEILER Director June 27, 1994
- - -----------------------
Bernard B. Heiler
/s/ HOWARD W. HILL Director June 27, 1994
- - -----------------------
Howard W. Hill
/s/ WHITNEY A. MCFARLIN Director June 27, 1994
- - -----------------------
Whitney A. McFarlin
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Stockholders of ZERO Corporation:
We have audited the consolidated financial statements of ZERO
Corporation and its subsidiaries (the "Company") as of March 31, 1994
and 1993, and for each of the three years in the period ended March 31,
1994, and have issued our report thereon dated May 12, 1994; such
financial statements and report are included in your 1994 Annual Report
to Stockholders and are incorporated herein by reference. Our audits
also included the financial statement schedules of the Company, listed
in Item 14(a)(2). These financial statement schedules are the
responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such financial
statement schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
/s/ DELOITTE & TOUCHE
Los Angeles, California
May 12, 1994
<PAGE>
S C H E D U L E I
ZERO CORPORATION AND SUBSIDIARIES
SHORT-TERM INVESTMENTS
AS OF MARCH 31, 1994
<TABLE>
<CAPTION>
Name of Issuer/ Principal Original Market Recorded
Type of Issue Amount Cost Value Value
- - ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The United States Government -
Treasury Bills and Notes $5,000,000 $5,021,000 $5,033,000 $5,008,000
The State of California-
Municipal Bonds $3,500,000 $3,518,000 3,481,000 3,481,000
The State of California,
Counties and Agencies
thereof -
Municipal Bonds $6,000,000 $6,085,000 6,004,000 6,004,000
Various Other States, Counties
and Agencies-
Municipal Bonds $4,000,000 $4,111,000 4,032,000 4,032,000
----------- -----------
$18,550,000 $18,525,000
=========== ===========
</TABLE>
<PAGE>
S C H E D U L E V I I I
ZERO CORPORATION AND SUBSIDIARIES
---------------------------------
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED MARCH 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
Balance at Provision Doubtful Balance at
Beginning Charged to Accounts End of
of Year Income Written Off (1) Year
- - ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts:
April 1, 1993 to March 31, 1994 $886,000 $489,000 ($546,000) $829,000
April 1, 1992 to March 31, 1993 $871,000 $609,000 ($594,000) $886,000
April 1, 1991 to March 31, 1992 $801,000 $564,000 ($494,000) $871,000
</TABLE>
(1) Net of recoveries
<PAGE>
S C H E D U L E IX
ZERO CORPORATION AND SUBSIDIARIES
---------------------------------
SHORT-TERM BANK BORROWINGS
FOR THE YEARS ENDED MARCH 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
Interest Rate Maximum Amount Average Amount Weighted Average
Balance at at End of Outstanding Outstanding Interest Rate
Category End of Year Year During the Year During the Year During the Year
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Amounts Payable To Bank - 1994 None None None N/A N/A
Amounts Payable To Bank - 1993 None None $1,093,000 $468,000 9.54%
Amounts Payable To Bank - 1992 $333,000 12.00% $825,000 $502,000 12.47%
</TABLE>
<PAGE>
S C H E D U L E X
ZERO CORPORATION AND SUBSIDIARIES
---------------------------------
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED MARCH 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
Amount Charged to Costs and Expenses
------------------------------------------
1994 1993 1992
- - ---------------------------------------------------------------------------
<S> <C> <C> <C>
Maintenance and repairs $2,002,000 $1,980,000 $2,439,000
Advertising $2,572,000 $2,003,000 $2,245,000
</TABLE>
<PAGE>
ZERO CORPORATION AND SUBSIDIARIES
FORM 10K, ITEM 14(c)
EXHIBITS FILED HEREWITH
3.2 Bylaws of ZERO Corporation, as amended on April 22, 1994.
10.3 Directors' Deferred Compensation Plan adopted by the Board of
Directors on October 20, 1993.
10.4 Executive Deferred Compensation Plan adopted by the Board of
Directors on October 20, 1993.
10.5 ZERO Corporation Management Bonus Plan adopted by the Board of
Directors on April 22, 1994.
10.9 Description of ZERO Corporation Supplemental Executive Retirement
Plan adopted by the Board of Directors on January 19, 1994.
10.10 Description of ZERO Corporation Contract and Joint Life Insurance
Plan adopted by the Board of Directors on April 22, 1994.
13 Annual Report for the year ended March 31, 1994 (not deemed filed
except for those portions specifically incorporated by reference
herein).
21 Subsidiaries of Registrant as of March 31, 1994.
23 Consent of Independent Auditors to incorporation by reference of
$599,000 reports filed herewith into the Company's Form S-8
Registration Statements (File Nos. 33-53943, 33-44143, 33-27929
and 2-54344).
<PAGE>
ZERO CORPORATION
a Delaware Corporation
BYLAWS
ARTICLE I
OFFICES
SECTION 1. Registered Office. The registered office of Zero Corporation
(the "Corporation") shall be at Corporation Trust Center, 1209 Orange Street,
City of Wilmington, County of New Castle, State of Delaware, and the name of the
registered agent in charge thereof shall be The Corporation Trust Company.
SECTION 2. Principal Office. The principal office for the transaction of
the business of the Corporation shall be at such place as the Board of Directors
of the Corporation (the "Board") may determine. The Board is hereby granted
full power and authority to change said principal office from one location to
another.
SECTION 3. Other Offices. The Corporation may also have an office or
offices at such other place or places, either within or without the State of
Delaware, as the Board may from time to time determine or as the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. Place of Meetings. All annual meetings of stockholders and all
other meetings of stockholders shall be held either at the principal office or
at any other place within or without the State of Delaware which may be
designated by the Board pursuant to authority hereinafter granted to the Board.
SECTION 2. Annual Meetings. Annual meetings of stockholders of the
Corporation for the purpose of electing directors and for the transaction of
such other proper business as may come before such meetings may be held at such
time, date and place as the Board shall determine by resolution.
SECTION 3. Special Meetings. Special meetings of stockholders of the
Corporation for any purpose or purposes may only be called in accordance with
the provisions in the Certificate of Incorporation.
Exhibit 3.2
<PAGE>
SECTION 4. Notice of Meetings. Except as otherwise required by law,
notice of each meeting of stockholders, whether annual or special, shall be
given not less than ten (10) nor more than sixty (60) days before the date of
the meeting to each stockholder of record entitled to vote at such meeting by
delivering a typewritten or printed notice thereof to such stockholder
personally, or by depositing such notice in the United States mail, in a postage
prepaid envelope, directed to such stockholder at such stockholder's post office
address furnished by such stockholder to the Secretary of the Corporation for
such purpose, or, if such stockholder shall not have furnished an address to the
Secretary for such purpose, then at such stockholder's post office address last
known to the Secretary, or by transmitting a notice thereof to such stockholder
at such address by telegraph, cable or wireless. Except as otherwise expressly
required by law, no publication of any notice of a meeting of the stockholders
shall be required. Every notice of a meeting of stockholders shall state the
place, date and hour of the meeting, and, in the case of a special meeting,
shall also state the purpose for which the meeting is called. Notice of any
meeting of stockholders shall not be required to be given to any stockholder to
whom notice may be omitted pursuant to applicable Delaware law or who shall have
waived such notice, and such notice shall be deemed waived by any
stockholder who shall attend such meeting in person or by proxy, except a
stockholder who shall attend such meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Except as otherwise expressly
required by law, notice of any adjourned meeting of stockholders need not be
given if the time and place thereof are announced at the meeting at which the
adjournment is taken.
SECTION 5. Quorum. Except as otherwise required by law, the holders of
record of a majority in voting interest of the shares of stock of the
Corporation entitled to be voted thereat, present in person or by proxy, shall
constitute a quorum for the transaction of business at any meeting of
stockholders of the Corporation or any adjournment thereof. Subject to the
requirement of a larger percentage vote contained in the Certificate of
Incorporation, these Bylaws or by statute, the stockholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the withdrawal of enough stockholders to
leave less than a quorum, if any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a quorum.
In the absence of a quorum at any meeting or any adjournment thereof, a majority
in voting interest of the stockholders present in person or by proxy and
entitled to vote thereat or, in the absence therefrom of all the stockholders,
any officer entitled to preside at, or to act as secretary of, such meeting may
adjourn such meeting from time to time. At any such adjourned meeting at which
a quorum is present, any business may be transacted which might have been
transacted at the meeting as originally called.
2
Exhibit 3.2
<PAGE>
SECTION 6. Voting.
A. Each stockholder shall, at each meeting of stockholders, be entitled to
vote in person or by proxy each share of the stock of the Corporation having
voting rights on the matter in question and which shall have been held by such
stockholder and registered in such stockholder's name on the books of the
Corporation:
(i) on the date fixed pursuant to Article VI, Section 5 of these
Bylaws as the record date for the determination of stockholders entitled to
notice of and to vote at such meeting, or
(ii) if no such record date shall have been so fixed, then (a) at the
close of business on the day next preceding the day on which notice of the
meeting shall be given or (b) if notice of the meeting shall be waived, at
the close of business on the day next preceding the day on which the
meeting shall be held.
B. Shares of its own stock belonging to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors in such other corporation is held, directly or indirectly, by the
Corporation, shall neither be entitled to vote nor be counted for quorum
purposes. Persons holding stock of the Corporation in a fiduciary capacity
shall be entitled to vote such stock. Persons whose stock is pledged shall be
entitled to vote, unless in the transfer by the pledgor on the books of the
Corporation the pledgor shall have expressly empowered the pledgee to vote
thereon, in which case only the pledgee, or the pledgee's proxy, may represent
such stock and vote thereon. Stock having voting power standing of record in
the names of two or more persons, whether fiduciaries, members of a partnership,
joint tenants, tenants in common, tenants by the entirety or otherwise, or with
respect to which two or more persons have the same fiduciary relationship, shall
be voted in accordance with the provisions of the Delaware General Corporation
Law.
C. Any such voting rights may be exercised by the stockholder entitled
thereto in person or by such stockholder's proxy appointed by an instrument in
writing, subscribed by such stockholder or by such stockholder's attorney
thereunto authorized and delivered to the secretary of the meeting; provided,
however, that no proxy shall be voted or acted upon after three years from its
date unless said proxy shall provide for a longer period. The attendance at any
meeting of a stockholder who may theretofore have given a proxy shall not have
the elect of revoking the same unless such stockholder shall in writing so
notify the secretary of the meeting prior to the voting of the proxy. At any
meeting of stockholders, all matters, except as otherwise provided in the
Certificate of Incorporation, in these Bylaws or by law, shall be decided by the
vote of a majority in voting interest of the stockholders present in person or
by proxy and entitled to vote thereat and thereon, a quorum being present. The
vote at any meeting of stockholders on
3
Exhibit 3.2
<PAGE>
any question need not be by ballot, unless so directed by the chairman of the
meeting. On a vote by ballot each ballot shall be signed by the stockholder
voting, or by such stockholder's proxy, if there be such proxy, and it shall
state the number of shares voted.
SECTION 7. List of Stockholders. The Secretary of the Corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of such stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
SECTION 8. Judges. If at any meeting of stockholders a vote by written
ballot shall be taken on any question, the chairman of such meeting may appoint
a judge or judges to act with respect to such vote. Each judge so appointed
shall first subscribe an oath faithfully to execute the duties of a judge at
such meeting with strict impartiality and according to the best of such judge's
ability. Such judges shall decide upon the qualification of the voters and
shall report the number of shares represented at the meeting and entitled to
vote on such question, shall conduct and accept the votes, and, when the voting
is completed, shall ascertain and report the number of shares voted respectively
for and against the question. Reports of judges shall be in writing and
subscribed and delivered by them to the Secretary of the Corporation. The judges
need not be stockholders of the Corporation, and any officer of the Corporation
may be a judge on any question other than a vote for or against a proposal in
which such officer shall have a material interest.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. General Powers. Subject to any requirements in the Certificate
of Incorporation, these Bylaws, and of the Delaware General Corporation Law as
to action which must be authorized or approved by the stockholders, any and all
corporate powers shall be exercised by or under the authority of, and the
business and affairs of the Corporation shall be under the direction of, the
Board of Directors to the fullest extent permitted by law. Without limiting the
generality of the foregoing, it is hereby expressly declared that the Board
shall have the following powers, to wit:
4
Exhibit 3.2
<PAGE>
A. To select and remove all the officers, agents and employees of the
Corporation, prescribe such powers and duties for them as may not be
inconsistent with law, the Certificate of Incorporation or these Bylaws,
fix their compensation, and require from them security for faithful
service.
B. To conduct, manage and control the affairs and business of the
Corporation, and to make such rules and regulations therefor not
inconsistent with law, the Certificate of Incorporation or these Bylaws, as
it may deem best.
C. To change the location of the registered office of the Corporation
in Article I, Section 1 hereof; to change the principal office and the
principal office for the transaction of the business of the Corporation
from one location to another as provided in Article I, Section 2 hereof; to
fix and locate from time to time one or more subsidiary offices of the
Corporation within or without the State of Delaware as provided in Article
I, Section 3 hereof; to designate any place within or without the State of
Delaware for the holding of any meeting or meetings of stockholders, and to
adopt, make and use a corporate seal, and to prescribe the forms of
certificates of stock, and to alter the form of such seal and of such
certificates from time to time, and in its judgment as it may deem best,
provided such seal and such certificate shall at all times comply with the
provisions of law.
D. To authorize the issue of shares of stock of the Corporation from
time to time, upon such terms and for such considerations as may be lawful.
E. To borrow money and incur indebtedness for the purposes of the
Corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust and
securities therefor.
F. By resolution adopted by a majority of the authorized number of
directors, to designate an executive and other committees, each consisting
of one or more directors, to serve at the pleasure of the Board, and to
prescribe the manner in which proceedings of such committee or committees
shall be conducted.
SECTION 2. Number and Term of Office. The authorized number of directors
of the Corporation shall be eight (8) until this Section 2 is amended by a
resolution duly adopted by the Board or by the stockholders of the Corporation,
in either case in accordance with the provisions of Article XIV of the
Certificate of Incorporation. Directors need not be stockholders. Each of the
directors of the Corporation shall hold office until such director's successor
shall have been duly elected and qualified or until such director shall resign
or shall have been removed in the manner provided in the Certificate of
Incorporation.
5
Exhibit 3.2
<PAGE>
SECTION 3. Election of Directors. The directors shall be elected by the
stockholders of the Corporation, and at each election, the persons receiving the
greatest number of votes, up to the number of directors then to be elected,
shall be the persons then elected. The election of directors is subject to any
provisions contained in the Certificate of Incorporation relating thereto,
including any provisions for a classified Board and for cumulative voting.
SECTION 4. Resignations. Any director of the Corporation may resign at
any time by giving written notice to the Board or to the Secretary of the
Corporation. Any such resignation shall take effect at the time specified
therein, or, if the time be not specified, it shall take effect immediately upon
receipt; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it elective.
SECTION 5. Vacancies. Except as otherwise provided in the Certificate of
Incorporation, any vacancy on the Board, whether because of death, resignation,
disqualification, an increase in the number of directors, or any other cause,
may be filled by vote of the majority of the remaining directors, although less
than a quorum. Each director so chosen to fill a vacancy shall hold office
until such director's successor shall have been elected and shall qualify or
until such director shall resign or shall have been removed.
No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of such director's term of office.
SECTION 6. Place of Meeting. The Board or any committee thereof may hold
any of its meetings at such place or places within or without the State of
Delaware as the Board or such committee may from time to time by resolution
designate or as shall be designated by the person or persons calling the meeting
or in the notice or a waiver of notice of any such meeting. Directors may
participate in any regular or special meeting of the Board or any committee
thereof by means of conference telephone or similar communications equipment
pursuant to which all persons participating in the meeting of the Board or such
committee can hear each other, and such participation shall constitute presence
in person at such meeting.
SECTION 7. First Meeting. The Board shall meet as soon as practicable
after each annual election of directors, and notice of such first meeting shall
not be required.
SECTION 8. Regular Meetings. Regular meetings of the Board may be held at
such times as the Board shall from time to time by resolution determine. If any
day fixed for a regular meeting shall be a legal holiday at the place where the
meeting is to be held,
6
Exhibit 3.2
<PAGE>
then the meeting shall be held at the same hour and place on the next succeeding
business day not a legal holiday. Except as provided by law, notice of regular
meetings need not be given.
SECTION 9. Special Meetings. Special meetings of the Board for any purpose
or purposes shall be called at any time by the Chairman of the Board or, if the
Chairman of the Board is absent or unable or refuses to act, by the President.
Except as otherwise provided by law or by these Bylaws, written notice of the
time and place of special meetings shall be delivered personally to each
director, or sent to each director by mail or by other form of written
communication, including but not limited to facsimile transmission and telex,
charges prepaid, addressed to such director at such director's address as it is
shown upon the records of the Corporation, or, if it is not so shown on such
records and is not readily ascertainable, at the place in which the meetings of
the directors are regularly held. In case such notice is mailed, telegraphed,
telexed, facsimiled, or sent by overnight courier it shall be deposited in the
United States mail, delivered to the telegraph company in the County in which
the principal office for the transaction of the business of the Corporation is
located or deposited with an overnight courier service at least forty-eight (48)
hours prior to the time of the holding of the meeting. In case such notice is
delivered personally as above provided, it shall be delivered at least twenty-
four (24) hours prior to the time of the holding of the meeting. Such mailing,
telegraphing, telexing, facsimiling or overnight delivery as above provided
shall be due, legal and personal notice to such director. Except where
otherwise required by law or by these Bylaws, notice of the purpose of a special
meeting need not be given. Notice of any meeting of the Board shall not be
required to be given to any director who is present at such meeting, except a
director who shall attend such meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
SECTION 10. Quorum and Manner of Acting. Except as otherwise provided in
these Bylaws, the Certificate of Incorporation or by applicable law, the
presence of a majority of the authorized number of directors shall be required
to constitute a quorum for the transaction of business at any meeting of the
Board, and all matters shall be decided at any such meeting, a quorum being
present, by the affirmative votes of a majority of the directors present. A
meeting at which a quorum is initially present may continue to transact business
notwithstanding the withdrawal of directors, provided any action taken is
approved by at least a majority of the required quorum for such meeting. In the
absence of a quorum, a majority of directors present at any meeting may adjourn
the same from time to time until a quorum shall be present. Notice of any
adjourned meeting need not be given. The directors shall act only as a Board,
and the individual directors shall have no power as such.
7
Exhibit 3.2
<PAGE>
SECTION 11. Action by Consent. Any action required or permitted to be
taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if consent in writing is given thereto by all members of the
Board or of such committee, as the case may be, and such consent is filed with
the minutes of proceedings of the Board or committee.
SECTION 12. Compensation. Directors who are not employees of the
Corporation or any of its subsidiaries may receive an annual fee for their
services as directors in an amount fixed by resolution of the Board, and, in
addition, a fixed fee, with or without expenses of attendance, may be allowed by
resolution of the Board for attendance at each meeting, including each meeting
of a committee of the Board. Nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity as an
officer, agent, employee, or otherwise, and receiving compensation therefor.
SECTION 13. Committees. The Board may, by resolution passed by a majority
of the whole Board, designate one or more committees, each committee to consist
of one or more of the directors of the Corporation. Any such committee, to the
extent provided in the resolution of the Board and subject to any restrictions
or limitations on the delegation of power and authority imposed by applicable
Delaware law, shall have and may exercise all the powers and authority of the
Board in the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which may
require it. Any such committee shall keep written minutes of its meetings and
report the same to the Board at the next regular meeting of the Board. Unless
the Board or these Bylaws shall otherwise prescribe the manner of proceedings of
any such committee, meetings of any such committee may be regularly scheduled in
advance and may be called at any time by the chairman of the committee or by any
two members thereof; otherwise, the provisions of these Bylaws with respect to
notice and conduct of meetings of the Board shall govern.
ARTICLE IV
OFFICERS
SECTION 1. Officers. The officers of the Corporation shall be a Chairman
of the Board, a Vice Chairman of the Board, a President, one or more Vice
Presidents (the number thereof and their respective titles to be determined by
the Board), a Secretary and a Treasurer and such other officers as may be
appointed at the discretion of the Board in accordance with the provisions of
Section 3 of this Article IV.
SECTION 2. Election. The officers of the Corporation, except such
officers as may be appointed or elected in accordance with the provisions of
Section 3 or Section 5 of this Article IV, shall be
8
Exhibit 3.2
<PAGE>
chosen annually by the Board at the first meeting thereof, and each officer
shall hold office until such officer shall resign or shall be removed or
otherwise disqualified to serve, or until such officer's successor shall be
elected and qualified.
SECTION 3. Other Officers. In addition to the officers chosen annually by
the Board at its first meeting, the Board also may appoint or elect such other
officers as the business of the Corporation may require, each of whom shall have
such authority and perform such duties as are provided in these Bylaws or as the
Board may from time to time specify, and shall hold office until such officer
shall resign or shall be removed or otherwise disqualified to serve, or until
such officer's successor shall be elected and qualified.
SECTION 4. Removal and Resignation. Any officer may be removed, either
with or without cause, by resolution of the Board passed by a majority of the
directors at the time in office, at any regular or special meeting of the Board,
or, except in case of an officer chosen by the Board, by any officer upon whom
such power of removal may be conferred by the Board.
SECTION 5. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in these Bylaws for regular appointments to such office.
SECTION 6. Chairman of the Board. The Chairman of the Board shall preside
at all meetings of stockholders and at all meetings of the Board.
SECTION 7. President. The President shall be the chief executive officer of
the Corporation and shall, subject to the control of the Board, have general
supervision, direction and control of the business and affairs of the
Corporation. The President shall have the general powers and duties of
management usually vested in the chief executive officer of a corporation, and
shall have such other powers and duties as may be prescribed by the Board or
these Bylaws.
SECTION 8. Vice Chairman of the Board. In the absence or disability of
the Chairman of the Board, or in the event and during the period of a vacancy in
that office, the Vice Chairman of the Board shall perform all the duties of the
Chairman of the Board, and when so acting shall have all of the powers of, and
be subject to all of the restrictions upon, the Chairman of the Board of the
Corporation.
SECTION 9. Vice President. Each Vice President shall have such powers and
perform such duties with respect to the administration of the business and
affairs of the Corporation as may from time to time be assigned to such Vice
President by the President or the Board, or as may be prescribed by these
Bylaws. In the absence or disability of the President, the Vice Presidents in
9
Exhibit 3.2
<PAGE>
order of their rank as fixed by the Board, or if not ranked, the Vice President
designated by the Board, shall perform all of the duties of the President, and
when so acting shall have all the powers of, and be subject to all the
restrictions upon, the President.
SECTION 10. Secretary. The Secretary shall keep, or cause to be kept, at
the principal office of the Corporation, or such other place as the Board may
order, a book of minutes of all meetings of directors and stockholders, with the
time and place of holding, whether regular or special, and if special, how
authorized and the notice thereof given, the names of those present at meetings
of directors, the number of shares present or represented at meetings of
stockholders, and the proceedings thereof.
The Secretary shall keep, or cause to be kept, at the principal office of
the Corporation's transfer agent, a share register, or a duplicate share
register, showing the name of each stockholder, the number of shares of each
class held by such stockholder, the number and date of certificates issued for
such shares, and the number and date of cancellation of every certificate
surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all meetings of
stockholders and of the Board required by these Bylaws or by law to be given,
and shall keep the seal of the Corporation in safe custody and shall affix and
attest the seal to all documents to be executed on behalf of the Corporation
under its seal, and shall have such other powers and perform such other duties
as may be prescribed by these Bylaws or assigned by the Board, the President or
any officer of the Corporation to whom the Secretary may report. If for any
reason the Secretary shall fail to give notice of any special meeting of the
Board called by one or more of the persons identified in Article Ill, Section 9
hereof, then any such person or persons may give notice of any such special
meeting.
SECTION 11. Treasurer. The Treasurer shall supervise, have custody of and
be responsible for all funds and securities of the Corporation. The Treasurer
shall deposit all moneys and other valuables in the name and to the credit of
the Corporation with such depositaries as may be designated by the Board or in
accordance with authority delegated by the Board. The Treasurer shall disburse
the funds of the Corporation as may be ordered or authorized by the Board, shall
render to the President or the Board whenever they request it, an account of all
of the Treasurer's transactions, and shall have such other powers and perform
such other duties as may be prescribed by these Bylaws or assigned by the Board,
the President or any officer of the Corporation to whom the Treasurer may
report.
The Treasurer shall keep and maintain, or cause to be kept and maintained,
adequate and correct accounts of the properties and business transactions of the
Corporation, including accounts of its
10
Exhibit 3.2
<PAGE>
assets, liabilities, receipts, disbursements, gains, losses, capital, surplus
and shares. Any surplus, including earned surplus, paid-in surplus and surplus
arising from a reduction of stated capital, shall be classified according to
source and shown in a separate account. The books of account shall at all
reasonable times be open to inspection by any director.
The Treasurer also shall supervise the maintenance of adequate and correct
accounts of the properties and business transactions of all subsidiaries of the
Corporation and shall have such other powers and perform such other duties as
may from time to time be prescribed by these Bylaws or assigned to the Treasurer
by the Board, the President or any officer of the Corporation to whom the
Treasurer may report.
SECTION 12. Chairman Emeritus. The officers of the Corporation shall
include the honorary position of Chairman Emeritus, which position shall be held
by John B. Gilbert, founder of the Corporation. The Chairman Emeritus shall
perform such duties as may from time to time be assigned by the Board.
ARTICLE V
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
SECTION 1. Execution of Contracts. The Board, except as in these Bylaws
otherwise provided, may authorize any officer or officers, or agent or agents,
to enter into any contract or execute any instrument in the name of and on
behalf of the Corporation, and such authority may be general or confined to
specific instances; and unless so authorized by the Board or by these Bylaws, no
officer, agent or employee shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or in any amount.
SECTION 2. Checks, Drafts, Etc. All checks, drafts or other orders for
payment of money, notes or other evidence of indebtedness, issued in the name of
or payable to the Corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the Board. Each such officer, assistant, agent or attorney shall
give such bond, if any, as the Board may require.
SECTION 3. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board may select, or as may
be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. For the purpose of deposit and for the
purpose of collection for the account of the Corporation, the Chairman of the
Board, the President, any Vice President or the Treasurer (or any other officer
or officers, assistant or
11
Exhibit 3.2
<PAGE>
assistants, agent or agents, or attorney or attorneys of the Corporation who
shall from time to time be determined by the Board) may endorse, assign and
deliver checks, drafts and other orders for the payment of money which are
payable to the order of the Corporation.
SECTION 4. General and Special Bank Accounts. The Board may from time to
time authorize the opening and keeping of general and special bank accounts with
such banks, trust companies or other depositories as the Board may select or as
may be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. The Board may make such special rules and
regulations with respect to such bank accounts, not inconsistent with the
provisions of these Bylaws, as it may deem expedient.
ARTICLE VI
SHARES AND THEIR TRANSFER
SECTION 1. Certificates for Stock. Every owner of stock of the Corporation
shall be entitled to have a certificate or certificates, to be in such form as
the Board shall prescribe, certifying the number and class of shares of the
stock of the Corporation owned by such owner. The certificates representing
shares of such stock shall be numbered in the order in which they shall be
issued and shall be signed in the name of the Corporation by the Chairman of the
Board, the President or any Vice President, and by the Secretary or the
Treasurer. Any or all of the signatures on the certificates may be a facsimile.
In case any officer, transfer agent or registrar who has signed, or whose
facsimile signature has been placed upon, any such certificate, shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued, such certificate may nevertheless be issued by the Corporation with
the same effect as though the person who signed such certificate, or whose
facsimile signature shall have been placed thereupon, were such officer,
transfer agent or registrar at the date of issue. A record shall be kept of the
respective names of the persons, firms or corporations owning the stock
represented by such certificates, the number and class of shares represented by
such certificates, respectively, and the respective dates thereof, and in case
of cancellation, the respective dates of cancellation. Every certificate
surrendered to the Corporation for exchange or transfer shall be cancelled, and
no new certificate or certificates shall be issued in exchange for any existing
certificate until such existing certificate shall have been so cancelled, except
in cases provided for in Section 4 of this Article VI.
12
Exhibit 3.2
<PAGE>
SECTION 2. Transfers of Stock. Transfers of shares of stock of the
Corporation shall be made only on the books of the Corporation by the registered
holder thereof, or by such holder's attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary, or with a transfer clerk or
a transfer agent appointed as provided in Section 3 of this Article VI, and upon
surrender of the certificate or certificates for such shares properly endorsed
and the payment of all taxes thereon. The person in whose name shares of stock
stand on the books of the Corporation shall be deemed the owner thereof for all
purposes as regards the Corporation. Whenever any transfer of shares shall be
made for collateral security, and not absolutely, such fact shall be so
expressed in the entry of transfer if, when the certificate or certificates
shall be presented to the Corporation for transfer, both the transferor and the
transferee request the Corporation to do so.
SECTION 3. Regulations. The Board may make such rules and regulations as
it may deem expedient, not inconsistent with these Bylaws, concerning the issue,
transfer and registration of certificates for shares of the stock of the
Corporation. It may appoint, or authorize any officer or officers to appoint,
one or more transfer clerks or one or more transfer agents and one or more
registrars, and may require all certificates for stock to bear the signature or
signatures of any of them.
SECTION 4. Lost, Stolen, Destroyed and Mutilated Certificates. In any case
of loss, theft, destruction, or mutilation of any certificate of stock, another
may be issued in its place upon proof of such loss, theft, destruction, or
mutilation and upon the giving of a bond of indemnity to the Corporation in such
form and in such sum as the Board may direct; provided, however, that a new
certificate may be issued without requiring any bond when, in the judgment of
the Board, it is proper so to do.
SECTION 5. Fixing Date for Determination of Stockholders of Record.
A. In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
the Board may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board, and
which record date shall not be more than sixty (60) nor less than ten (10) days
before the date of such meeting. If no record date is fixed by the Board, the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which the meeting is held. A determination of stockholders
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of such meeting; provided, however, that the Board may fix a new
record date for the adjourned meeting.
13
Exhibit 3.2
<PAGE>
B. In order that the Corporation may determine the stockholders entitled to
receive payment of any dividend or other distribution or allotment of any rights
or the stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted, and which record
date shall be not more than sixty (60) days prior to such action. If no record
date is fixed, the record date for determining stockholders for any such purpose
shall be at the close of business on the day on which the Board adopts the
resolution relating thereto.
ARTICLE VII
LIMITATION ON DIRECTOR LIABILITY AND INDEMNIFICATION
SECTION 1. Limitation of Director Liability. To the fullest extent
permitted by the Delaware General Corporation Law as the same exists or may
hereafter be amended, a director of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director.
SECTION 2. Scope of Indemnification. The Corporation shall indemnify, in
the manner and to the fullest extent permitted by law, any person (or the estate
of any person) who is or was a party to, or is threatened to be made a party to,
any threatened, pending or completed action, suit or proceeding, whether or not
by or in the right of the Corporation, and whether civil, criminal,
administrative, investigative or otherwise, by reason of the fact that such
person is or was a director, officer, employee, agent or fiduciary of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee, agent or fiduciary of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee,
agent or fiduciary of another corporation, partnership, joint venture, trust or
other enterprise. The Corporation may, to the fullest extent permitted by law,
purchase and maintain insurance on behalf of any such person against any
liability which may be asserted against such person. To the fullest extent
permitted by law, the indemnification provided herein shall include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
and, in the manner provided by law, any such expenses may be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding. The indemnification provided herein shall not be deemed to limit
the right of the Corporation to indemnify any other person for any such expenses
to the fullest extent permitted by law, nor shall it be deemed exclusive of any
14
Exhibit 3.2
<PAGE>
other rights to which any person seeking indemnification from the Corporation
may be entitled under any agreement, vote of stockholders or disinterested
directors, or otherwise, both as to action in such person's official capacity
and as to action in another capacity while holding such office.
ARTICLE VIII
MISCELLANEOUS
SECTION 1. Seal. The Board shall adopt a corporate seal, which shall be in
the form of a circle and shall bear the name of the Corporation and words
showing that the Corporation was incorporated in the State of Delaware.
SECTION 2. Waiver of Notices. Whenever notice is required to be given by
these Bylaws or the Certificate of Incorporation or by law, the person entitled
to said notice may waive such notice in writing, either before or after the time
stated therein, and such waiver shall be deemed equivalent to notice.
SECTION 3. Amendments. Except as otherwise provided herein or in the
Certificate of Incorporation, these Bylaws, or any of them, may be altered,
amended, repealed or rescinded and new Bylaws may be adopted, (A) by the Board,
or (B) by the stockholders, at any annual meeting of stockholders or at any
special meeting of stockholders, provided that notice of such proposed
alteration, amendment, repeal, recission or adoption is given in the notice of
meeting.
SECTION 4. Representation of Other Corporations. The Chairman or Vice
Chairman of the Board or the President or the Secretary or any Vice President of
the Corporation is authorized to vote, represent and exercise on behalf of the
Corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of the Corporation. The authority herein
granted to said officers to vote or represent on behalf of the Corporation any
and all shares held by the Corporation in any other corporation or corporations
may be exercised either by such officers in person or by any person authorized
so to do by proxy or power of attorney duly executed by such officers.
15
Exhibit 3.2
<PAGE>
ZERO CORPORATION
DIRECTORS' DEFERRED COMPENSATION PLAN
AS ADOPTED OCTOBER 20, 1993
PURPOSE
The purpose of the Zero Corporation Directors' Deferred Compensation Plan
is to provide the opportunity to defer the receipt of compensation payable to
the members of the Board of Directors of Zero Corporation upon whose judgment,
initiative and efforts the continued success of Zero Corporation and its
divisions and subsidiaries is dependent.
Exhibit 10.3
<PAGE>
ZERO CORPORATION
----------------
DIRECTORS' DEFERRED COMPENSATION PLAN
-------------------------------------
AS ADOPTED OCTOBER 20, 1993
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE Page
- - ------- ----
<S> <C>
I Title and Effective Date............................. 3
II Definitions.......................................... 3
III Eligibility.......................................... 5
IV Deferral of Compensation............................. 5
V Deferral Account and Crediting....................... 5
VI Distributions........................................ 6
VII Hardship Distributions............................... 7
VIII Beneficiary.......................................... 7
IX Administration of the Plan........................... 8
X Claims Procedure..................................... 9
XI Amendment and Termination............................ 10
XII Miscellaneous........................................ 11
</TABLE>
2
Exhibit 10.3
<PAGE>
ARTICLE I
TITLE AND EFFECTIVE DATE
------------------------
1.01 TITLE This Plan shall be known as the Zero Corporation Directors'
-----
Deferred Compensation Plan.
1.02 EFFECTIVE DATE The effective date of this Plan shall be
--------------
January 1, 1994.
ARTICLE II
DEFINITIONS
-----------
2.01 BENEFICIARY shall mean the person or persons, trust or the estate of
-----------
a Participant entitled to receive any benefits under the Plan, as indicated by
the Participant on the Beneficiary Designation Form.
2.02 BOARD shall mean the Board of Directors of Zero Corporation.
-----
2.03 BOOKKEEPING ACCOUNT means the bookkeeping record established for each
-------------------
Participant who elects to defer compensation under the Plan.
2.04 CHANGE IN CONTROL shall mean the date upon which the first of the
-----------------
following events occurs:
(a) Consummation of (i) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or
pursuant to which shares of the Company's common stock would be converted
into cash, securities or other property, other than a merger of the Company
in which the holders of the Company's common stock immediately prior to the
merger have substantially the same proportionate ownership of common stock
of the surviving corporation immediately after the merger, or (ii) any
sale, lease, exchange or other transfer (in one transaction or a series of
transactions) of all, or more than fifty percent (50%), of the assets of
the Company;
(b) The stockholders of the Company approve a plan or proposal for
the liquidation or dissolution of the Company; or
(c) Any "person" (as such term is used in Sections 13 and 14(d)(2) of
the Securities Exchange Act of 1934) other than a person owned by or
directly or indirectly managed by the Company, shall become the beneficial
owner, directly or indirectly, of twenty-five percent (25%) or more of the
common stock of the Company.
3
Exhibit 10.3
<PAGE>
2.05 COMMITTEE means the Employee Benefits Committee appointed by the
---------
Board to administer the Plan pursuant to Article IX hereof.
2.06 COMPANY shall mean Zero Corporation.
-------
2.07 DISABILITY shall be deemed to occur if a Participant cannot engage in
----------
any substantial, gainful activity because of a physical or mental impairment (as
verified to the Committee's satisfaction) likely to result in death or to be of
a continuous period of not less than twelve (12) months.
2.08 ELECTION DATE is the date established by the Plan as the date before
-------------
which an Eligible Director must submit a valid Election Form to the Named
Fiduciary. The applicable Election Dates are as follows: (a) January 1 of any
Plan Year, or (b) thirty (30) days after a newly Eligible Director is first
notified of his or her right to participate in the Plan.
2.09 ELECTION FORM means the written form which is submitted to the
-------------
Named Fiduciary before the relevant Election Date which indicates whether the
Eligible Director wishes to defer a portion of his or her compensation, and the
portion of such compensation to be deferred. No Election Form shall be
effective until received, acknowledged, and executed by the Company. Each
Election Form is, with respect to the applicable Eligible Director, incorporated
herein by reference and made an integral part of the Plan.
2.10 ELIGIBLE DIRECTOR shall mean each member of the Company's Board of
-----------------
Directors who is not an employee of the Company.
2.11 MOODY'S SEASONED CORPORATE BOND RATE, sometimes referred to as
------------------------------------
"Moody's", means the Moody's Corporate Bond Yield Average as published by
Moody's Investors Service, Inc. (or any successor thereto).
2.12 NAMED FIDUCIARY shall mean the Corporate Secretary of the Company.
---------------
2.13 PARTICIPANT means an Eligible Director (including such Director's
-----------
estate and/or Beneficiary(ies)) who has deferred a portion of Plan Compensation
pursuant to the terms of the Plan, and whose Bookkeeping Account has not yet
been distributed in full.
2.14 PLAN COMPENSATION shall mean all or any portion of compensation
-----------------
earned for services as a Director, including retainer payments and meeting and
other fees.
2.15 PLAN YEAR is the period from the Effective Date through December 31,
---------
1994 and each successive twelve (12) calendar month period thereafter.
4
Exhibit 10.3
<PAGE>
2.16 SEPARATION FROM SERVICE means the retirement from the Company's
-----------------------
Board of Directors.
ARTICLE III
ELIGIBILITY
-----------
3.01 Only Eligible Directors may participate in the Plan. As a condition
to becoming a Participant hereunder, however, an Eligible Director must complete
and return to the Named Fiduciary a duly executed Election Form prior to the
applicable Election Date. Election Forms remain in effect for the Plan Year to
which they apply. A Participant must file a new Election Form for any
subsequent Plan Year.
ARTICLE IV
DEFERRAL OF COMPENSATION
------------------------
4.01 Each Participant in the Plan may irrevocably elect to have all or a
portion of his or her Plan Compensation during a Plan Year following the
applicable Election Date deferred and credited to the Participant's
Bookkeeping Account in accordance with the terms and conditions hereof. The
amount of such Plan Compensation to be so deferred under this paragraph 4.01 for
a Plan Year shall be any whole number or percentage as the Participant
shall select on his or her Election Form; provided, that such amount for any
Plan Year shall not be less than Five Thousand ($5,000) Dollars.
4.02 An Eligible Director desiring to participate in the Plan must submit
his or her written Election Form to the Named Fiduciary before the applicable
Election Date. Valid Election Forms filed by the applicable Election Date
shall cause Plan Compensation to be deferred for the Plan Year (or portion
thereof in the case of Participants for whom paragraph 2.08(b) of Article II is
the applicable Election Date) for which such Election is made.
4.03 A Participant who has not submitted to or does not have on file a
valid Election Form with the Named Fiduciary before the applicable Election Date
may not defer any Plan Compensation for the applicable Plan Year.
ARTICLE V
DEFERRAL ACCOUNT AND CREDITING
------------------------------
5.01 Plan Compensation deferred by a Participant under a written Election
Form shall be credited in a dollar amount to a separate Bookkeeping Account for
each Participant as of the date on which such Plan Compensation would otherwise
be payable to the Participant.
5
Exhibit 10.3
<PAGE>
5.02 The deferrals credited to the Participant's Bookkeeping Account shall
also be credited earnings on a quarterly basis equal to the Moody's Seasoned
Corporate Bond Rate for the last month of each quarter on which earnings are
applied plus three percent (3%) until such account value is distributed pursuant
to Article VI hereof. Plan Compensation deferred shall be deemed to be invested
and accruing earnings starting on the date the amounts deferred are credited to
the Bookkeeping Account.
5.03 The Participant shall at all times have a nonforfeitable right to the
value of his or her Bookkeeping Account attributable to his or her own deferrals
under paragraph 4.01 of Article IV hereof plus interest credited thereon, with
no right of offset by the Company.
ARTICLE VI
DISTRIBUTIONS
-------------
6.01 At the time of electing deferrals for each Plan Year, a Participant
shall specify the amount to be deferred, and any other matter required to be
specified by the Company on its Election Form. In addition, in his or her
initial deferral election, Participant shall specify the payment method and
commencement date (relative to the date of Separation from Service) which shall
apply to all amounts deferred in the initial year and in all subsequent years.
A separate designation of payment commencement time and method of distribution
shall be made depending upon whether a Participant's Separation from Service
occurs on or after attaining age 60 or before attaining age 60. The period of
deferral shall end, and distribution of the value of a Participant's Bookkeeping
Account shall begin on the date specified in the Participant's initial deferral
election. The Participant may elect to receive distributions in substantially
equal installments over a five (5) or ten (10) year period or in a lump sum, or
in such other payment form as offered by the Company. In the case of any
payment deferred beyond Separation from Service, interest at the rate specified
in paragraph 5.02 of Article V shall be credited on all amounts remaining in the
Bookkeeping Account of the Participant from which the payments are to be made.
Notwithstanding the foregoing, a Participant may, after the initial deferral
election, modify any election with respect to either time of payment
commencement or the method of distribution without penalty so long as such
change is made at least one (1) year before the commencement date previously
elected; provided, however, the Named Fiduciary must make a determination that
such subsequent modification in election would not have a detrimental effect on
the tax consequences of benefits deferred hereunder or such subsequent
modification will be disregarded.
6
Exhibit 10.3
<PAGE>
6.02 In the event of a Participant's death before the payments have
commenced hereunder, the Participant's Bookkeeping Account shall be distributed
as soon as practicable after his or her death to his or her Beneficiary(ies)
designated in accordance with Article VIII hereof in the manner selected on the
Participant's initial Election Form. In the event of a Participant's death after
payments have commenced, any remaining amounts in the Participant's Bookkeeping
Account shall be distributed to the Participant's Beneficiary(ies) in the same
manner of distribution as was being followed at the time of his or her death.
6.03 Notwithstanding paragraphs 6.01 and 6.02 hereof, if the total amount
in a Participant's Bookkeeping Account is Fifty Thousand ($50,000) Dollars or
less, such Bookkeeping Account shall be distributed to him or her in full within
thirty (30) days after Separation from Service or upon the occurrence of a
Disability or shall be distributed in full to his or her Beneficiary upon his or
her death. In the event that either the Named Fiduciary or the Committee
determines, in their sole discretion, that a Change in Control is likely, the
Company will, effective automatically and concurrently with the Change in
Control, deposit in one or more grantor trusts (within the meaning of Section
671 of the Internal Revenue Code of 1986) funds in an amount sufficient to pay
Participant that amount which is the value of his or her Bookkeeping Account.
6.04 All distributions of a Participant's Bookkeeping Account hereunder
shall be made in cash payments only and shall commence not later than January 1
of the first year following the Director's Separation from Service.
6.05 The Company shall have the right to deduct from all payments any
federal, state, local or foreign taxes or other charges required by law to be
withheld or elected by the Participant to be withheld with respect to such
payments.
6.06 Notwithstanding any provision hereunder to the contrary, a
Participant may take a distribution of all or a portion of his or her
Bookkeeping Account in a manner inconsistent with his or her deferral election
even though the Participant is not then suffering a financial hardship, as
defined in paragraph 7.01 of Article VII hereof, provided that the distribution
is reduced by ten percent (10%), to be adjusted upward or downward as required
by law. The ten percent (10%) reduction shall be forfeited to the
Company.
7
Exhibit 10.3
<PAGE>
ARTICLE VII
HARDSHIP DISTRIBUTIONS
----------------------
7.01 At the request of a Participant before complete distribution
of his or her Bookkeeping Account, the Committee may, in its sole discretion,
accelerate and pay all or part of the value of a Participant's Bookkeeping
Account due under the Plan. Accelerated distributions at the request of the
Participant or a Participant's Beneficiary may be allowed only in the event of a
financial emergency beyond the Participant's or Beneficiary's control due to
unforeseeable circumstances and only if disallowance of a distribution would
create a severe hardship for the Participant or Beneficiary. An accelerated
distribution must be limited to only that amount necessary to relieve the
financial emergency.
ARTICLE VIII
BENEFICIARY
-----------
8.01 A Participant shall, by completing the Beneficiary Designation Form,
designate one or more Beneficiaries to receive benefits under the Plan payable
in the event of his or her death before complete distribution of his or her
Bookkeeping Account. If more than one Beneficiary is named, the share and/or
precedence of each Beneficiary shall be indicated. A Participant shall have the
right to change the Beneficiary by notifying the Named Fiduciary in the
appropriate spaces of a revised Beneficiary Designation Form. However, no
designation or change in designation of Beneficiary shall be effective until
received, accepted and acknowledged by the Company.
8.02 The Committee shall be entitled to rely on the last Beneficiary
Designation Form filed by the Participant and accepted by the Committee prior to
his or her death. If the Committee has any doubt as to the proper Beneficiary
to receive payments hereunder, the Committee shall have the right to direct the
Company to withhold such payments until the matter is finally adjudicated.
However, any payment made by the Company, in good faith and in accordance with
the Plan and the directions of the Committee, shall fully discharge the Company
and the Committee from all further obligations with respect to that payment.
8.03 In making any payments to or for the benefit of any minor or
incompetent Beneficiary, the Committee, in its sole and absolute discretion, may
direct the Company to make a distribution to a legal or natural guardian or
other relative of a minor or court appointed committee of such incompetent.
Alternatively, the Committee may direct the Company to make a payment to any
adult with whom the minor or incompetent temporarily or permanently resides.
The receipt by a guardian, committee, relative or other
8
Exhibit 10.3
<PAGE>
person shall be a complete discharge to the Company and the Committee. Neither
the Committee nor the Company shall have any responsibility to see to the proper
application of any payments so made.
ARTICLE IX
ADMINISTRATION OF THE PLAN
--------------------------
9.01 The Plan shall be administered by the Employee Benefits Committee as
constituted and approved from time to time by the Board. Such persons shall
serve at the pleasure of the Board. Participants in this Plan may serve as
members of the Committee. All resolutions or other actions taken by the
Committee shall be by vote of a majority of those present at a meeting at which
a majority of the members are present, or in writing by a majority of all the
members at the time in office if they act without a meeting.
9.02 Subject to the terms of the Plan, the Committee shall, from time to
time, establish rules, forms and procedures for the administration of the Plan.
Except as herein otherwise expressly provided, the Committee shall have the
exclusive right to interpret the Plan and to make, amend, interpret and enforce
all rules adopted in connection with the Plan and to decide any and all matters
arising hereunder or in connection with the administration of the Plan, and it
shall endeavor to act, whether by general rules or by particular decisions, so
as not to discriminate in favor of or against any person. The decisions, actions
and records of the Committee shall be conclusive and binding upon the Company
and all persons having or claiming to have any right or interest in or under the
Plan.
9.03 In the administration of the Plan, the Committee may, from time to
time, employ agents and delegate to them such administrative duties as it deems
appropriate and may, from time to time, consult with counsel who may be counsel
to the Company.
9.04 The members of the Committee and the officers and Directors of the
Company shall be entitled to rely on all certificates and reports made by any
duly appointed accountants, and on all opinions given by any duly appointed
legal counsel, which legal counsel may be counsel for the Company.
9.05 To enable the Committee to perform its functions, the Company shall
supply full and timely information to the Committee on all matters relating to
the compensation of Participants and the date and circumstances of the
Separation from Service or death or Disability of a Participant and such other
pertinent information as the Committee may reasonably require.
9
Exhibit 10.3
<PAGE>
9.06 The Company shall indemnify and save harmless each member of the
Committee against any and all expenses and liabilities arising out of his or her
membership on the Committee. Expenses against which a member of the Committee
shall be indemnified hereunder shall include, without limitation, the amount of
any settlement or judgment, costs, counsel fees, and related charges reasonably
incurred in connection with a claim asserted, or a proceeding brought or
settlement thereof. The foregoing right of indemnification shall be in addition
to any other rights to which any such member of the Committee may be entitled as
a matter of law.
ARTICLE X
CLAIMS PROCEDURE
----------------
10.01 Benefits shall be paid in accordance with the provisions of this
instrument. The Participant, or a Beneficiary or any other person claiming
through the Participant, shall make a written request for benefits under this
Plan. This written claim shall be mailed or delivered to the Named Fiduciary who
shall review such claim.
10.02 If the claim is denied, in full or in part, the Named Fiduciary
shall provide a written notice within forty-five (45) days setting forth the
specific reasons for denial, and any additional material or information
necessary to perfect the claim, and an explanation of why such material or
information is necessary, and appropriate information and explanation of the
steps to be taken if a review of the denial is desired.
10.03 If the claim is denied and a review by the full Committee is
desired, the Participant (or Beneficiary) shall notify the Named Fiduciary in
writing within thirty (30) days (a claim shall be deemed denied if the Named
Fiduciary does not take any action within the aforesaid forty-five (45) day
period) after receipt of the written notice of denial. In requesting a review,
the Participant or his or her Beneficiary may request a review of the Plan
document or other pertinent documents, may submit any written issues and
comments, and may request that a hearing be held, but the decision to hold a
hearing shall be within the sole discretion of the Committee.
10.04 The decision on the review of the denied claim shall be rendered by
the Committee within thirty (30) days after the receipt of the request for
review (if a hearing is not held) or within sixty (60) days after the hearing if
one is held. The decision shall be written and shall state the specific reasons
for the decision including reference to specific provisions of the Plan on which
the decision is based.
10
Exhibit 10.3
<PAGE>
10.05 If, after the review process, a claimant seeks further redress,
the subject of the dispute shall be submitted to arbitration in Los Angeles,
California, in accordance with the Commercial Rules of the American Arbitration
Association then in effect, which arbitration shall be the exclusive remedy of
the parties hereto. The resulting arbitration award shall be deemed a final
order of a court having jurisdiction over the subject matter and shall not be
appealable. All fees and expenses connected with the arbitration proceeding,
other than counsel fees incurred by either party, if any, shall be shared
equally by both parties.
ARTICLE XI
AMENDMENT AND TERMINATION
-------------------------
11.01 The Company, by action of the Board, may amend or modify this
Plan from time to time or may terminate the Plan if it deems appropriate;
provided that no such amendment, modification or termination shall in any
way reduce the vested portion of affected Participants' (or Beneficiaries')
Bookkeeping Accounts measured as of the date the amendment, modification or
termination is made, or, if later, the effective date of such actions; and,
provided further, no amendment or modification which would reduce the interest
rate below Moody's as set forth in paragraph 5.02 of Article V hereof, or which
would assess costs or fees to Participants, may be made without the unanimous
consent of all Participants in the Plan.
ARTICLE XII
MISCELLANEOUS
-------------
12.01 The Company's obligation under the Plan shall in every case be
an unfunded and unsecured promise to pay. Participants' rights as to benefits
hereunder shall be no greater than that of general, unsecured creditors of the
Company. The Company may establish one or more grantor trusts as described in
Section 671 of the Internal Revenue Code of 1986, although the Company shall not
be obligated under any circumstances to fund its financial obligations under the
Plan. Any assets which the Company may acquire or set aside to help cover its
financial liabilities are and must remain general assets of the Company and such
assets as well as any assets set aside in any grantor trust shall be subject to
the claims of its general creditors. Neither the Company nor the Plan gives the
Participant any beneficial ownership interest in any asset of the Company. All
rights of ownership in any such assets are and remain in the Company.
12.02 Except insofar as permitted by applicable law, no sale, transfer,
alienation, assignment, pledge, collateralization or attachment of any benefits
under the Plan shall be valid or recognized by the Company. Neither the
Participant, his or her
11
Exhibit 10.3
<PAGE>
spouse, or designated Beneficiary shall have any power to hypothecate, mortgage,
commute, modify or otherwise encumber in advance of any of the benefits payable
hereunder, nor shall any of said benefits be subject to seizure for the payment
of any debts, judgments, alimony maintenance, owed by the Participant or his
Beneficiary, or be transferable by operation of law in the event of bankruptcy,
insolvency, or otherwise. Notwithstanding the foregoing, the Company may, if the
Committee so determines in its sole discretion, follow the terms of any court
order issued in connection with any domestic relations proceeding including but
not limited to marital dissolution or child support.
12.03 The Plan shall be binding upon the Company, its assigns, and any
successor company which shall succeed to substantially all of its assets and
business through merger, acquisition or consolidation, and upon a Director, his
or her Beneficiary, assigns, heirs, executors and administrators.
12.04 The terms and conditions of the Plan shall not be deemed to
constitute a contract of employment between the Company and a Director. Nothing
in this Plan shall of itself be deemed to give a Director the right to be
retained in the service of the Company or to interfere with any right of the
Company to discipline or discharge the Director at any time.
12.05 A Director will cooperate with the Company by furnishing any and all
information reasonably requested by the Company and take such other actions as
may be requested in order to facilitate the administration of the Plan and the
payment of benefits hereunder.
12.06 In case any provisions of this Plan shall be found illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but the Plan shall be construed and enforced as if such
illegal and invalid provision had never been included herein.
12.07 Any notice which shall be or may be given under the Plan or an
Election Form shall be in writing and shall be mailed by United States mail,
postage prepaid. If notice is to be given to the Company, such notice shall be
addressed to the Company at 444 South Flower Street, Suite 2100, Los Angeles,
California 90071-2922, marked for the attention of the Corporate Secretary of
the Company or, if notice to a Director, addressed to the address shown on such
Director's Election Form or the last known address on the Company's personnel
records. Any notice or filing required or permitted to be given to a
Participant under this Plan shall be sufficient if in writing and sent by
facsimile, hand delivered, or sent by mail, to the last known address of the
Participant. Any party may, from time to time, change the address to which
notices shall be mailed by giving written notice of such new address.
12
Exhibit 10.3
<PAGE>
12.08 The interest in the benefits hereunder of a spouse of a Participant
who has predeceased the Participant shall automatically pass to the Participant
and shall not be transferable by such spouse in any manner, including but not
limited to such spouse's will, nor shall such interest pass under the laws of
intestate succession.
12.09 If, for any reason, all or any portion of a Participant's benefit
under this Plan becomes taxable to the Participant prior to receipt, a
Participant may petition the Committee for a distribution of funds sufficient to
meet the Participant's tax liability (including additions to tax, penalties and
interest). Upon the grant of such a petition, which grant shall not be
unreasonably withheld, the Company shall distribute to the Participant
immediately available funds in an amount equal to that Participant's federal,
state and local tax liability associated with such taxation, which liability
shall be measured by using that Participant's then current highest federal,
state and local marginal tax rate, plus the rates or amounts for the applicable
additions to tax, penalties and interest. This distribution shall include an
additional amount to "gross up" the tax liability distribution to include all
applicable taxes on the tax liability distribution and the grossed up amount. If
the petition is granted, the tax liability distribution (including gross-up)
shall be made within ninety (90) days of the date when the Participant's
petition is granted. Such a distribution shall affect and reduce the benefits to
be paid under Articles VI or VII hereof.
12.10 The benefits provided for a Participant and Participant's
Beneficiary under the Plan are in addition to any other benefits available to
such Participant under any other plan or program for employees of the Company.
The Plan shall supplement and shall not supersede, modify or amend any other
such plan or program except as may otherwise be expressly provided.
12.11 The payment of benefits under the Plan to a Participant or
Beneficiary shall fully and completely discharge the Company and the Committee
from all further obligations under this Plan with respect to a Participant, and
that Participant's Election Form shall terminate upon such full payment of
benefits.
12.12 Without limiting the provisions of paragraph 9.06 of Article IX
above, if any action at law or in equity is necessary by a Participant or
Beneficiary to enforce the terms of the Plan, the Participant or Beneficiary
shall be entitled to recover reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which that party may be
entitled.
13
Exhibit 10.3
<PAGE>
12.13 Titles and headings of the Articles of the Plan are included for
ease of reference only and are not to be used for the purpose of construing
any portion or provision of the Plan document.
12.14 To the extent not preempted by Federal law, this Plan shall be
governed by and construed pursuant to the laws of the State of California.
12.15 Any Election Form may be executed in one or more counterparts, each
of which is legally binding and enforceable.
AS ADOPTED BY THE BOARD OF DIRECTORS
OF ZERO CORPORATION
OCTOBER 20, 1993
14
Exhibit 10.3
<PAGE>
ZERO CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
AS ADOPTED OCTOBER 20, 1993
PURPOSE
The purpose of the Zero Corporation Executive Deferred Compensation Plan is
to provide the opportunity to defer the receipt of compensation to a select
group of management employees upon whose judgment, initiative and efforts the
continued success of Zero Corporation and its divisions and subsidiaries is
dependent.
Exhibit 10.4
<PAGE>
ZERO CORPORATION
----------------
EXECUTIVE DEFERRED COMPENSATION PLAN
------------------------------------
AS ADOPTED OCTOBER 20, 1993
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE Page
- - ------- -----
<S> <C>
I Title and Effective Date......................... 3
II Definitions...................................... 3
III Eligibility...................................... 5
IV Deferral of Compensation......................... 5
V Deferral Account and Crediting................... 5
VI Distributions.................................... 6
VII Hardship Distributions........................... 8
VIII Beneficiary...................................... 8
IX Administration of the Plan....................... 9
X Claims Procedure................................. 10
XI Amendment and Termination........................ 11
XII Miscellaneous.................................... 11
</TABLE>
2
Exhibit 10.4
<PAGE>
ARTICLE I
TITLE AND EFFECTIVE DATE
------------------------
1.01 TITLE This Plan shall be known as the Zero Corporation Executive
-----
Deferred Compensation Plan.
1.02 EFFECTIVE DATE The effective date of this Plan shall be
--------------
January 1, 1994.
ARTICLE II
DEFINITIONS
-----------
2.01 BENEFICIARY shall mean the person or persons, trust or the estate of
-----------
a Participant entitled to receive any benefits under the Plan, as indicated by
the Participant on the Beneficiary Designation Form.
2.02 BOARD shall mean the Board of Directors of Zero Corporation.
-----
2.03 BOOKKEEPING ACCOUNT means the bookkeeping record established for
-------------------
each Participant who elects to defer compensation under the Plan.
2.04 CHANGE IN CONTROL shall mean the date upon which the first of the
-----------------
following events occurs:
(a) Consummation of (i) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or
pursuant to which shares of the Company's common stock would be converted
into cash, securities or other property, other than a merger of the Company
in which the holders of the Company's common stock immediately prior to the
merger have substantially the same proportionate ownership of common stock
of the surviving corporation immediately after the merger, or (ii) any
sale, lease, exchange or other transfer (in one transaction or a series of
transactions) of all, or more than fifty percent (50%), of the assets of
the Company;
(b) The stockholders of the Company approve a plan or proposal for
the liquidation or dissolution of the Company; or
(c) Any "person" (as such term is used in Sections 13 and 14(d)(2) of
the Securities Exchange Act of 1934) other than a person owned by or
directly or indirectly managed by the Company, shall become the beneficial
owner, directly or indirectly, of twenty-five percent (25%) or more of the
common stock of the Company.
3
Exhibit 10.4
<PAGE>
2.05 COMMITTEE means the Employee Benefits Committee appointed by the
---------
Board to administer the Plan pursuant to Article IX hereof.
2.06 COMPANY shall mean Zero Corporation.
-------
2.07 DISABILITY shall be deemed to occur if a Participant cannot engage in
----------
any substantial, gainful activity because of a physical or mental impairment (as
verified to the Committee's satisfaction) likely to result in death or to be of
a continuous period of not less than twelve (12) months.
2.08 ELECTION DATE is the date established by the Plan as the date before
-------------
which an Executive must submit a valid Election Form to the Named Fiduciary.
The applicable Election Dates are as follows: (a) January 1 of any Plan Year, or
(b) thirty (30) days after a newly eligible Executive is first notified of his
or her right to participate in the Plan.
2.09 ELECTION FORM means the written form which is submitted to the
-------------
Named Fiduciary before the relevant Election Date which indicates whether the
Executive wishes to defer a portion of his or her compensation, and the portion
of such compensation to be deferred. No Election Form shall be effective until
received, acknowledged, and executed by the Company. Each Election Form is,
with respect to the applicable Executive, incorporated herein by reference and
made an integral part of the Plan.
2.10 EXECUTIVE shall mean each of the key employees designated by the
---------
Board to include generally corporate officers, division and subsidiary
presidents and general managers and any other person designated by the Board to
participate in the Plan.
2.11 MOODY'S SEASONED CORPORATE BOND RATE, sometimes referred to as
------------------------------------
"Moody's", means the Moody's Corporate Bond Yield Average as published by
Moody's Investors Service, Inc. (or any successor thereto).
2.12 NAMED FIDUCIARY shall mean the Corporate Secretary of the Company.
---------------
2.13 PARTICIPANT means an Executive (including such Executive's estate
-----------
and/or Beneficiary(ies)) who has deferred a portion of Plan Compensation
pursuant to the terms of the Plan, and whose Bookkeeping Account has not yet
been distributed in full.
2.14 PLAN COMPENSATION shall mean the Participant's annual salary and/or
-----------------
bonus.
2.15 PLAN YEAR is the period from the Effective Date through December 31,
---------
1994 and each successive twelve (12) calendar month period thereafter.
4
Exhibit 10.4
<PAGE>
2.16 SEPARATION FROM SERVICE means the termination of the Participant's
-----------------------
employment as a regular employee of the Company.
ARTICLE III
ELIGIBILITY
-----------
3.01 Only Executives may participate in the Plan. As a condition to
becoming a Participant hereunder, however, an Executive must complete and return
to the Named Fiduciary a duly executed Election Form prior to the applicable
Election Date. Election Forms remain in effect for the Plan Year to which they
apply. A Participant must file a new Election Form for any subsequent Plan
Year.
ARTICLE IV
DEFERRAL OF COMPENSATION
------------------------
4.01 Each Participant in the Plan may irrevocably elect to have all or a
portion of his or her Plan Compensation during a Plan Year following the
applicable Election Date deferred and credited to the Participant's Bookkeeping
Account in accordance with the terms and conditions hereof. The amount of such
Plan Compensation to be so deferred under this paragraph 4.01 for a Plan Year
shall be any whole number or percentage as the Participant shall select
on his or her Election Form; provided, that such amount for any Plan Year shall
not be less than Five Thousand ($5,000) Dollars.
4.02 An Executive desiring to participate in the Plan must submit his or
her written Election Form to the Named Fiduciary before the applicable Election
Date. Valid Election Forms filed by the applicable Election Date shall cause
Plan Compensation to be deferred for the Plan Year (or portion thereof in the
case of Participants for whom paragraph 2.08(b) of Article II is the applicable
Election Date) for which such Election is made.
4.03 A Participant who has not submitted to or does not have on file a
valid Election Form with the Named Fiduciary before the applicable Election Date
may not defer any Plan Compensation for the applicable Plan Year.
ARTICLE V
DEFERRAL ACCOUNT AND CREDITING
------------------------------
5.01 Plan Compensation deferred by a Participant under a written Election
Form shall be credited in a dollar amount to a separate Bookkeeping Account for
each Participant as of the date on which such Plan Compensation would otherwise
be payable to the Participant.
5.02 The deferrals credited to the Participant's Bookkeeping Account shall
also be credited earnings on a quarterly basis equal to the Moody's Seasoned
Corporate Bond Rate for the last month of
5
Exhibit 10.4
<PAGE>
each quarter on which earnings are applied plus three percent (3%) until such
account value is distributed pursuant to Article VI hereof. Plan Compensation
deferred shall be deemed to be invested and accruing earnings starting on the
date the amounts deferred are credited to the Bookkeeping Account.
5.03 The Participant shall at all times have a nonforfeitable right to the
value of his or her Bookkeeping Account attributable to his or her own deferrals
under paragraph 4.01 of Article IV hereof plus interest credited thereon, with
no right of offset by the Company.
ARTICLE VI
DISTRIBUTIONS
-------------
6.01 At the time of electing deferrals for each Plan Year, a Participant
shall specify the amount to be deferred, and any other matter required to be
specified by the Company on its Election Form. In addition, in his or her
initial deferral election, Participant shall specify the payment method and
commencement date (relative to the date of Separation from Service) which shall
apply to all amounts deferred in the initial year and in all subsequent years.
A separate designation of payment commencement time and method of distribution
shall be made depending upon whether a Participant's Separation from Service
occurs on or after attaining age 60 or before attaining age 60. The period of
deferral shall end, and distribution of the value of a Participant's Bookkeeping
Account shall begin on the date specified in the Participant's initial deferral
election. The Participant may elect to receive distributions in substantially
equal installments over a five (5) or ten (10) year period or in a lump sum, or
in such other payment form as offered by the Company. In the case of any
payment deferred beyond Separation from Service, interest at the rate specified
in paragraph 5.02 of Article V shall be credited on all amounts remaining in the
Bookkeeping Account of the Participant from which the payments are to be made.
Notwithstanding the foregoing, a Participant may, after the initial deferral
election, modify any election with respect to either time of payment
commencement or the method of distribution without penalty so long as such
change is made at least one (1) year before the payment commencement date
previously elected; provided, however, the Named Fiduciary must make a
determination that such subsequent modification in election would not have a
detrimental effect on the tax consequences of benefits deferred hereunder or
such subsequent modification will be disregarded.
6.02 In the event of a Participant's death before the payments have
commenced hereunder, the Participant's Bookkeeping Account shall be distributed
as soon as practicable after his or her death to his or her Beneficiary(ies)
designated in accordance with Article VIII hereof in the manner selected on the
Participant's Election Form. In the event of a
6
Exhibit 10.4
<PAGE>
Participant's death after payments have commenced, any remaining amounts in the
Participant's Bookkeeping Account shall be distributed to the Participant's
Beneficiary(ies) in the same manner of distribution as was being followed at the
time of his or her death.
6.03 Notwithstanding paragraphs 6.01 and 6.02 hereof, if the total amount
in a Participant's Bookkeeping Account is Fifty Thousand ($50,000) Dollars or
less, such Bookkeeping Account shall be distributed to him or her in full within
thirty (30) days after Separation from Service or upon the occurrence of a
Disability or shall be distributed in full to his or her Beneficiary upon his or
her death. In the event that either the Named Fiduciary or the Committee
determines, in their full discretion, that a Change in Control is likely, the
Company will, effective automatically and concurrently with the Change in
Control, deposit in one or more grantor trusts (within the meaning of Section
671 of the Internal Revenue Code of 1986) funds in an amount sufficient to pay
Participant that amount which is the value of his or her Bookkeeping Account.
6.04 All distributions of a Participant's Bookkeeping Account hereunder
shall be made in cash payments only and shall commence not later than January 1
of the first year following the Executive's attainment of age 65; provided,
--------
however, notwithstanding the foregoing, any Participant who as of January 1,
- - -------
1994 had more than twenty (20) years of service with the Company must commence
distribution not later than the January 1 following the year in which he or she
attains age 65 or has a Separation from Service, whichever is later.
6.05 The Company shall have the right to deduct from all payments any
federal, state, local or foreign taxes or other charges required by law to be
withheld or elected by the Participant to be withheld with respect to such
payments.
6.06 Notwithstanding any provision hereunder to the contrary, a
Participant may take a distribution of all or a portion of his or her
Bookkeeping Account in a manner inconsistent with his or her deferral election
even though the Participant is not then suffering a financial hardship, as
defined in paragraph 7.01 of Article VII hereof, provided that the distribution
is reduced by ten percent (10%), to be adjusted upward or downward as required
by law. The ten percent (10%) reduction shall be forfeited to the
Company.
ARTICLE VII
HARDSHIP DISTRIBUTIONS
----------------------
7.01 At the request of a Participant before complete distribution of his or
her Bookkeeping Account, the Committee may, in its sole discretion, accelerate
and pay all or part of the value of a Participant's Bookkeeping Account due
under the Plan. Accelerated distributions at the request of the Participant or a
Participant's Beneficiary may be allowed only in the event of a financial
emergency beyond the Participant's or Beneficiary's
7
Exhibit 10.4
<PAGE>
control due to unforeseeable circumstances and only if disallowance of a
distribution would create a severe hardship for the Participant or Beneficiary.
An accelerated distribution must be limited to only that amount necessary to
relieve the financial emergency.
ARTICLE VIII
BENEFICIARY
-----------
8.01 A Participant shall, by completing the Beneficiary Designation
Form, designate one or more Beneficiaries to receive benefits under the Plan
payable in the event of his or her death before complete distribution of his or
her Bookkeeping Account. If more than one Beneficiary is named, the share
and/or precedence of each Beneficiary shall be indicated. A Participant shall
have the right to change the Beneficiary by notifying the Named Fiduciary in the
appropriate spaces of a revised Beneficiary Designation Form. However, no
designation or change in designation of Beneficiary shall be effective until
received, accepted and acknowledged by the Company.
8.02 The Committee shall be entitled to rely on the last Beneficiary
Designation Form filed by the Participant and accepted by the Committee prior to
his or her death. If the Committee has any doubt as to the proper Beneficiary
to receive payments hereunder, the Committee shall have the right to direct the
Company to withhold such payments until the matter is finally adjudicated.
However, any payment made by the Company, in good faith and in accordance with
the Plan and the directions of the Committee, shall fully discharge the Company
and the Committee from all further obligations with respect to that payment.
8.03 In making any payments to or for the benefit of any minor or
incompetent Beneficiary, the Committee, in its sole and absolute discretion, may
direct the Company to make a distribution to a legal or natural guardian or
other relative of a minor or court appointed committee of such incompetent.
Alternatively, the Committee may direct the Company to make a payment to any
adult with whom the minor or incompetent temporarily or permanently resides.
The receipt by a guardian, committee, relative or other person shall be a
complete discharge to the Company and the Committee. Neither the Committee nor
the Company shall have any responsibility to see to the proper application of
any payments so made.
ARTICLE IX
ADMINISTRATION OF THE PLAN
--------------------------
9.01 The Plan shall be administered by the Employee Benefits
Committee as constituted and approved from time to time by the Board. Such
persons shall serve at the pleasure of the Board. Participants in this Plan may
serve as members of the Committee.
8
Exhibit 10.4
<PAGE>
All resolutions or other actions taken by the Committee shall be by vote of a
majority of those present at a meeting at which a majority of the members are
present, or in writing by a majority of all the members at the time in office if
they act without a meeting.
9.02 Subject to the terms of the Plan, the Committee shall, from time
to time, establish rules, forms and procedures for the administration of the
Plan. Except as herein otherwise expressly provided, the Committee shall have
the exclusive right to interpret the Plan and to make, amend, interpret and
enforce all rules adopted in connection with the Plan and to decide any and all
matters arising hereunder or in connection with the administration of the Plan,
and it shall endeavor to act, whether by general rules or by particular
decisions, so as not to discriminate in favor of or against any person. The
decisions, actions and records of the Committee shall be conclusive and binding
upon the Company and all persons having or claiming to have any right or
interest in or under the Plan.
9.03 In the administration of the Plan, the Committee may, from time
to time, employ agents and delegate to them such administrative duties as it
deems appropriate and may, from time to time, consult with counsel who may be
counsel to the Company.
9.04 The members of the Committee and the officers and directors of
the Company shall be entitled to rely on all certificates and reports made by
any duly appointed accountants, and on all opinions given by any duly appointed
legal counsel, which legal counsel may be counsel for the Company.
9.05 To enable the Committee to perform its functions, the Company
shall supply full and timely information to the Committee on all matters
relating to the compensation of Participants and the date and circumstances of
the Separation from Service or death or Disability of a Participant and such
other pertinent information as the Committee may reasonably require.
9.06 The Company shall indemnify and save harmless each member of the
Committee against any and all expenses and liabilities arising out of his or her
membership on the Committee. Expenses against which a member of the Committee
shall be indemnified hereunder shall include, without limitation, the amount of
any settlement or judgment, costs, counsel fees, and related charges reasonably
incurred in connection with a claim asserted, or a proceeding brought or
settlement thereof. The foregoing right of indemnification shall be in addition
to any other rights to which any such member of the Committee may be entitled as
a matter of law.
9
Exhibit 10.4
<PAGE>
ARTICLE X
CLAIMS PROCEDURE
----------------
10.01 Benefits shall be paid in accordance with the provisions of
this instrument. The Participant, or a Beneficiary or any other person claiming
through the Participant, shall make a written request for benefits under this
Plan. This written claim shall be mailed or delivered to the Named Fiduciary
who shall review such claim.
10.02 If the claim is denied, in full or in part, the Named Fiduciary
shall provide a written notice within forty-five (45) days setting forth the
specific reasons for denial, and any additional material or information
necessary to perfect the claim, and an explanation of why such material or
information is necessary, and appropriate information and explanation of the
steps to be taken if a review of the denial is desired.
10.03 If the claim is denied and a review by the full Committee is
desired, the Participant (or Beneficiary) shall notify the Named Fiduciary in
writing within thirty (30) days (a claim shall be deemed denied if the Named
Fiduciary does not take any action within the aforesaid forty-five (45) day
period) after receipt of the written notice of denial. In requesting a review,
the Participant or his or her Beneficiary may request a review of the Plan
document or other pertinent documents, may submit any written issues and
comments, and may request that a hearing be held, but the decision to hold a
hearing shall be within the sole discretion of the Committee.
10.04 The decision on the review of the denied claim shall be
rendered by the Committee within thirty (30) days after the receipt of the
request for review (if a hearing is not held) or within sixty (60) days after
the hearing if one is held. The decision shall be written and shall state the
specific reasons for the decision including reference to specific provisions of
the Plan on which the decision is based.
10.05 If, after the review process, a claimant seeks further redress,
the subject of the dispute shall be submitted to arbitration in Los Angeles,
California, in accordance with the Commercial Rules of the American Arbitration
Association then in effect, which arbitration shall be the exclusive remedy of
the parties hereto. The resulting arbitration award shall be deemed a final
order of a court having jurisdiction over the subject matter and shall not be
appealable. All fees and expenses connected with the arbitration proceeding,
other than counsel fees incurred by either party, if any, shall be shared
equally by both parties.
10
Exhibit 10.4
<PAGE>
ARTICLE XI
AMENDMENT AND TERMINATION
-------------------------
11.01 The Company, by action of the Board, may amend or modify this
Plan from time to time or may terminate the Plan if it deems appropriate;
provided that no such amendment, modification or termination shall in any
way reduce the vested portion of affected Participants' (or Beneficiaries')
Bookkeeping Accounts measured as of the date the amendment, modification or
termination is made, or, if later, the effective date of such actions; and,
provided further, no amendment or modification which would reduce the interest
rate below Moody's as set forth in paragraph 5.02 of Article V hereof, or which
would assess costs or fees to Participants, may be made without the unanimous
consent of all Participants in the Plan.
ARTICLE XII
MISCELLANEOUS
-------------
12.01 The Company's obligation under the Plan shall in every case be
an unfunded and unsecured promise to pay. Participants' rights as to benefits
hereunder shall be no greater than that of general, unsecured creditors of the
Company. The Company may establish one or more grantor trusts as described in
Section 671 of the Internal Revenue Code of 1986, although the Company shall not
be obligated under any circumstances to fund its financial obligations under the
Plan. Any assets which the Company may acquire or set aside to cover its
financial liabilities are and must remain general assets of the Company and such
assets as well as any assets set aside in any grantor trust shall be subject to
the claims of its general creditors. Neither the Company nor the Plan gives the
Participant any beneficial ownership interest in any asset of the Company. All
rights of ownership in any such assets are and remain in the Company.
12.02 Except insofar as permitted by applicable law, no sale, transfer,
alienation, assignment, pledge, collateralization or attachment of any benefits
under the Plan shall be valid or recognized by the Company. Neither the
Participant, his or her spouse, or designated Beneficiary shall have any power
to hypothecate, mortgage, commute, modify or otherwise encumber in advance of
any of the benefits payable hereunder, nor shall any of said benefits be subject
to seizure for the payment of any debts, judgments, alimony maintenance, owed by
the Participant or his Beneficiary, or be transferable by operation of law in
the event of bankruptcy, insolvency, or otherwise. Notwithstanding the
foregoing, the Company may, if the Committee so determines in its sole
discretion, follow the terms of any court order issued in connection with any
domestic relations proceeding including but not limited to marital dissolution
or child support.
11
Exhibit 10.4
<PAGE>
12.03 The Plan shall be binding upon the Company, its assigns, and
any successor company which shall succeed to substantially all of its assets and
business through merger, acquisition or consolidation, and upon an Executive,
his or her Beneficiary, assigns, heirs, executors and administrators.
12.04 The terms and conditions of the Plan shall not be deemed to
constitute a contract of employment between the Company and an Executive.
Nothing in this Plan shall of itself be deemed to give an Executive the right to
be retained in the service of the Company or to interfere with any right of the
Company to discipline or discharge the Executive at any time.
12.05 An Executive will cooperate with the Company by furnishing any
and all information reasonably requested by the Company and take such other
actions as may be requested in order to facilitate the administration of the
Plan and the payment of benefits hereunder.
12.06 In case any provisions of this Plan shall be found illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but the Plan shall be construed and enforced as if such
illegal and invalid provision had never been included herein.
12.07 Any notice which shall be or may be given under the Plan or an
Election Form shall be in writing and shall be mailed by United States mail,
postage prepaid. If notice is to be given to the Company, such notice shall be
addressed to the Company at 444 South Flower Street, Suite 2100, Los Angeles,
California 90071-2922, marked for the attention of the Corporate Secretary of
the Company or, if notice to an Executive, addressed to the address shown on
such Executive's Election Form or the last known address on the Company's
personnel records. Any notice or filing required or permitted to be given to a
Participant under this Plan shall be sufficient if in writing and sent by
facsimile, hand delivered, or sent by mail, to the last known address of the
Participant. Any party may, from time to time, change the address to which
notices shall be mailed by giving written notice of such new address.
12.08 The interest in the benefits hereunder of a spouse of a
Participant who has predeceased the Participant shall automatically pass to the
Participant and shall not be transferable by such spouse in any manner,
including but not limited to such spouse's will, nor shall such interest pass
under the laws of intestate succession.
12.09 If, for any reason, all or any portion of a Participant's
benefit under this Plan becomes taxable to the Participant prior to receipt, a
Participant may petition the Committee for a distribution of funds sufficient to
meet the Participant's tax liability (including additions to tax, penalties
12
Exhibit 10.4
<PAGE>
and interest). Upon the grant of such a petition, which grant shall not be
unreasonably withheld, the Company shall distribute to the Participant
immediately available funds in an amount equal to that Participant's federal,
state and local tax liability associated with such taxation, which liability
shall be measured by using that Participant's then current highest federal,
state and local marginal tax rate, plus the rates or amounts for the applicable
additions to tax, penalties and interest. This distribution shall include an
additional amount to "gross up" the tax liability distribution to include all
applicable taxes on the tax liability distribution and the grossed up amount. If
the petition is granted, the tax liability distribution (including gross-up)
shall be made within ninety (90) days of the date when the Participant's
petition is granted. Such a distribution shall affect and reduce the benefits to
be paid under Articles VI or VII hereof.
12.10 The benefits provided for a Participant and Participant's
Beneficiary under the Plan are in addition to any other benefits available to
such Participant under any other plan or program for employees of the Company.
The Plan shall supplement and shall not supersede, modify or amend any other
such plan or program except as may otherwise be expressly provided.
12.11 The payment of benefits under the Plan to a Participant or
Beneficiary shall fully and completely discharge the Company and the Committee
from all further obligations under this Plan with respect to a Participant, and
that Participant's Election Form shall terminate upon such full payment of
benefits.
12.12 Without limiting the provisions of Section 9.06 above, if any
action at law or in equity is necessary by a Participant or Beneficiary to
enforce the terms of the Plan, the Participant or Beneficiary shall be entitled
to recover reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which that party may be entitled.
12.13 Titles and headings of the Articles of the Plan are included
for ease of reference only and are not to be used for the purpose of construing
any portion or provision of the Plan document.
12.14 To the extent not preempted by Federal law, this Plan shall be
governed by and construed pursuant to the laws of the State of California.
12.15 Any Election Form may be executed in one or more counterparts, each
of which is legally binding and enforceable.
AS ADOPTED BY THE BOARD OF DIRECTORS
OF ZERO CORPORATION
OCTOBER 20, 1993
13
Exhibit 10.4
<PAGE>
ZERO CORPORATION
MANAGEMENT BONUS PLAN
I. Purpose
The purpose of the ZERO Corporation Management Bonus Plan is to encourage
management of ZERO Corporation ("ZERO") to strongly perform for the benefit of
ZERO stockholders and to fairly compensate management for performance.
II. Target Performance
Each management employee who is a participant in the ZERO Management Bonus
Plan at the beginning of each fiscal year, will be assigned a "Target Bonus" by
the President of ZERO which shall be a percentage of the participant's salary.
The Target Bonus of the President shall be assigned by the Compensation
Committee and approved by the Board Directors.
III. Factors to Determine Award of Bonus
The award of Bonus shall be determined by three factors measured during a
fiscal year of ZERO:
a. Net Income - Actual Net Income for the plan fiscal year calculated as a
percentage of the Plan I forecast as presented by management to the Board of
Directors and approved by the Board of Directors at its April meeting, in each
case calculated pre-bonus (the "% of Plan I").
b. Stockholder Value - The percentage increase in stockholder value during
the plan fiscal year measured by the Common Stock price of ZERO on the New York
Stock Exchange on the last day of January, February and March of the preceding
fiscal year and the plan fiscal year, plus cash dividends paid during the fiscal
year, and adjusted for stock splits and stock dividends (the "Increase in
Stockholder Value").
c. Tangible Stockholders' Equity - The percentage increase in tangible
Stockholders' Equity during the plan fiscal year measured by Stockholders'
Equity, less goodwill, reflected on the books of ZERO on the last day of the
preceding fiscal year and on the last day of the plan fiscal year (the "Increase
in Stockholders' Equity"). For purposes of these calculations, the public
issuance or repurchase of Common Stock (except normal purchases or sales
pursuant to ZERO's employee stock purchase or stock option plans as approved by
stockholders) and goodwill resulting from an acquisition shall be excluded only
from the first year that they are reflected on the financial statements.
Exhibit 10.5
<PAGE>
IV. Weight of Factors to Determine Bonus
In connection with the award of a Bonus, the factors set forth in III above
shall have the following weights:
a. % of Plan I = 60 points
b. Increase in Stockholder Value = 15 points
c. Increase in Stockholders' Equity = 25 points
If, after calculation of the factors, 100 points are earned, then 100% of the
Target Bonus will be paid. (Likewise, if 75 points are earned, 75% of the
Target Bonus will be paid; if 125 points are earned, 125% of the Target Bonus
will be paid.)
V. Calculations
a. % of Plan I - An award of 60 points will be made if 95% of Plan I
is achieved. For each 1 percentage point achieved above or below 95% of Plan I,
there will be added or subtracted 5 points. No points will be awarded unless at
least 55% of Plan I is achieved.
b. Stockholder Value - An award of 15 points will be made if an
increase of 7.5% of Stockholder Value is achieved. For each 1 percentage point
achieved above or below 7.5%, there will be added or subtracted 2.5 points. In
no event will the number of points awarded be less than zero.
c. Stockholders' Equity - An award of 25 points will be made if an
increase of 5% in Stockholders' Equity is achieved. For each 1 percentage point
achieved above or below 5%, there will be added or subtracted 5 points. In no
event will the number of points awarded be less than zero.
VI. Unusual Circumstances
In the event of unusual circumstances during the plan fiscal year,
such as extraordinary income or expense or dramatic market downturns, the
Compensation Committee of the Board of Directors shall reserve to itself the
power to modify the factors described above to achieve fairness, which
modification shall be subject to approval of the Board of Directors.
Exhibit 10.5
<PAGE>
DESCRIPTION OF ZERO CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ADOPTED JANUARY 19, 1994
The purpose of the Supplemental Executive Retirement Plan adopted January 19,
1994 (the "Plan") is to restore benefits to certain executive employees of the
Corporation under the ZERO Corporation Pension Plan (the "Pension Plan") where
benefits are lost to such executive employees as a result of the enactment by
the Internal Revenue Service of Section 401(a)(17) of the Internal Revenue Code
(the "Code").
The Plan is administered and interpreted by the Employee Benefits Committee of
the Board of Directors (the "Committee"), which Committee establishes rules,
forms and procedures for the administration of the Plan, has the exclusive right
to interpret the Plan and to make, amend, and enforce all provisions of the
Plan.
Eligible employees include executive employees of the Company, its divisions and
subsidiaries.
Each participant under the Plan is entitled to contribution from the Company in
an amount equal to the reduction in the contributions to the account of the
participant under the Pension Plan as a result of contribution limitations
established by Sections 415 and/or 401(a)(17) of the Code. Company contributions
are made on the date which is the earlier of the date of separation of
employment from the Company or on December 31 of each year.
Exhibit 10.9
<PAGE>
DESCRIPTION OF ZERO CORPORATION
CONTRACT AND JOINT SUPPLEMENTAL LIFE INSURANCE PLAN
ADOPTED APRIL 22, 1994
The Company and certain of its executive officers and other key employees of the
Company, its divisions and subsidiaries, have entered into Contracts under the
Joint Supplemental Life Insurance Plan (the "Plan") under which the executive
receives an insurance benefit and the cash value of the life insurance policy on
the life of the executive. The Company pays a portion of the premium and the
executive also pays a portion of the premium equal to the economic benefit of
the insurance the executive receives as established by the Internal Revenue
Service. The executive owns the policy under the Plan but must repay any amounts
advanced by the Company. The obligation of the executive is secured by a
collateral assignment of the cash value and death proceeds under the policy of
insurance.
Exhibit 10.10
<PAGE>
FIVE-YEAR CONSOLIDATED FINANCIAL HIGHLIGHTS
(In $000s except per share data)
<TABLE>
<CAPTION>
Year Ended March 31, 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Net Sales $171,821 $160,466 $160,279 $189,479 $196,928
Net Income 12,851 11,635 9,695 10,761 16,114
Working Capital 66,980 59,576 56,223 56,544 57,434
Total Assets 158,734 153,871 150,479 156,680 147,526
Stockholders' Equity 136,477 128,671 123,065 119,286 115,609
Long-term Obligations -- -- 1,172 2,429 3,259
Return on Average Stockholders' Equity 9.8% 9.3% 8.1% 9.0% 14.6%
Current Ratio 5.0:1 3.9:1 3.8:1 3.0:1 3.6:1
Per Share Data:
Earnings $0.81 $0.74 $0.62 $0.68 $1.02
Dividends Paid 0.40 0.40 0.40 0.40 0.39
Stockholders' Equity 8.57 8.15 7.83 7.61 7.32
</TABLE>
Exhibit 13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Management's Discussion and Analysis of Results of Operations and Financial
Condition includes the Five-Year Consolidated Financial Highlights on the
inside front cover and the following additional information.
RESULTS OF OPERATIONS
For the years ended March 31, 1994, 1993 and 1992, Net Income was $12,851,000,
$11,635,000 and $9,695,000 and Earnings Per Share were $.81, $.74 and $.62,
respectively.
Net Sales in fiscal 1994 grew 7.1% over the amount reported in fiscal 1993. This
compares to a minor sales growth in 1993 when compared to 1992. The increase
in 1994 was primarily attributable to higher sales applicable to the
communication/instrumentation, data processing/peripherals and the airline/air
cargo markets, as well as the acquisition of a case hardware business in
August 1993. In fiscal 1993, similar growth in the communication/
instrumentation and data processing/peripherals markets was offset by weakness
in the airline/air cargo, consumer and government/military markets.
Cost of sales, as a percentage of Net Sales, was 65.2% in 1994 versus 64.8% in
1993 and 66.5% in 1992. Over the past several years, the Company has
benefited from cost-containment efforts, including the relocation and
restructuring of several facilities, and stable material costs, partially
offset by changes in product mix and pricing strategies.
Selling and administrative expenses, as a percentage of Net Sales, decreased to
20.9% in 1994 from 21.6% in 1993 and 22.1% in 1992 primarily as a result of
net sales fluctuations and cost-containment efforts.
EFFECT OF INFLATION - Price increases have not contributed significantly to
increases in the Company's Net Sales. The impact of rising costs of labor,
material and supplies, and equipment has been mitigated by changes in product
design, overall manufacturing and purchasing efficiencies and effective
management and control of operating expenses.
LIQUIDITY AND CAPITAL RESOURCES - At March 31, 1994, the Company's primary
source of liquidity was $33,368,000 of cash and short-term investments.
Working capital increased to $66,980,000 from $59,576,000 at March 31, 1993 as
a result of higher earnings and operating efficiencies. During 1994, the
Company repaid the remaining portion of its outstanding long-term debt.
Cash provided by operating activities was $14,817,000 in 1994, $19,299,000 in
1993 and $17,311,000 in 1992, while property additions during those years were
$4,160,000, $5,236,000 and $7,176,000, respectively. The higher property
additions during 1992 were the result of plant relocations.
Management believes cash from operations, together with the Company's short-term
investments and ability to obtain financing, will provide sufficient funds to
finance current and forecasted operations, including potential acquisitions.
The Company will continue to invest its cash reserves in liquid, lower-risk
investments.
CONTINGENCIES - The Company has been notified by governmental agencies that it
may be potentially responsible for costs associated with the investigation and
remediation of eight sites where soil and/or groundwater contamination is
alleged. The Company has responded to these notices and is working with the
governmental agencies and other parties involved to resolve these matters. The
Company has provided reserves to cover those costs which can be reasonably
estimated. Refer to Note 7 of Notes to Consolidated Financial Statements for
further discussion of environmental and other contingencies.
Exhibit 13
<PAGE>
STATEMENTS OF CONSOLIDATED INCOME
<TABLE>
<CAPTION>
Year Ended March 31, 1994 1993 1992
<S> <C> <C> <C>
Net Sales $171,821,000 $160,466,000 $160,279,000
Interest Income 984,000 902,000 1,180,000
Other Income 1,078,000 1,204,000 1,839,000
------------ ------------ ------------
Total Revenue 173,883,000 162,572,000 163,298,000
------------ ------------ ------------
Costs and Expenses
Cost of sales (exclusive of depreciation) 111,985,000 104,044,000 106,512,000
Selling and administrative expenses 35,984,000 34,635,000 35,345,000
Depreciation 4,470,000 4,372,000 4,625,000
Interest expense 481,000 519,000 756,000
------------ ------------ ------------
Total Costs and Expenses 152,920,000 143,570,000 147,238,000
------------ ------------ ------------
Income Before Income Taxes 20,963,000 19,002,000 16,060,000
Income Taxes 8,112,000 7,367,000 6,365,000
------------ ----------- -----------
Net Income $12,851,000 $11,635,000 $9,695,000
============ =========== ===========
Earnings Per Common Share $0.81 $0.74 $0.62
============ =========== ===========
</TABLE>
The notes to consolidated financial statements are an integral part of these
statements.
Exhibit 13
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31,
1994 1993
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $14,843,000 $9,546,000
Short-term investments 18,525,000 20,865,000
Receivables (less allowances for doubtful accounts of $829,000 in 1994 and
$886,000 in 1993) 24,487,000 23,164,000
Inventories
Raw materials and supplies 12,000,000 11,657,000
Work in process 6,589,000 6,530,000
Finished goods 3,253,000 3,481,000
Other (including deferred tax benefit of $2,979,000 in 1994 and $3,919,000 in 1993) 4,216,000 4,829,000
------------ ------------
Total Current Assets 83,913,000 80,072,000
------------ ------------
Net Property, Plant and Equipment 29,863,000 29,005,000
Goodwill (less accumulated amortization of $8,533,000 in 1994 and $7,537,000 in 1993) 30,649,000 31,647,000
Other Assets 14,309,000 13,147,000
------------ ------------
Total Assets $158,734,000 $153,871,000
============ ============
</TABLE>
The notes to consolidated financial statements are an integral part of these
statements.
Exhibit 13
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31,
1994 1993
<S> <C> <C>
LIABILITIES
Current Liabilities
Current portion of long-term debt $ -- $197,000
Accounts payable 6,039,000 5,054,000
Income taxes payable 384,000 2,260,000
Accrued liabilities
Other taxes 468,000 506,000
Wages and commissions 5,375,000 6,542,000
Workers' compensation 980,000 1,269,000
Other 3,687,000 4,668,000
------------ ------------
Total Current Liabilities 16,933,000 20,496,000
------------ ------------
Non-Current Liabilities (including deferred compensation of $4,846,000 in 1994
and $4,332,000 in 1993) 5,324,000 4,704,000
STOCKHOLDERS' EQUITY
Preferred stock - authorized 1,000,000 shares of $.01 par value; none issued
Common stock - authorized 30,000,000 shares of $.01 par value; outstanding
shares, 16,079,500 in 1994 and 15,953,203 in 1993 161,000 160,000
Additional paid-in capital 30,605,000 28,273,000
Retained earnings 107,509,000 102,020,000
------------ ------------
138,275,000 130,453,000
Foreign currency translation adjustments (124,000) (105,000)
Treasury stock (162,390 shares in 1994 and 162,700 shares in 1993), at cost (1,674,000) (1,677,000)
------------ ------------
Total Stockholders' Equity 136,477,000 128,671,000
------------ ------------
Total Liabilities and Stockholders' Equity $158,734,000 $153,871,000
============ ============
</TABLE>
The notes to consolidated financial statements are an integral part of these
statements.
Exhibit 13
<PAGE>
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Foreign
Additional Currency
Oustanding Common Paid-in Retained Translation Treasury
Shares Stock Capital Earnings Adjustments Stock
<S> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1991 15,843,004 $158,000 $26,632,000 $93,629,000 $544,000 ($1,677,000)
Net income for the year -- -- -- 9,695,000 -- --
Cash dividends declared - $.40
per share -- -- -- (6,281,000) -- --
Exercise of stock options 32,283 1,000 604,000 (249,000) -- --
Foreign currency translation
adjustments -- -- -- -- 9,000 --
---------- -------- ----------- ------------ --------- -----------
Balance at March 31, 1992 15,875,287 159,000 27,236,000 96,794,000 553,000 (1,677,000)
Net income for the year -- -- -- 11,635,000 -- --
Cash dividends declared - $.40
per share -- -- -- (6,289,000) -- --
Exercise of stock options 77,916 1,000 1,037,000 (120,000) -- --
Foreign currency translation
adjustments -- -- -- -- (658,000) --
---------- -------- ----------- ------------ --------- -----------
Balance at March 31, 1993 15,953,203 160,000 28,273,000 102,020,000 (105,000) (1,677,000)
Net income for the year -- -- -- 12,851,000 -- --
Cash dividends declared - $.40
per share -- -- -- (6,340,000) -- --
Exercise of stock options and
issuance of treasury stock 126,297 1,000 2,332,000 (1,005,000) -- 3,000
Foreign currency translation
adjustments and other -- -- -- (17,000) (19,000) --
---------- -------- ----------- ------------ --------- -----------
Balance at March 31, 1994 16,079,500 $161,000 $30,605,000 $107,509,000 ($124,000) ($1,674,000)
========== ======== =========== ============ ========= ===========
</TABLE>
The notes to consolidated financial statements are an integral part of these
statements.
Exhibit 13
<PAGE>
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
Year Ended March 31, 1994 1993 1992
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $12,851,000 $11,635,000 $9,695,000
Adjustments to reconcile net income to net cash provided by operating activities :
Depreciation and amortization 5,466,000 5,366,000 5,666,000
Changes in operating assets and liabilities net of effect of business
acquisitions:
Decrease (increase) in accounts receivable (873,000) 394,000 5,708,000
Decrease in inventories 226,000 1,801,000 5,028,000
Increase in other non-current assets (1,162,000) (794,000) (828,000)
Increase (decrease) in accounts payable 985,000 1,035,000 (926,000)
Increase (decrease) in accrued liabilities (4,021,000) 500,000 (7,619,000)
Increase (decrease) in other non-current liabilities 711,000 (1,248,000) 112,000
Other 634,000 610,000 475,000
----------- ----------- -----------
Net cash provided by operating activities 14,817,000 19,299,000 17,311,000
----------- ----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES:
(Purchases) sales of short-term investments, net 2,010,000 (10,476,000) 277,000
Purchase of non-cash assets of acquired business (2,100,000) --- ---
Expenditures for property, plant and equipment (4,160,000) (5,236,000) (7,176,000)
Other 280,000 631,000 893,000
----------- ----------- -----------
Net cash required by investing activities (3,970,000) (15,081,000) (6,006,000)
----------- ----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES:
Cash dividends paid (6,340,000) (6,289,000) (6,281,000)
Payments of long-term debt (197,000) (2,149,000) (1,522,000)
Exercise of stock options 1,331,000 918,000 356,000
Other (including effect of exchange rate changes) (344,000) (462,000) (17,000)
----------- ---------- -----------
Net cash required by financing activities (5,550,000) (7,982,000) (7,464,000)
----------- ---------- -----------
Net increase (decrease) in cash and cash equivalents 5,297,000 (3,764,000) 3,841,000
Cash and cash equivalents at beginning of period 9,546,000 13,310,000 9,469,000
----------- ---------- -----------
Cash and cash equivalents at end of period $14,843,000 $9,546,000 $13,310,000
=========== ========== ===========
</TABLE>
The notes to consolidated financial statements are an integral part of these
statements.
Exhibit 13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 Significant Accounting Policies:
Principles of Consolidation - The accompanying consolidated financial statements
include the accounts of the Company and its subsidiaries. All significant
intercompany balances and transactions have been eliminated.
Cash Equivalents - Cash equivalents include mutual funds and other highly liquid
investments purchased with maturities of three months or less. As of March 31,
1994 and 1993, the carrying values of cash equivalents approximated fair
market values.
Short-Term Investments - Short-term investments at March 31, 1994 and 1993
consisted primarily of treasury notes and municipal bonds. Municipal bonds are
carried at the lower of aggregate cost (computed on a first-in, first-out
basis) or market. Based on quoted market prices, the aggregate fair value of
short-term investments as of March 31, 1994 and 1993 was $18,550,000 and
$20,944,000, respectively.
Inventories - Substantially all of the Company's inventories are stated at the
lower of cost (first-in, first-out or average) or market.
Property, Plant and Equipment - Property, plant and equipment is recorded at
cost. Depreciation is computed principally using the straight-line method over
the estimated useful lives of the assets. Capital leases and leasehold
improvements are amortized over the life of the related assets or the life of
the lease, whichever is shorter.
Goodwill - Costs in excess of the value of net assets acquired in purchase
transactions are being amortized over periods of up to 40 years.
Earnings per Common Share - Earnings per common share are computed using the
weighted average number of shares of common stock and common stock equivalents
(stock options) outstanding, which for 1994, 1993 and 1992 was 15,958,366,
15,791,972 and 15,733,093, respectively.
Foreign Currency Translation - Assets and liabilities of foreign subsidiaries
are translated into U.S. dollars at the year-end exchange rate. Gains and
losses from this translation are being accumulated in stockholders' equity.
The related income statement is translated at the average exchange rate for
the year.
Supplemental Cash Flow Information - For the years ended March 31, 1994, 1993
and 1992 cash paid for interest was $20,000, $157,000 and $299,000 and cash
paid for income taxes was $8,588,000, $6,152,000 and $5,809,000, respectively.
NOTE 2 Property, Plant and Equipment:
Property, plant and equipment and accumulated depreciation at March 31, 1994
and 1993 consisted of:
<TABLE>
<CAPTION>
Estimated
Useful Lives 1994 1993
<S> <C> <C> <C>
Land $ 2,780,000 $ 2,780,000
Buildings/land improvements 10-40 years 16,465,000 15,809,000
Machinery/equipment 3-15 years 50,696,000 48,781,000
Leasehold improvements 5-9 years 3,725,000 3,351,000
----------- -----------
Total 73,666,000 70,721,000
Less accumulated depreciation 43,803,000 41,716,000
----------- -----------
Net property, plant
and equipment $29,863,000 $29,005,000
=========== ===========
</TABLE>
NOTE 3 Employee Benefits:
The Company has a defined contribution pension plan which, except for employees
covered by collective bargaining agreements, covers all employees of U.S.
divisions which have elected to participate and who have completed at least
one year of service. The pension plan cost, which is fully funded on a current
basis, is based upon percentages of eligible employees' compensation. The
Company's contributions to the plan aggregated $1,460,000, $1,253,000 and
$1,331,000 in 1994, 1993 and 1992, respectively.
The Company has nonqualified deferred compensation plans covering key employees
who can elect to have a portion of their compensation deferred. The amounts
set aside earn interest at rates generally higher than the average prime
interest rate compounded semi-annually. Interest expense accrued on the
participants' accounts totalled $463,000, $356,000 and $437,000 in 1994, 1993
and 1992, respectively. Generally, payment of a participant's account balance
will be deferred until death, disability or retirement.
NOTE 4 Common Stock :
The Company has a nonqualified and incentive stock option plan which provides
for the granting to directors, officers and other key employees of options to
purchase shares of the Company's stock at a price not less than the fair
market value on the date of grant. Options are granted for terms of five years
and are exercisable in annual installments (generally one-third of the total
grant) commencing one year from date of grant, on a cumulative basis.
The Company's stock option plan also provides for the granting of stock
appreciation rights (SARs) in tandem with options. The SARs entitle a holder
to receive an amount equal to the excess of the fair market value of the
Company's common stock on the date of exercise over the option price. The
exercise of SARs automatically cancels an equal number of related options.
Compensation expense recognized in connection with SARs during the years ended
March 31, 1994, 1993 and 1992 was not material.
Exhibit 13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Changes in the number of shares subject to options during the three years ended
March 31, 1994, are summarized as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Outstanding at beginning of year 793,593 689,388 592,310
Options granted
(1994, $13.56 to $13.75 per share;
1993, $11.31 to $11.81 per share;
1992, $11.56 to $14.38 per share) 219,800 245,700 208,550
Options exercised
(1994, $10.38 to $15.25 per share;
1993 and 1992, $10.38 to $12.24 per share) (195,626) (86,280) (48,933)
Options cancelled as a result of SARs exercised
(1994, $12.24 per share;
1993, none;
1992, $12.04 per share) (1,142) --- (11,875)
Options cancelled or expired
(1994, $10.38 to $17.50 per share;
1993 and 1992, $10.38 to $15.25 per share) (44,625) (55,215) (50,664)
------- ------- -------
Outstanding at end of year
($10.38 to $17.50 per share) 772,000 793,593 689,388
======= ======= =======
</TABLE>
Of the total outstanding options at March 31, 1994 and 1993, options for 320,750
and 330,029 shares, respectively, were exercisable; and options for 223,751,
154,233 and 73,266 shares will become exercisable during the fiscal years
ending March 31, 1995 through 1997, respectively. At March 31, 1994, options
for 38,329 shares remained available for future grants.
NOTE 5 Income Taxes:
Effective April 1, 1993, the Company adopted SFAS No. 109, "Accounting for
Income Taxes." The adoption of SFAS 109 changed the Company's method of
accounting for income taxes from the deferred approach (APB 11) to an asset
and liability approach. The asset and liability approach requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the financial reporting basis
and tax basis of assets and liabilities. Financial statements for prior years
have not been restated and the cumulative effect of the accounting change was
not material.
The provision for income taxes is summarized as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Current:
Federal $6,451,000 $5,744,000 $3,979,000
State 1,332,000 1,552,000 887,000
Other (48,000) (105,000) 98,000
Deferred:
Federal - Plant relocation --- 209,000 1,651,000
- Other reserves
and accruals 54,000 (210,000) (601,000)
- Other 221,000 53,000 263,000
---------- ---------- ----------
275,000 52,000 1,313,000
---------- ---------- ----------
State 102,000 19,000 368,000
Other --- 105,000 (280,000)
---------- ---------- ----------
Total $8,112,000 $7,367,000 $6,365,000
========== ========== ==========
</TABLE>
Deferred tax assets and liabilities were comprised of the following as of March
31, 1994:
<TABLE>
<CAPTION>
Deferred Tax Deferred Tax
Assets Liabilities
<S> <C> <C>
Depreciation/amortization $2,300,000
Provision for estimated expenses $1,597,000
Employee benefit plans 3,210,000
State and foreign taxes 391,000
Other 1,065,000
---------- ----------
Total $5,198,000 $3,365,000
========== ==========
</TABLE>
A reconciliation between the income taxes computed at the Federal statutory rate
and the provision for income taxes is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Income taxes computed at the
Federal statutory rate $7,337,000 $6,461,000 $5,460,000
State income taxes net of
Federal income tax benefit 932,000 1,037,000 828,000
Tax exempt income (244,000) (154,000) (210,000)
Other 87,000 23,000 287,000
---------- ---------- ----------
Total provision $8,112,000 $7,367,000 $6,365,000
========== ========== ==========
Effective income tax rate 38.7% 38.8% 39.6%
==== ==== ====
</TABLE>
Note 6 Commitments:
Future minimum lease payments under operating leases at March 31, 1994 are
summarized as follows:
<TABLE>
<S> <C>
Year Ending March 31:
1995 $2,181,000
1996 1,885,000
1997 1,474,000
1998 1,174,000
1999 1,174,000
thereafter 3,935,000
-----------
Total $11,823,000
</TABLE> ===========
Rental expense under operating leases was $2,141,000, $2,390,000 and $2,525,000
for 1994, 1993 and 1992, respectively. Obligations under capital leases at
March 31, 1994 were not material.
NOTE 7 Contingent Liabilities:
Environmental Matters -
The Company has been identified as a potentially responsible party (PRP) by
various Federal and State authorities for cleanup at eight sites, the most
significant being in Burbank, California referred to as the Glendale North
Operable Unit of the San Fernando Valley Superfund Site (the Site). In March
1994, the Company, along with twenty-three other PRPs, entered into a consent
decree with the U.S. Environmental Protection Agency relating to the remedial
design work necessary for implementing a groundwater extraction and treatment
system for the Site. The current estimate for such remedial design work is
approximately $3.6 million of which the Company's current share is
approximately $330,000. The Company has provided reserves for its share of the
remedial design costs for the Site and other cleanup costs associated with the
other sites to the extent they could be reasonably estimated. However, the
Company's ultimate liability related to these environmental matters mentioned
above will be dependent upon a variety of factors including changes in the
designs and costs of remediation systems, and the addition or elimination of
participating PRPs, and therefore cannot be reasonably estimated at this time.
The Company has also filed claims and commenced litigation against certain of
its insurance carriers for recovery of expenditures.
Other Matters -
The Company has responded to an administrative subpoena received from the U.S.
Government General Services Administration (GSA), Office of Inspector General,
seeking documents related to certain GSA contracts of a division of the
Company. The matter is in a preliminary stage and the Company is unable to
accurately assess the situation further at this time; however, the Company
believes that the subpoena was directed to an examination of freight charges
under the contracts.
The Company is subject to other legal proceedings that arise in the ordinary
course of its business activities. In the opinion of management, any liability
that may result from the resolution of these matters will not have a material
adverse effect on its financial statements.
Exhibit 13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 Segment Information:
Business segment information as of and for the years ended March 31, 1994, 1993
and 1992 is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
Encl. and Encl. and Encl. and
(In $000s) Accessories Other Total Accessories Other Total Accessories Other Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $141,754 $30,067 $171,821 $135,208 $25,258 $160,466 $132,031 $28,248 $160,279
======== ======= ======== ======== ======= ======== ======== ======= ========
Operating profit 21,380 2,001 23,381 19,181 2,018 21,199 15,461 2,983 18,444
======== ======= ======= ======= ======== =======
General corporate
income (expenses), net (1,937) (1,678) (1,628)
Interest expense (481) (519) (756)
-------- ------ -------
Income before taxes $20,963 $19,002 $16,060
======== ======= =======
Identifiable assets $ 93,907 $16,715 $110,622 $ 94,809 $16,772 $111,581 $ 96,557 $18,553 $115,110
======== ======= ======== ======= ======== =======
Corporate assets 48,112 42,290 35,369
-------- -------- --------
Total assets $158,734 $153,871 $150,479
======== ======== ========
Depreciation $ 3,563 $ 907 $ 4,470 $ 3,479 $ 893 $ 4,372 $ 3,786 $ 839 $4,625
======== ======= ======== ======== ====== ======== ======== ====== ========
Capital expenditures $ 3,811 $ 349 $ 4,160 $ 4,762 $ 474 $ 5,236 $ 6,435 $ 741 $ 7,176
======== ======= ======== ======== ====== ======== ======== ====== ========
</TABLE>
The Company's business primarily consists of enclosures and accessories
including the design, manufacture and sale of metal and plastic enclosures,
cabinets, instrument cases, aluminum luggage, camera cases, industrial
carrying cases, cargo enclosures, card cages for printed circuit boards, as
well as precision slides, blowers, fans, cooling systems and wire wrap
services and other similar products. The Company also manufactures and sells
thermoformed plastic parts, metal stampings, case hardware, aircraft cargo
hardware, food service containers and other custom metal products.
Sales under United States Government contracts and subcontracts accounted for
approximately 12%, 15% and 18% of total sales in 1994, 1993 and 1992,
respectively.
NOTE 9 Quarterly Results of Operations (unaudited):
The following is a summary of the unaudited quarterly results of operations for
the two years ended March 31, 1994:
<TABLE>
<CAPTION>
Total Gross Income Before Net Earnings Per
Quarter Ended: Revenues Profit Income Taxes Income Common Share
<S> <C> <C> <C> <C> <C>
1994
March 31, 1994 $44,984,000 $15,285,000 $5,517,000 $3,514,000 $0.22
December 31, 1993 42,611,000 13,855,000 4,774,000 2,885,000 0.18
September 30, 1993 45,009,000 15,059,000 5,780,000 3,446,000 0.22
June 30, 1993 41,279,000 14,044,000 4,892,000 3,006,000 0.19
1993
March 31, 1993 $41,642,000 $14,346,000 $5,430,000 $3,395,000 $0.22
December 31, 1992 41,152,000 13,272,000 4,491,000 2,704,000 0.17
September 30, 1992 39,578,000 13,345,000 4,349,000 2,672,000 0.17
June 30, 1992 40,200,000 13,909,000 4,732,000 2,864,000 0.18
</TABLE>
Exhibit 13
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders of ZERO Corporation:
We have audited the accompanying consolidated balance sheets of ZERO Corporation
and its subsidiaries as of March 31, 1994 and 1993, and the related statements
of consolidated income, stockholders' equity, and cash flows for each of the
three years in the period ended March 31, 1994. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
and opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of ZERO Corporation and its
subsidiaries at March 31, 1994 and 1993, and the results of their operations and
cash flows for each of the three years in the period ended March 31, 1994
in conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE
Los Angeles, California
May 12, 1994
Exhibit 13
<PAGE>
MANAGEMENT'S REPORT
The accompanying consolidated financial statements have been prepared by
management in accordance with generally accepted accounting principles and,
where appropriate, include amounts based on management's judgement and
estimates. The integrity of the financial statements and the other financial
information in the Annual Report is the responsibility of management. The
financial statements have been audited by Deloitte & Touche, independent
auditors, appointed by the Board of Directors.
The Company maintains internal accounting control systems that are adequate to
provide reasonable, but not absolute, assurance that the assets are safeguarded
from loss or unauthorized use. These systems produce records adequate for
preparation of financial information. In establishing and maintaining internal
controls, the Company exercises judgement in determining that the costs of such
controls do not exceed the benefits to be derived.
The Board of Directors has an Audit Committee composed solely of directors who
are not officers or employees. The Committee meets regularly with management,
with the Company's internal audit staff, and with the independent auditors. The
independent auditors and the internal audit staff periodically meet alone with
the Audit Committee and have free access to the Audit Committee at any time.
In management's opinion, the consolidated financial statements present fairly,
in all material respects, the financial position of ZERO Corporation and its
subsidiaries at March 31, 1994 and 1993, and the results of operations and cash
flows for each of the three years in the period ended March 31, 1994 in
conformity with generally accepted accounting principles.
/s/ WILFORD D. GODBOLD, JR.
- - ---------------------------------------
Wilford D. Godbold, Jr.
President and Chief Executive Officer
/s/ GEORGE A. DANIELS
- - ---------------------------------------
George A. Daniels
Vice President and
Chief Financial Officer
/s/ ERIC A. SAND
- - ---------------------------------------
Eric A. Sand
Controller and Chief Accounting Officer
Exhibit 13
<PAGE>
Market and Dividend Information
The Company's common stock is traded on the New York Stock Exchange and the
Pacific Stock Exchange under the ticker symbol ZRO. The trading range and
dividends paid by quarter for the two fiscal years ended March 31, 1994 are as
follows:
<TABLE>
<CAPTION>
Trading Range Dividends
------------------- ---------
Quarter Ended High Low Paid
- - ------------- ------ ------ ---------
<S> <C> <C> <C>
1994
March 31, 1994 $16.13 $12.63 $.10
December 31, 1993 16.63 12.75 .10
September 30, 1993 14.75 12.75 .10
June 30, 1993 15.13 13.00 .10
1993
March 31, 1993 $15.00 $12.50 $.10
December 31, 1992 14.13 10.50 .10
September 30, 1992 12.50 10.50 .10
June 30, 1992 12.75 10.00 .10
</TABLE>
Exhibit 13
<PAGE>
ZERO CORPORATION
Subsidiaries of Registrant*
As of March 31, 1994
1. Air Cargo Equipment Corporation, a Delaware corporation
2. Air Cargo Equipment (UK) Limited, a U.K. corporation
3. Air Cooling Technology, Inc., a California corporation
4. Anvil Cases, Inc., a California corporation
5. Composite Research Inc., a California corporation
6. Contempo Engineering Co., a California corporation
7. Electronic Solutions, a Nevada corporation
8. McLean Midwest Corporation, a Minnesota corporation
9. Nielsen Hardware Corporation, a Connecticut corporation
10. Productos Aeros, S.A., a Mexican corporation
11. Samuel Groves & Co. Limited, a U.K. corporation
12. ZERO FSC Corporation, a Virgin Islands corporation
13. ZERO East Division, ZERO Corporation, a Massachusetts corporation
14. ZERO International, Inc., a California corporation
15. ZERO Manufacturing Corporation, a California corporation
16. ZERO McLean Europe Ltd., a U.K. corporation
* All are 100% owned
EXHIBIT 21
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
We consent to the incorporation by reference in Registration Statement
No. 33-53943 on Form S-8, Registration Statement No. 33-27929 on Form
S-8, Post-Effective Amendment No. 9 to Registration Statement No.
2-54344 on Form S-8, and Registration Statement No. 33-44143 on Form S-8
of ZERO Corporation of our report dated May 12, 1994, appearing in and
incorporated by reference in this Annual Report on Form 10-K of ZERO
Corporation for the year ended March 31, 1994.
/s/ DELOITTE & TOUCHE
Los Angeles, California
June 27, 1994
EXHIBIT 23
