FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
X Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 1995
___ 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 1-5502
ZURN INDUSTRIES, INC.
IRS Employer
State of Address and Identification
Incorporation Telephone Number Number
Pennsylvania One Zurn Place 25-1040754
Erie, Pennsylvania 16505
814-452-2111
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, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
November 10, 1995 -- Common Stock, $.50 Par Value -- 12,340,757
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PART I - FINANCIAL INFORMATION
CONSOLIDATED FINANCIAL POSITION
(Thousands)
September 30, March 31,
1995 1995
Assets
Current assets
Cash and equivalents $ 5,348 $ 6,360
Marketable securities 44,333 48,478
Accounts receivable 108,819 115,373
Inventories
Finished products 52,434 47,608
Work in process 9,545 12,751
Raw materials and supplies 14,501 15,577
Contracts in process 20,158 8,328
96,638 84,264
Income taxes 35,016 38,751
Other current assets 6,329 5,153
Total current assets 296,483 298,379
Property, plant, and equipment 149,859 143,606
Less allowances for depreciation
and amortization 91,345 87,444
58,514 56,162
Investments 36,247 35,447
Other assets 25,807 24,708
$417,051 $414,696
Liabilities and Shareholders' Equity
Current liabilities
Trade accounts payable $ 42,376 $ 49,758
Other current liabilities 95,851 93,086
Total current liabilities 138,227 142,844
Long-term obligations 9,002 9,525
Retirement obligations 43,679 43,397
Shareholders' equity
Common stock 6,285 6,285
Other shareholders' equity 219,858 212,645
226,143 218,930
$417,051 $414,696
See notes to consolidated financial statements.
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CONSOLIDATED OPERATIONS
(Thousands Except Per Share Amounts)
Three Months Ended Six Months Ended
September 30 September 30
1995 1994 1995 1994
Net sales $124,852 $112,169 $247,187 $226,554
Cost of sales 93,623 86,694 184,830 177,186
Marketing and administration 25,002 22,502 48,895 44,170
Interest income (844) (1,160) (1,729) (2,332)
Interest expense 1,184 1,083 2,318 2,061
Other income (798) (702) (1,431) (1,227)
Income before income taxes 6,685 3,752 14,304 6,696
Income taxes 2,610 1,280 5,580 2,280
Net income $ 4,075 $ 2,472 $ 8,724 $ 4,416
Earnings per share $.33 $.20 $.71 $.36
Average shares outstanding 12,384 12,340 12,365 12,374
Cash dividends declared
per common share $.10 $.22 $.20 $.44
See notes to consolidated financial statements.
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CONSOLIDATED CASH FLOWS
(Thousands)
Six Months Ended
September 30
1995 1994
Operations
Net income $ 8,724 $ 4,416
Operating assets and liabilities (7,962) 6,846
Depreciation and amortization 4,792 4,859
Miscellaneous (163) (346)
5,391 15,775
Investing
Capital expenditures (7,214) (4,075)
Marketable securities 4,346 2,597
Long-term investments 1,068 1,756
Sales of operations 259 218
Miscellaneous 115 230
(1,426) 726
Financing
Dividends paid (3,950) (5,462)
Debt payments (1,027) (881)
Treasury stock purchased (1,926)
Stock options exercised 33
(4,977) (8,236)
Cash and equivalents
(Decrease) increase (1,012) 8,265
Beginning of year 6,360 4,137
End of period $ 5,348 $ 12,402
See notes to consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the results for the interim
periods presented. The results of operations for the six months ended
September 30, 1995 are not necessarily indicative of the results to be
expected for the full year.
Earnings per share are based on net income or loss and the average shares of
common stock and dilutive stock options outstanding during the period.
The appeal of a jury verdict against the Company in connection with a power
plant construction contract is being aggressively pursued; however, if all
issues are lost, charges in addition to the fiscal 1994 provision could reach
$22.1 million, including interest on the unrecorded contingency which is not
being accrued.
At September 30, 1995, $16.2 million of letters of credit were outstanding
under the $75 million commitment from a group of banks for letters of credit
and revolving credit loans.
In the normal course of business, financial and performance guarantees are
made in connection with major engineering and construction contracts and a
liability is recognized when a probable loss occurs. Also, there are various
claims, legal, and environmental proceedings which management believes will
have no material effect on the Company's financial position or results of
operations when they are resolved.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Condition
The accounts receivable decline was primarily attributable to the collection
of balances due on Power Systems segment long-term contracts which were almost
double the accounts receivable increase from the Company's other construction
businesses. Almost half the increase in contracts in progress was associated
with Power Systems segment activities. The greater amount of capital
expenditures and the increase in property, plant, and equipment resulted from
new and expanded facilities for Plumbing Products and equipment additions by
the water resource construction business.
The litigation disclosed in the notes to consolidated financial statements is
not expected to have a future material effect on the Company's financial
position; however, if all issues are lost on appeal, the resulting cash
expenditure, net of the ensuing income tax payment reductions, could be more
than $34 million.
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Results of Operations
Sales by the Company's industry segments were as set forth below.
Three Months Ended Six Months Ended
September 30 September 30
1995 1994 1995 1994
(Thousands)
Power Systems $ 33,080 $ 35,182 $ 67,400 $ 71,692
Water Control 69,717 61,673 129,507 122,781
Lynx Golf 11,335 5,584 29,000 12,906
Mechanical Power Transmission 10,250 9,454 20,444 18,729
Others 470 276 836 446
$124,852 $112,169 $247,187 $226,554
Second quarter sales by each of the Water Control segment businesses were
greater than the same period last year. New products and increased market
share and prices contributed to a 14% increase from Plumbing Products for the
quarter. The year-to-date sales growth from Plumbing Products was offset by
lower revenues from water resource construction projects due to delays in
starting recently awarded contracts. The Lynx Golf sales increase was
attributable to the new irons introduced in January 1995. Its second quarter
sales were from orders placed in the first quarter; consequently, new orders
in the second quarter were lower than the normal seasonal pattern.
The greater gross profit margin percentage resulted from the increase in
Plumbing Products sales and cost benefits derived from increased Lynx Golf
volumes. The gross profit margin contributed by the Power Systems segment
continued to be adversely impacted by the low profit on a power plant project
which contributed 48% of the segment's construction revenues in the six-month
period.
Marketing and administration expenses were up primarily as the result of
commissions on the increased Lynx Golf and Plumbing Products sales. Interest
income last year included earnings recognized on long-term receivables of the
Power Systems segment. Interest associated with prior year's income taxes on
construction contracts increased this year's expense. The higher effective
income tax rate results from tax exempt investment income being a less
significant component of pretax income this year.
The Company's backlog of unfilled orders by industry segment was as follows:
September June September
1995 1995 1994
(Millions)
Power Systems $ 95 $118 $116
Water Control 139 150 61
Lynx Golf 5 14 2
Mechanical Power Transmission 12 13 11
$251 $295 $190
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Form 10-Q, Part II, Item 1 for the quarterly period ended June 30, 1995.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the August 4, 1995 annual meeting of shareholders, votes were cast as
follows:
Votes For Votes Withheld
Election of directors:
For a term of one year:
David W. Wallace 10,640,936 155,292
For a term of three years each:
Edward J. Campbell 10,646,769 149,459
Robert R. Womack 10,675,282 120,947
Adopt 1995 Directors Stock Option Plan
Votes For 9,685,132 Abstentions 171,317
Votes Against 939,779 Broker Nonvotes -0-
Ratify appointment of auditors
Votes For 10,656,083 Abstentions 42,727
Votes Against 97,418 Broker Nonvotes -0-
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
The exhibits listed in the Exhibit Index to this report on Form 10-Q are
incorporated herein by reference. Management contracts and compensatory plan
arrangements are preceded by an asterisk (*) in the Exhibit Index.
Reports on Form 8-K
No reports were filed during the quarter for which this report is filed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ZURN INDUSTRIES, INC.
(Registrant)
November 10, 1995 /s/ Dennis Haines
Dennis Haines
General Counsel and Secretary
November 10, 1995 /s/ John E. Rutzler III
John E. Rutzler III
Vice President-Controller
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EXHIBIT INDEX
3 Articles Of Incorporation And By-laws
Restated Articles of Incorporation with Amendments through Incorporated
August 7, 1987 filed as Exhibit 19A to Form 10-Q for the by reference
quarter ended September 30, 1987
3.1 By-laws as of August 1995
4 Instruments Defining The Rights Of Security Holders,
Including Indentures
Description of Common Stock contained in the prospectus Incorporated
dated July 26, 1972 beginning on page 18 ("Description of by reference
Capital Stock") forming a part of Amendment No. 3 to the
Form S-1 Registration Statement No. 2-44631
Description of Common Stock as set forth in the Restated Incorporated
Articles of Incorporation with Amendments through by reference
August 7, 1987 filed as Exhibit 19A to Form 10-Q for the
quarter ended September 30, 1987
Description of Preferred Share Purchase Rights contained Incorporated
in the Form 8-A/A Registration Statement Amendment No. 1 by reference
dated June 27, 1995
10 Material Contracts
* 1986 Stock Option Plan filed as Exhibit 28A to Form S-8 Incorporated
Post-Effective Amendment No. 1 Registration Statement No. by reference
33-19103
* 1989 Directors Stock Option Plan filed as Exhibit 28 to Incorporated
Form S-8 Registration Statement No. 33-30383 by reference
10.10* 1995 Directors Stock Option Plan
* 1991 Stock Option Plan filed as Exhibit 28 to Form S-8 Incorporated
Registration Statement No. 33-49224 by reference
* Supplemental Executive Retirement Plan of Zurn Incorporated
Industries, Inc. filed as Exhibit 10.1 to Form 10-Q for by reference
the quarter ended December 31, 1994
* 1982 Retirement Plan for Outside Directors of Zurn Incorporated
Industries, Inc. filed as Exhibit 19A to Form 10-Q for by reference
the quarter ended June 30, 1989
* 1986 Retirement Plan for Outside Directors of Zurn Incorporated
Industries, Inc. filed as Exhibit 19B to Form 10-Q for by reference
the quarter ended June 30, 1989
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* Agreements Relating to Employment dated June 5, 1989 with Incorporated
D.F. Fessler, W.A. Freeman, and J.A. Zurn filed as Exhibit by reference
10H to Form 10-Q for the quarter ended June 30, 1989;
dated October 17, 1994 with R.R. Womack filed as Exhibit
10.2 to Form 10-Q for the quarter ended December 31, 1994;
dated May 1, 1995 with D.L. Butynski and July 1, 1995 with
J.R. Mellett filed as Exhibit 10.8 to Form 10-Q for the
quarter ended June 30, 1995
10.11* Agreement Relating to Employment dated August 14, 1995 with
F.E. Sheeder
* Zurn Industries, Inc. Deferred Compensation Plan for Non- Incorporated
Employee Directors filed as Exhibit 19E to Form 10-Q for by reference
the quarter ended June 30, 1989
* Zurn Industries, Inc. Deferred Compensation Plan for Incorporated
Salaried Employees filed as Exhibit 10.3 to Form 10-Q for by reference
the quarter ended December 31, 1994
* Zurn Industries, Inc. Optional Deferment Plan for Incorporated
Incentive Compensation Plan Participants filed as Exhibit by reference
10.4 to Form 10-Q for the quarter ended December 31, 1994
* Zurn Supplemental Pension Plan filed as Exhibit 10.5 to Incorporated
Form 10-Q for the quarter ended December 31, 1994 by reference
* Indemnity Agreements dated August 14, 1986 with E.J. Incorporated
Campbell, A.S. Cartwright, D.W. Wallace, and J.A. Zurn by reference
filed as Exhibit 19J to Form 10-Q for the quarter ended
September 30, 1986; dated October 20, 1986 with D.F.
Fessler and W.A. Freeman filed as Exhibit 19A to Form
10-Q for the quarter ended December 31, 1986 and with
J.E. Rutzler III filed as Exhibit 10B to Form 10-Q for
the quarter ended December 31, 1988; dated January 25,
1993 with W.E. Butler, April 1, 1993 with D. Haines, and
August 6, 1993 with Z. Baird filed as Exhibit 10A to Form
10-Q for the quarter ended June 30, 1993; dated October
17, 1994 with R.R. Womack filed as Exhibit 10.6 to Form
10-Q for the quarter ended December 31, 1994; dated May
1, 1995 with D.L. Butynski, June 8, 1995 with R.D. Neary,
and July 1, 1995 with J.R. Mellett filed as Exhibit 10.9
to Form 10-Q for the quarter ended June 30, 1995
10.12* Indemnity Agreement dated August 14, 1995 with F.E. Sheeder
* Irrevocable Trust Agreements for the Grantor's: 1982 Incorporated
Retirement Plan for Outside Directors of Zurn Industries, by reference
Inc.; 1986 Retirement Plan for Outside Directors of Zurn
Industries, Inc.; Deferred Compensation Plan for Non-
Employee Directors; Supplemental Executive Retirement
Plan for Zurn Industries, Inc.; Zurn Industries, Inc.
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Supplemental Pension Plan for Participants in the
Deferred Compensation Plan for Salaried Employees;
Deferred Compensation Plan for Salaried Employees;
Optional Deferment Plan for Incentive Compensation Plan
Participants filed as Exhibit 19I to Form 10-Q for the
quarter ended September 30, 1986
* Second Irrevocable Trust Agreement for the Grantor's Incorporated
Indemnity Agreements filed as Exhibit 10A to Form 10-Q by reference
for the quarter ended December 31, 1988
* Incentive Compensation Plan filed as Exhibit 10.7 to Incorporated
Form 10-K for the year ended March 31, 1995 by reference
11 Statement Re Computation Of Per Share Earnings
Computation of Earnings Per Share
27 Financial Data Schedule SEC Edgar
Filing Only
* - Management contracts and compensatory plan arrangements.
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EXHIBIT 3.1
ZURN INDUSTRIES, INC.
A Pennsylvania Company
BY-LAWS
As of August 1995
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ARTICLE I. SHAREHOLDERS' MEETINGS, RIGHTS AND LIABILITIES
Section 1. Meetings of the shareholders of Zurn Industries, Inc.
(hereinafter called the "Company") shall be held at the registered office of
the Company in the City of Erie, Commonwealth of Pennsylvania, or at such
other place within or without the Commonwealth of Pennsylvania as shall be
determined by the Board of Directors and stated in the notice of such meeting.
Section 2. The annual meeting of the shareholders for the election of
Directors and the transaction of such other business as may properly come
before the meeting, shall be held in the first week of August in each year on
such date and at such time as the Board of Directors may prescribe. The
business at each annual meeting of shareholders shall include only (a) the
election of Directors, (b) matters contained in the notice of the meeting or
any supplements thereto, (c) matters brought before the meeting by or at the
direction of the Board of Directors, (d) matters properly brought before the
meeting by shareholder(s) (1) in accordance with the proxy rules of the
Securities and Exchange Commission relating to shareholder proposals, or (2)
by written notice of such business delivered to or mailed to the Secretary of
the Company and received at the principal office of the Company not less than
ninety (90) days prior to the meeting and (e) matters which are incidental or
germane to any of the foregoing.
Section 3. Special meetings of shareholders may be called at any time
by a majority of the Board of Directors, or by the Chairman or Chief Executive
Officer of the Company. Upon the written request of any of the foregoing
officers or majority of Directors to call a special meeting, it shall be the
duty of the Secretary to call a special meeting of the shareholders to be held
at such time as the Secretary may fix, not more than sixty (60) days after
receipt of such request. If the Secretary shall neglect or refuse to issue
such call, the person or persons making the request may do so. Only such
business shall be conducted as shall have been specified in the notice of
meeting (or any supplement thereto) or brought before the meeting at the
direction of the Board of Directors.
Section 4. Written notice of the time and place of each meeting of the
shareholders shall be given by or at the direction of the person authorized to
call the meeting to each shareholder of record at least ten (10) days prior to
the date fixed for such meeting, unless a greater period of notice shall be
required by law in any particular case. Such notice shall be given by sending
a copy thereof by first class or express mail, postage prepaid, or such other
manner as may be prescribed by law, to the address of each shareholder of
record. When notice is deposited with the United States mail, such notice
shall be deemed to have been given to the person entitled thereto when
deposited in the United States mail for transmission. All such notices shall
specify the place, day, and hour of the meeting, and in the case of a special
meeting shall specify the general nature of the business to be transacted at
such meeting.
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Section 5. Any annual or special meeting of shareholders may be
adjourned, except as otherwise provided by law, from time to time, by a
majority vote of the shareholders present or represented at the meeting,
whether or not a quorum is present. When a meeting is adjourned, it shall not
be necessary to give any notice of the adjourned meeting or of the business to
be transacted at such adjourned meeting other than by an announcement at the
meeting at which such adjournment is taken, unless the Board of Directors
fixes a new record date for the adjourned meeting.
Section 6. The presence in person or by proxy of the holders of a
majority of the outstanding shares of voting stock shall constitute a quorum.
In case an adjournment of the meeting called for the election of Directors,
for lack of a quorum, shall have been taken, the shareholders who attend
either personally or by proxy the adjourned meeting, although less than a
quorum as fixed in this Section, shall nevertheless constitute a quorum for
the purpose of electing directors. In case of an adjournment of any other
meeting of shareholders for one or more periods aggregating at least 15 days,
for the lack of a quorum, the shareholders who attend either personally or by
proxy this adjournment meeting, although less than a quorum as fixed in this
Section, shall nevertheless constitute a quorum for the purposes of acting
upon any matters set forth in the notice of the meeting if the notice states
that those shareholders who attend the adjourned meeting shall nevertheless
constitute a quorum for the purpose of acting upon the matter.
Section 7. Meetings of shareholders shall be presided over by the
Chairman of the Company, or in his absence, by the President. The duties of
the Secretary of such meetings shall be performed by the Secretary of the
Company, or in his absence by an assistant secretary.
Section 8. At all meetings of shareholders, each shareholder shall be
entitled to one vote for each share of stock held by him. In election of
Directors, the candidates receiving the highest number of votes up to the
number of Directors to be elected shall be elected. Every shareholder may vote
either in person or by proxy. Every proxy shall be executed in writing by the
shareholder, or by his duly authorized attorney-in-fact, and filed with the
Secretary of the meeting at or before the meeting.
ARTICLE II. DIRECTORS
Section 1. The business and affairs of the Company shall be managed by
a Board of not less than three (3) Directors and not more than thirteen (13)
Directors, the exact number of which shall be established from time to time by
resolution of the Board of Directors, divided into three (3) classes, each
class being as nearly equal in number as possible. The term of office of one
of the three classes shall expire in each year. At each Annual Election, the
Directors of the class to be elected shall be elected for a term of three (3)
years each, provided that the term of one or more Directors shall be one or
two years when necessary for the purpose of making each class of Directors as
nearly equal in number as possible to each other class of Directors. The
Directors need not be residents of the Commonwealth of Pennsylvania.
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Section 2. Meetings of the Board of Directors may be held at such
place within the Commonwealth of Pennsylvania or elsewhere as the majority of
the Directors may from time to time specify, or as may be designated in the
notice calling the meeting.
Section 3. Regular meetings of the Board may be held without notice at
such places and times as may be determined from time to time by resolution of
the Board.
Section 4. Special meetings of the Board of Directors may be called by
the Chairman, the Chief Executive Officer, or the Chairman-Executive
Committee. Any such meeting shall be deemed to have been duly called if notice
thereof stating the time and place of such meeting shall have been given to
each Director at least two (2) days prior to the date fixed for such meeting.
Such notice may be given by sending a copy thereof through first class or
express mail, postage prepaid, or courier service, postage prepaid, or by
facsimile transmission (or such other means as may be permitted by law).
Section 5. Whenever any written notice is required to be given to any
Director, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein,
shall be deemed equivalent to the giving of such notice.
Section 6. Meetings of the Board of Directors shall be presided over
by the Chairman of the Company, or in his absence by the Chief Executive
Officer or in the absence of both by the Chairman -- Executive Committee. If
all three (3) of said officers should be absent, then the meeting shall be
presided over by a Director chosen by a majority of the Directors then
present. The duties of the Secretary of meetings of the Board of Directors
shall be performed by the Secretary of the Company, or in his absence by a
Director designated by the Presiding Officer.
Section 7. A majority of the Directors who have been elected shall be
necessary to constitute a quorum for the transaction of business, and the acts
of a majority of the Directors present at any meeting at which a quorum is
present shall be the acts of the Board of Directors; provided, that if all the
Directors shall severally or collectively consent in writing to any action
taken or to be taken by the Company, such action shall be valid as corporate
action as though it had been authorized at a meeting of the Board of
Directors. One or more Directors may participate in a meeting of the Board or
of a Committee of the Board by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other.
Section 8. Any meeting of the Board of Directors at which a quorum is
present may be adjourned from time to time by a vote of a majority of the
Directors present. At the adjourned meeting, any business may be transacted
or other action taken which might have been transacted or taken at the meeting
as originally called, and no notice need be given of any adjourned meeting or
of the business to be transacted at the meeting other than by an announcement
at the meeting at which such adjournment is taken.
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Section 9. Any Director may resign at any time by giving written
notice to the Chairman, to the Chief Executive Officer, or to the
Chairman-Executive Committee of the Company. The resignation of any Director
shall take effect at the time specified therein and, unless otherwise
specified therein, acceptance of such resignation shall not be necessary to
make it effective.
Section 10. Vacancies on the Board of Directors, including vacancies
resulting from an increase in the number of Directors, shall be filled by a
majority of the remaining members of the Board, although less than a quorum,
and each person so elected shall be a Director for the term of his predecessor
and until his successor is elected by the shareholders at an annual meeting of
the shareholders, or at any special meeting duly called for that purpose and
held prior thereto. No decrease in the number of Directors constituting the
Board of Directors shall shorten the term of any incumbent Director.
Section 11. By resolution of the Board of Directors, a fixed sum and
expenses of attendance, if any, may be allowed to Directors who are not
employees or officers of the Company for their services, for attendance at any
regular or special meeting of the Board of Directors. A Director may serve
the Company in any other capacity and may also be a salaried officer of the
Company.
Section 12. Written notice of the intent to make a nomination at a
meeting of shareholders must be received by the Secretary of the Company not
later than (a) with respect to an election to be held at an annual meeting of
shareholders, ninety (90) days in advance of such meeting; and (b) with
respect to an election to be held at a special meeting of shareholders for the
election of directors, the close of business on the seventh day following the
day on which notice of such meeting is first given to shareholders. The notice
must contain (a) the name and address of the shareholder who intends to make
the nomination and of the person or persons to be nominated; (b) a
representation that the shareholder is a holder of record of the Company's
stock entitled to vote at the meeting and intends to appear in person or by
proxy at the meeting to nominate the person or persons specified in the
notice; (c) a description of all arrangements or understandings between the
shareholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nominee or nominations are to be made
by the shareholder as would have been required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission had each nominee been nominated, or intended to be nominated, by
the Board of Directors of the Company; and (e) the consent of each nominee to
serve as a director of the Company if so elected.
ARTICLE III. COMMITTEES
Section 1. Appointment. The Board of Directors may from time to time
name certain of its members to act as a committee or committees at, or in the
intervals between, meetings of the Board, and may delegate to such committee
or committees powers to be exercised under the control and direction of the
Board. Each such committee and each member thereof shall serve at the pleasure
of the Board.
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Section 2. Executive Committee. The Board of Directors may create from
its membership and define the powers and duties of an Executive Committee.
During the intervals between meetings of the Board of Directors, the Executive
Committee shall possess and may exercise all of the powers of the Board of
Directors in the management and control of the business of the Company to the
extent permitted by law. All action taken by the Executive Committee shall be
reported to the Board of Directors at its first meeting thereafter.
Section 3. Committee Action. Unless otherwise provided by the Board
of Directors, a majority of the members of any committee named by the Board of
Directors pursuant to this Section shall constitute a quorum at any meeting
thereof and the act of a majority of the members present at a meeting at which
a quorum is present shall be the act of such committee. Action may be taken
by any such committee without a meeting by a writing signed by all its
members. Any such committee shall prescribe its own rules for calling and
holding meetings and its method of procedure, subject to any rules prescribed
by the Board of Directors.
ARTICLE IV. OFFICERS AND AGENTS
Section 1. The following executive officers of the Company shall be
elected annually by the Board of Directors:
Chairman of the Board
Chief Executive Officer
Chairman -- Executive Committee
Executive or Group Vice Presidents
Senior Vice President -- Chief Financial Officer
Vice President -- Controller
General Counsel and Secretary
Section 2. The highest ranking officers of the Company shall be the
Chairman and the Chief Executive Officer. Both offices may be held by the
same person. The Chairman (and in his absence the Chief Executive Officer)
shall preside at all meetings of the shareholders and Directors.
Section 3. The office of President is merged into the office of Chief
Executive Officer. The Chief Executive Officer shall act as President as
required by law, contract, prior resolution of the Board, or otherwise.
Section 4. The Chairman -- Executive Committee shall be a
nonmanagement director who shall preside at all meetings of the Executive
Committee. In the absence of both the Chairman and the Chief Executive
Officer, the Chairman -- Executive Committee shall preside at all meetings of
the shareholders and Directors.
Section 5. The Board shall elect such Executive and Group Vice
Presidents as it deems appropriate. Each Executive or Group Vice President
shall be responsible for the overall activities of various product groups of
the Company and its subsidiaries. They shall report to the Chief Executive
Officer and assist him in such duties as he shall direct from time to time.
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Section 6. The Senior Vice President -- Chief Financial Officer
shall report to the Chief Executive Officer and be responsible for tax,
securities law, other required filings, and all other financial affairs of the
Company, including supervision of the controller and audit functions. The
Senior Vice President -- Chief Financial Officer will also be responsible for
human resources and any other administrative matters that the Chief Executive
Officer delegates to him. The Senior Vice President -- Chief Financial
Officer shall act as Treasurer of the Company and shall be responsible for
conducting treasury activities, including the care and custody of funds and
financial assets, for supervising banking operations and for determining the
amount and source of funds required to meet outstanding and planned
commitments. He shall be responsible for maintenance of banking relations,
arranging for lines of credit, controlling deposit levels, bank selection, and
insurance functions.
Section 7. In addition to the Senior Vice President -- Chief
Financial Officer, the Board may elect such other Senior Vice Presidents as
the Board deems appropriate. Duties of such officers shall be assigned by the
Board and the Chief Executive Officer.
Section 8. The Vice President -- Controller shall be the principal
accounting officer having direct supervision and control over all accounting
personnel. The Vice President --Controller shall report to the Chief
Financial Officer, and shall be responsible for initiating, preparing and
issuing standard practices relating to all accounting matters and procedures,
and for coordinating systems throughout the Company, including clerical and
office methods, reports, and procedures. He shall be responsible for the
preparation of financial statements and tax returns. He shall ascertain
currently that all financial transactions covered by the minutes of the Board
of Directors and the Executive Committee are properly executed and recorded.
Section 9. General Counsel and Secretary shall be a member in good
standing of the Pennsylvania Bar and have responsibility for the legal affairs
of the Company, including the retention of outside counsel as required to
protect the Company's interests. General Counsel and Secretary shall record
the minutes of the meetings of the shareholders and Board of Directors, shall
advise and consult with the Chairman, the Chief Executive Officer, the
Chairman-Executive Committee, and other officers of the Company regarding
matters requiring shareholder or Board action, shall attend to giving and
certifying all notices of the Company, shall prepare or have prepared the list
of shareholders required in connection with shareholder meetings and supervise
the solicitation of proxies, and shall perform such other duties as may be
conferred upon him by the Chairman, the Chief Executive Officer, the
Chairman-Executive Committee, and the Board of Directors.
Section 10. The foregoing responsibilities and titles of the elected
executive officers may be modified by resolution of the Board.
Section 11. Each officer elected by the Board shall hold office until
the annual meeting of shareholders next succeeding his election or until his
successor shall have been chosen and qualified, unless a shorter period be
specified at the time of his election, or until his death, or until he has
-18- -6-<PAGE>
earlier been removed or has resigned. Any officer or agent elected by the
Board of Directors may be removed by the Board of Directors at a regular
meeting thereof or at a special meeting for that purpose whenever in its
judgment the best interests of the Company will be served thereby.
Section 12. The officers of the Company, other than the Chairman,
Chief Executive Officer and Chairman-Executive Committee, need not be
Directors.
Section 13. The Chief Executive Officer may from time to time appoint
additional officers having responsibility for groups, divisions,
representative offices, or specific staff functions. Such officers shall
report to such other officers, hold office for such periods, have such
authority, and perform such duties as the Chief Executive Officer may from
time to time prescribe.
Section 14. Except to the extent limited by law, the Board may name
such officers, employees and agents or representatives of the Company as it
may deem desirable, or as these By-Laws otherwise require, as members of
committees.
Section 15. Compensation of officers, employees and agents of the
Company elected by the Board shall be payable in such amounts and at such
times as may be determined from time to time by the Board of Directors, and
compensation of other officers, employees, and agents shall be payable in such
amounts as may be determined by the Chief Executive Officer. Prior to the
determination of any salary for any officer or agent of the Company in excess
of a dollar amount specified by the Board of Directors from time to time, the
Board or an authorized committee of the Board shall review and approve such
salary as proposed. The determination and establishment of any such salary
shall be made only as approved by the Board or its authorized committee.
ARTICLE V. CONTRACTS, LOANS, CHECKS, DRAFTS, ETC.
Section 1. The Board of Directors, except as in these By-Laws
otherwise provided, may authorize officers, employees and agents or any of
them to enter into any contract or execute and deliver any instrument in the
name and on behalf of the Company, and such authority may be general or
confined to specific instances; and unless so authorized by the Board of
Directors or by the provisions of these By-Laws, no officer, employee or agent
shall have any power or authority to bind the Company, except as otherwise
provided by the law, by any contract or engagement or to pledge its credit or
to render it liable pecuniarily for any property or to any amount. Any officer
or agent of the Company authorized so to act by the Board of Directors or as
otherwise provided in these By-Laws may effect loans and advances of any kind
for the Company from any bank, trust company or other institution, or from any
firm, corporation or individual, and for such loans and advances may make,
execute and deliver bonds, notes or other obligations or evidences of
indebtedness of the Company for money so borrowed, and as security for the
payment of the same and interest thereon may mortgage, pledge, convey or
-19- -7-<PAGE>
assign in trust the whole or any part of the property, real or personal, of
the corporation whether at the time owned or thereafter acquired, except any
franchises of the Company.
ARTICLE VI. SHARES OF STOCK AND THEIR TRANSFER
Section 1. Certificates for shares of the Company shall be in such
form as is required by the laws of the Commonwealth of Pennsylvania and as
shall be approved by the Board of Directors. Each shareholder shall be
entitled to a share certificate, which shall be signed by the Chief Executive
Officer, Treasurer, or Secretary of the Company. Either actual or facsimile
signature may be used.
Section 2. Transfer of shares of stock of the Company (by the
registered holder thereof or by their attorneys, thereunto authorized by a
power of attorney duly executed and filed with the stock transfer agent
designated by the Company, or by their legal representative upon the surrender
for cancellation of the certificate or certificates to be transferred) shall
be made only on the books of the Company; but no shares of stock shall be
transferable until all previous costs thereon of any amounts due the Company
shall have been paid. A person in whose name shares of stock stand on the
books of the Company may be deemed the owner thereof for all purposes as
regards the Company; provided, however, that whenever such transfer of shares
of stock shall be made as collateral security, such fact, if known to the
transfer agent for the Company, shall be expressed in the entry of transfer.
Section 3. The holder of any shares of stock of the Company shall
immediately notify the Company or its designated transfer agent of any loss,
destruction, or mutilation of the certificate therefor, and the Board of
Directors may, in its discretion, cause to be issued to him a new certificate
or certificates upon the surrender of the mutilated certificate or, in the
case of loss or destruction of the certificate, upon satisfactory proof of
such loss or destruction, and the Board of Directors may, in its discretion,
require the owner of the lost or destroyed certificate or his legal
representative to give the Company a bond in such sum and with such surety or
sureties as it may direct, to indemnify the Company against any claim that may
be made against it on account of the alleged loss or destruction of any such
certificate.
ARTICLE VII. SEAL
The corporate seal of the Company shall be in the form expressed hereon and
such seal may be used by causing a facsimile thereof to be impressed or
affixed or in any manner reproduced upon any document.
ARTICLE VIII. FISCAL YEAR
The fiscal year of the company shall begin on the first day of April in
each year and end on the last day of March in the following year.
-20- -8-<PAGE>
ARTICLE IX. LIMITS OF LIABILITY AND INDEMNIFICATION
DIRECTORS AND OFFICERS
Section 1. To the fullest extent that the laws of the Commonwealth of
Pennsylvania, as in effect on January 27, 1987, or as thereafter amended,
permit the elimination or limitation of liability of directors, no director of
the Company shall be personally liable for monetary damages as such for any
action taken or any failure to take any action as a director. The provisions
of this Article shall be deemed to be a contract with each director of the
Company who serves as such at any time while such provisions are in effect,
and each director shall be deemed to be serving as such in reliance on such
provisions. Any amendment to or repeal of this Article, or adoption of any
other Article or By-Law of the Company, which has the effect of increasing
director liability shall require the affirmative vote of at least 80% of the
voting power of the then outstanding shares of capital stock of the Company
entitled to vote in any election of directors, voting together as a single
class. Any such Amendment or repeal, or other Article or By-Law, shall operate
prospectively only and shall not have effect with respect to any action taken,
or any failure to act, by a director prior thereto.
Section 2. (a) Each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
("proceeding"), by reason of the fact that he, or a person of whom he is the
legal representative, is or was a director, officer or employee of the Company
or is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action in an official
capacity as a director, officer or employee of the Company or in any other
capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Company to the fullest extent authorized
by the Pennsylvania Business Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide prior to
such amendment) against all expenses, liability and loss (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to
be paid in settlement) reasonably incurred or suffered by such person in
connection therewith. Such right shall be a contract right and shall include
the right to be paid by the Company expenses incurred in defending any such
proceeding in advance of its final disposition; provided, however, that, the
payment of such expenses incurred by a director, officer or employee of the
Company in his or her capacity as such in advance of the final disposition of
such proceeding, shall be made only upon delivery to the Company of an
undertaking, by or on behalf of such director, officer or employee, to repay
all amounts so advanced if it should be determined ultimately that such
director, officer or employee is not entitled to be indemnified under this
Section or otherwise.
-21- -9-<PAGE>
(b) If a claim under Section 1 is not paid in full by the Company within
forty-five (45) days after a written claim has been received by the Company,
the claimant may at any time thereafter bring suit against the Company to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled also to be paid the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought
to enforce a claim for expenses incurred in defending any proceeding in
advance of its final disposition where the required undertaking has been
tendered to the Company) that the claimant has not met the standards of
conduct which make it permissible under the Pennsylvania Business Corporation
Law for the Company to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on the Company. Neither the failure
of the Company (including its Board of Directors, independent legal counsel,
or its shareholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is proper in the
circumstances because he has met the applicable standard of conduct set forth
in the Pennsylvania Business Corporation Law, nor an actual determination by
the Company (including its Board of Directors, independent legal counsel, or
its shareholders) that the claimant had not met such applicable standard of
conduct, shall bar the action or create an irrefutable presumption that
claimant had not met the applicable standard of conduct.
ARTICLE X. AMENDMENT
The Board of Directors shall have the power and authority to make, adopt,
alter, amend, and repeal all By-Laws of the Company, at any regular or special
meeting at which a quorum is present by majority vote of the Directors at any
such meeting regardless of whether the shareholders have previously adopted
the By-Law being amended or repealed, except with respect to those matters
that are by statute reserved exclusively to shareholders; provided, however,
that all such By-Laws shall be subject to change or repeal by the shareholders
at any annual meeting or at any special meeting called for such purpose at
which a quorum is present by a vote of the holders of a majority of the shares
of stock present in person or by proxy.
-22- -10-
EXHIBIT 10.10 - 1995 DIRECTORS STOCK OPTION PLAN
I. PURPOSE
The Zurn Industries, Inc. 1995 Directors Stock Option Plan (the "1995
Plan") is intended to advance the interests of Zurn Industries, Inc.
(the "Company") and its Shareholders by affording to directors of the
Company, upon whose judgment and experience the Company is dependent
for the successful administration of its business, the incentive
advantages inherent in stock ownership, to the end that the Company
may attract and retain them as directors.
II. OPTIONS
The Shareholders of the Company have authorized the distribution of
options with respect to no more than 150,000 shares of Common Stock of
the Company subject to adjustment as provided in Section V. Such
shares may be authorized and unissued or may have been issued and
reacquired and held in the Treasury of the Company. Any shares which
have been subject to an option which for any reason expires or is
terminated unexercised shall again be available for options.
Each nonemployee member of the Company's Board of Directors shall be a
Participant in the 1995 Plan. No person who is also an employee of
the Company or one of its subsidiaries shall be a Participant except
with respect to any options received prior to becoming such an
employee.
Each Participant who was not an employee of the Company or of one of
its subsidiaries during the six-month period preceding the date
options are distributed shall receive on the first business day
following the final adjournment of the Company's Annual Meetings of
Shareholders during the term of the 1995 Plan an option to purchase
2,000 shares of the Company's Common Stock provided there is a
sufficient number of shares available; otherwise, the number of shares
shall be prorated.
The holder of an option shall, as such, have none of the rights of a
Shareholder.
III. TERMS AND CONDITIONS OF OPTIONS
Option Price
The option price shall be the closing price of the Common Stock
of the Company on The New York Stock Exchange on the day prior to
the day the option is distributed or, if no sale of the Company's
Stock shall have been made on that Exchange on that day, on the
next preceding day on which there was a sale (Fair Market Value).
In no event shall the purchase price be less than the par value
of the shares.
-23-<PAGE>
Payment
Payment for all shares shall be made in cash or with Common Stock
of the Company or a combination of both delivered at the time
that an option, or any part thereof, is exercised. No shares
shall be issued until full payment therefor has been made.
Common Stock of the Company used as payment shall have been owned
by the optionee not less than six months preceding the date the
option is exercised and shall be valued at its Fair Market Value.
Term Of Option
The duration of stock options shall be ten years from the date of
distribution.
Exercise Of Option
No option shall be exercised prior to six months after the date on
which the option was distributed. While an optionee is a Director of
the Company and in the case of an optionee who ceases to be a Director
of the Company by reason of retirement, full and complete disability,
or death, an option may be exercised prior to its expiration only by
the optionee or, in the case of death, by the executor or
administrator of the optionee's estate or by a person who acquired the
right to exercise such option by bequest or inheritance. All option
privileges continue for five years after retirement, full and complete
disability, or death, but not after the expiration of the option term.
Otherwise, an exercisable option may only be exercised within the
ninety day period after an optionee ceases to be a Director of the
Company. An option shall not be transferable by the optionee other
than by will or by the laws of descent and distribution.
IV. CHANGE IN CONTROL OF THE COMPANY
Notwithstanding any other provisions in the 1995 Plan or the terms of
any option distributed pursuant to the 1995 Plan, in the event of a
change in control, each optionee may, during the period of thirty days
following the change in control, require the Company to purchase
outstanding options distributed more than six months before the change
in control from the optionee at a purchase price equal to the excess
of the market value per share over the option price multiplied by the
number of shares subject to such options specified by the optionee for
purchase in a written notice to the Company, attention of the
Secretary. For purposes of this paragraph, market value per share
shall mean the higher of (1) the average of the highest sales price
per share of the Company's Common Stock on The New York Stock Exchange
Composite Tape on each of the five trading days immediately preceding
the date the optionee so notifies the Company and (2) the highest
price, if any, offered in connection with a change in control. The
amount paid to each optionee by the Company shall be in cash or by
certified check and shall be reduced by any taxes required to be
withheld.
-24-<PAGE>
A Change in Control shall be deemed to occur if: (1) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended [the "Exchange Act"], other than the
Company, any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or any Company owned, directly
or indirectly, by the Shareholders of the Company in substantially the
same proportions as their ownership of stock of the Company), becomes
the "beneficial owner" (as defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's
then outstanding securities; (2) during any period of two consecutive
years (not including any period prior to the distribution of an
option) individuals who at the beginning of such period constitute the
Board, and any new director (other than a director designated by a
person who has entered into an agreement with the Company to effect a
transaction described in clauses (1), (3) or (4) of this paragraph)
whose election by the Board or nomination for election by the
Company's Shareholders was approved by a vote of at least two-thirds
of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election
was previously so approved cease for any reason to constitute a
majority thereof; (3) the Shareholders of the Company approve a merger
or consolidation of the Company with any other company, other than (a)
a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation or (b) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 50% of the
combined voting power of the Company's then outstanding securities; or
(4) the Shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
V. ADJUSTMENTS IN EVENT OF RECAPITALIZATION
If the Company shall issue any additional shares of Common Stock by
way of stock dividend, stock split, subdivision or reclassification of
shares of outstanding Common Stock, then in any of those events the
aggregate number of shares subject to the 1995 Plan, and the number of
shares and the option price per share of all stock subject to
outstanding options shall be adjusted in order to appropriately
reflect such capitalization changes.
Upon any merger of one or more corporations into the Company or after
any consolidation in which the Company shall be the surviving
corporation, each optionee shall, at no cost, be entitled, upon any
exercise of an option, to receive (subject to any required action by
the Shareholders) in place of the shares of the Company as to which
such option shall have been exercised, the number and class of stock
-25-<PAGE>
or other securities to which such option shall be entitled pursuant to
the terms of the agreement of merger or consolidation. The Board of
Directors has the right to make, in its sole discretion, any
adjustment required to equitably reflect any changes in the number or
kind of shares to which the optionee would be entitled under the terms
of such agreement of merger or consolidation had the option been
exercised at the time of such merger or consolidation. Anything
herein contained to the contrary notwithstanding, in the event (1) the
Company shall be liquidated or dissolved, (2) the Company shall be a
party to a merger or consolidation in which the Company will not be
the surviving corporation, or (3) the Company shall sell substantially
all of its assets and business to another corporation for a
consideration consisting principally of shares or other securities of
the purchasing corporation which are to be distributed among the
Shareholders of the Company (other than dissenting Shareholders), then
in any of these events the Board of Directors, prior to the
consummation of such dissolution, merger, consolidation or sale of
assets, shall make every reasonable effort to advise the holders of
outstanding options that such transaction is imminent, and shall in
the case of liquidation, and may in the case of such merger,
consolidation or sale of assets, in its sole discretion, fix a date
and notify the optionees thereof, at least thirty days prior thereto,
on or prior to which, but not thereafter, the optionees may exercise
the options in respect of any or all of the shares then remaining
unpurchased.
VI. ADMINISTRATION OF THE 1995 PLAN
The 1995 Plan shall be administered by the Board of Directors of the
Company which shall construe and interpret the 1995 Plan. The 1995
Plan may be terminated, except with respect to outstanding options, at
any time by the Board of Directors.
The Board of Directors may amend the 1995 Plan provided that, subject
to the provisions of Section IV, no amendment shall (1) impair any
option theretofore distributed under the 1995 Plan, (2) change the
option price, or (3) without the approval of Shareholders, increase
the number of shares of Common Stock authorized to be optioned and
sold or change the number of shares which may be purchased pursuant to
an option.
VII. EFFECTIVE DATE AND TERM OF 1995 PLAN
The 1995 Plan shall be effective on August 4, 1995, and shall
terminate August 31, 2005. However, termination shall not impair the
validity of outstanding options nor shall it affect the authority of
the Board of Directors to administer the 1995 Plan after August 31,
2005, or earlier termination date, to the extent that it relates to
those options which remain outstanding beyond such date.
-26-
EXHIBIT 10.11 - AGREEMENT RELATING TO EMPLOYMENT
Agreement Relating to Employment in the form of the attached entered into with
the following Employee as of the date indicated:
F.E. Sheeder August 14, 1995
-27-<PAGE>
Date
Name
Address
RE: Agreement Relating To Employment
Dear Mr. __________:
ZURN INDUSTRIES, INC, (the "Company") considers it in the best interests
of its stockholders to foster the continuous employment of key management
personnel. In this connection, the Board of Directors of the Company (the
"Board") recognizes that, the possibility of a change in control may exist and
that such possibility, and the uncertainty and questions which it may arise
among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its stockholders.
Therefore, in order to induce you to remain in the employment of the
Company, the Company agrees that you shall receive the severance benefits set
forth in this letter agreement ("Agreement") in the event your employment with
the Company is terminated subsequent to a "change in control of the Company"
(as defined in Section 2 hereof) under the circumstances described below.
1. TERM OF AGREEMENT. This Agreement shall commence on the date hereof
and shall continue in effect through December 31, 1995; and each January 1,
thereafter, the term of this Agreement shall automatically be extended for one
additional year, provided, if a change in control of the Company shall have
occurred during the original or extended term of this Agreement, this
Agreement shall continue in effect for a period of thirty-six (36) months
beyond the month in which such change in control occurred.
2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless
there shall have been a change in control of the Company, as set forth below.
For purposes of this Agreement, a "change in control of the Company" shall be
deemed to have occurred if:
(a) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended [the "Exchange
Act"], other than the Company, any trustee or other fiduciary
holding securities under an employee benefit plan of the Company,
or any Company owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their
ownership of stock of the Company) becomes the "beneficial owner"
(as defined in Rule 13d-3 promulgated under the Exchange
-28-<PAGE>
Mr. __________
Date
- -2-
Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the
Company's then outstanding securities;
(b) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board, and any new
director (other than a director designated by a person who has
entered into an agreement with the Company to effect a transaction
described in clauses (a), (c) or (d) of this Section) whose
election by the Board or nomination for election by the Company's
stockholders was approved by a vote at least two-thirds of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved cease for any reason to
constitute a majority thereof;
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other Company, other than (1) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of
the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger
or consolidation or (2) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no "person" (as hereinabove defined)
acquires more than 50% of the combined voting power of the
Company's then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all of substantially all of the
Company's assets.
3. TERMINATION FOLLOWING CHANGE IN CONTROL. If any of the events
described in Section 2 hereof constituting a change in control of the Company
shall have occurred, you shall be entitled to the benefits provided in
Subsection 4(iv) hereof upon the subsequent termination of your employment
during the term of this Agreement unless such termination is (a) because of
your death, Disability or Retirement, (b) by the Company for Cause, or (c) by
you other than for Good Reason.
-29-<PAGE>
Mr. __________
Date
- -3-
(i) DISABILITY; RETIREMENT. If, as a result of your incapacity
due to physical or mental illness, you shall have been absent
from the full-time performance of your duties with the Company
for six (6) consecutive months, and within thirty (30) days
after written notice of termination is given you shall have
not returned to the full-time performance of your duties, your
employment may be terminated for "Disability". Termination by
the Company or you of your employment based on "Retirement"
shall mean termination in accordance with the Company's
retirement policy at normal retirement age generally
applicable to its salaried employees or in accordance with any
retirement arrangement established with your consent with
respect to you.
(ii) CAUSE. Termination by the Company of your employment for
"Cause" shall mean termination upon (a) the willful and
continued failure by you to substantially perform your duties
with the Company (other than any such failure resulting from
your incapacity due to physical or mental illness or any such
actual or anticipated failure after the issuance of a Notice
of Termination, as defined in Subsection 3(iv), by you for
Good Reason) after a written demand for substantial
performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes
that you have not substantially performed your duties, or (b)
the willful engaging by you in conduct which is demonstrably
and materially injurious to the Company, monetarily or
otherwise. For purposes (of this Subsection, no act, or
failure to act, on your part shall be deemed "willful" unless
done, or omitted to be done, by you not in good faith and
without reasonable belief that your action or omission was in
the best interest of the Company. You may be terminated for
Cause only after there shall have been delivered to you a copy
of a resolution duly adopted by the affirmative vote of not
less then two thirds (2/3) of the entire membership of the
Board at a meeting of the Board called and held for such
purpose (after reasonable notice to you and an opportunity for
you, together with your counsel, to be heard before the
Board), finding that in the good faith opinion of the Board
you were guilty of conduct set forth above in clauses (a) or
(b) of the first sentence of this Subsection and specifying
the particulars thereof in detail.
-30-<PAGE>
Mr. __________
Date
- -4-
(iii) GOOD REASON. You shall be entitled to terminate your employment
for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, any of the following:
(a) a substantial adverse alteration in the nature or status of
your responsibilities from those in effect immediately prior
to a change in control of the Company other than any such
alteration primarily attributable to the fact that the Company
may no longer be a public company;
(b) a reduction by the Company in your annual base salary as in
effect on the date hereof or as the same may be increased from
time to time;
(c) the failure of the Company, without your consent, to pay to
you any portion of your current compensation, or to pay to you
any portion of an installment of deferred compensation under
any deferred compensation program of the Company, within seven
(7) days of the date such compensation is due;
(d) the failure by the Company to continue in effect any
compensation plan in which you participate including but not
limited to the Company's Incentive Compensation Plan and the
Company's Stock Option Plan, or any substitute plans adopted
prior to the change in control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan in connection
with the change in control of the Company, or
the failure by the Company to continue your participation
therein on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at
the time of the change in control;
(e) the failure by the Company to continue to provide you with
benefits substantially similar to those enjoyed by you under
any of the Company's pension, life insurance, medical, health
and accident, or disability plans in which you were
participating at the time of a change in control of the
Company, the taking of any action by the Company which would
directly or indirectly materially reduce any of such benefits
or deprive you of any material fringe benefits enjoyed by you
at the time of the change in control of the Company, or the
failure by the Company to provide you with the number of paid
vacation days to which you are entitled on the basis of years
of service with the Company in accordance with the Company's
normal vacation policy in effect at the time of the change in
control;
-31-<PAGE>
Mr. __________
Date
- -5-
(f) the failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this
Agreement, as contemplated in Section 5 hereof; or
(g) any purported termination of your employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of Subsection (iv) below (and, if applicable, the
requirements of Subsection (ii) above); for purposes of this
Agreement, no such purported termination shall be effective.
(h) a determination by you in good faith that, following a change
in control, you are no longer able to perform your duties and
responsibilities with the Company.
Your right to terminate your employment pursuant to this Subsection shall be
affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(iv) NOTICE OF TERMINATION. Any purported termination of your
employment by the Company or by you shall be communicated by
written Notice of Termination to the other party hereto in
accordance with Section 6 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so
indicated.
(v) DATE OF TERMINATION, ETC. "Date of Termination" shall mean
(a) if your employment is terminated for Disability, thirty
(30) days after Notice of Termination is given (provided that
you shall not have returned to the full-time performance of
your duties during such thirty (30) day period), and (b) if
your employment is terminated pursuant to Subsection (ii) and
(iii) above or for any other reason (other than Disability),
the date specified in the Notice of Termination which, in the
case of a termination pursuant to Subsection (ii) above shall
not be less than thirty (30) days, and in the case of a
termination pursuant to Subsection (iii) above shall not be
less than thirty (30) nor more than sixty (60) days,
respectively, from the date such Notice of Termination is
given); provided that if within thirty (30) days after any
Notice of Termination is given the party receiving such Notice
of Termination notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be
the date on which the dispute is finally determined, either by
-32-<PAGE>
Mr. __________
Date
- -6-
mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of
a court of competent jurisdiction (which is not appealable or
the time for appeal therefrom having expired and no appeal
having been perfected); provided further that the Date of
Termination shall be extended by a notice of dispute only if
such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable
diligence. Notwithstanding the pendency of any such dispute,
the Company will continue to pay you your full compensation in
effect when the notice giving rise to the dispute was given
(including, but not limited to, base salary) and continue you
as a participant in all compensation, benefit and insurance
plans in which you were participating when the notice giving
rise to the dispute was given, until the dispute is finally
resolved in accordance with this Subsection. Amounts paid
under this Subsection are in addition to all other amounts due
under this Agreement and shall not be offset against or reduce
any other amounts due under this Agreement except to the
extent otherwise provided in paragraph (c) of Subsection
4(iv).
4. COMPENSATION UPON TERMINATION OR DURING DISABILITY. Following a
change in Control of the Company, as defined by Section 2, upon
termination of your employment or during a period of disability you
shall be entitled to the following benefits:
(i) During any period that you fail to perform your full-time
duties with the Company as a result of incapacity due to
physical or mental illness, you shall continue to receive your
base salary at the rate in effect at the commencement of any
such period, together with all compensation payable to you
under the Company's long-term disability insurance program or
other [plan during such period, until this Agreement is
terminated pursuant to Section 3(i) hereof. Thereafter, your
benefits shall be determined in accordance with the Company's
insurance and retirement programs then in effect.
(ii) If your employment shall be terminated by the Company for
Cause or by you other than for Good Reason, Disability, death
or Retirement, the Company shall pay you your full base salary
through the Date of Termination at the rate in effect at the
time Notice of Termination is given, plus all other amounts to
which you are entitled under any compensation plan of the
Company at the time such payments are due, and the Company
shall have no further obligations to you under this Agreement.
-33-<PAGE>
Mr. __________
Date
- -7-
(iii) if your employment shall be terminated by you for Retirement,
or by reason of your death, your benefits shall be determined
in accordance with the Company's retirement and insurance
programs then in effect.
(iv) If your employment by the Company shall be terminated (a) by
the Company other than for Cause or Disability or (b) by you
for Good Reason or Retirement, then you shall be entitled to
the benefits provided below:
(A) the Company shall pay you your full base salary through
the Date of Termination at the rate in effect at the time
Notice of Termination is given, plus other amounts to
which you are entitled under any compensation plan of the
Company, at the time such payments are due except as
otherwise provided below;
(B) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall
pay as severance pay to you a lump sum severance payment
(together with payments provided in paragraphs C, D, and E
below, the "Severance Payment") equal to 300% of the
greater of (i,) your annual base salary in effect on the
Date of Termination or (ii) your annual base salary in
effect immediately prior to the change in control of the
Company and 300% of the average of the annual bonus paid
to you for the three full fiscal years preceding the
termination.
(C) If any of the Severance Payments will be subject to the
tax (the "Excise Tax") imposed by section 4999 of the
Internal Revenue Code, (or any similar tax that may
hereafter be imposed) the Company shall pay to you at the
time specified in Subsection (D), below, an additional
amount (the "Gross-Up Payment") such that the net amount
retained by you, after deduction of any Excise Tax on the
Total Payments (as hereinafter defined) and any federal,
state and local income tax and Excise Tax upon the payment
provided for by this subsection, shall be equal to the
Total Severance Payments. For purposes of determining
whether any of the Severance Payments will be subject to
the Excise Tax and the amount of such Excise Tax, (a) any
other payments or benefits received or to be received by
you in connection with a change in control of the Company
or your termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions
result in a change in control of the Company or any person
-34-<PAGE>
Mr. __________
Date
- -8-
affiliated with the Company or such person) (which
together with the Severance Payments, constitute the
"Total Payments") shall be treated as "parachute payments"
within the meaning of section 28OG(b)(2) of the Code, and
all "excess parachute payments" within the meaning of
section 28OG(b)(1) shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel selected
by the Company's independent auditors and acceptable to
you such other payments or benefits(in whole or in part)
do not constitute parachute payments, or such excess
parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered
within the meaning of section 28OG(b)(4) of the Code in
excess of the base amount within the meaning of section
28OG(b)(3) of the Code, or are otherwise not subject to
the Excise Tax, (b) the amount of the Total Payments which
shall be treated as subject to the Excise Tax shall be
equal to the lesser of (1) the total amount of the Total
Payments of (2) the amount of excess parachute payments
within the meaning of section 28OG(b)(1) (after applying
clause (q) above, and (c) the value of any non-cash
benefits or any deferred payment or benefit shall be
determined by the Company's independent auditors in
accordance with the principles of section 28OG(d)(3) and
(4) of the Code. For purposes of determining the amount of
the Gross-Up Payment, you shall be deemed to pay federal
income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at
the highest marginal rate of taxation in the state and
locality of your residence on the Date of Termination, net
of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local
taxes. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account
hereunder at the time of termination of your employment,
you shall repay to the Company at the time that the amount
of such reduction in Excise Tax is finally determined the
portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax and federal and state and
local income tax imposed on the Gross-Up Payment being
repaid by you if such repayment results in a reduction in
Excise Tax and/or a federal and state and local income tax
deduction) plus interest on the amount of such repayment
at the rate provided in section 1274(b)(2)(B) of the Code.
In the event that the Excise Tax is determined to exceed
the amount taken into account hereunder at the time of the
-35-<PAGE>
Mr. __________
Date
- -9-
termination of your employment (including by reason of any
payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the
Company shall make an additional gross-up payment in
respect of such excess (plus any interest payable with
respect to such excess) at the time that the amount of
such excess is finally determined.
(D) The payment provided for in paragraph (B), above, shall be
made not later than the fifth day following the Date of
Termination, provided, however, that if the amounts of
such payments, and the limitation on such payments set
forth in paragraph (C), above, cannot be finally
determined on or before such day, the Company shall pay to
you on such day an estimate, as determined in good faith
by the Company, of the minimum amount of such payments and
shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of
the Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth day after the
Date of Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently
determined to have been due, such excess shall constitute
a loan by the Company to you, payable on the fifth day
after demand by the Company (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Code).
(E) The Company shall also pay to you all legal fees and
expenses incurred by you as a result of such termination
(including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking
to obtain or enforce early right or benefit provided by
this Agreement).
(v) If your employment shall be terminated (a) by the Company
other than for Cause, Retirement or Disability or (b) by you
for Good Reason, then for a twenty-four (24) month period
after such termination, the Company shall arrange to provide
you with life, disability, accident and health insurance
benefits substantially similar to those which you are
receiving immediately prior to the Notice of Termination.
(vi) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other
employment or otherwise, nor shall the amount of any payment
or benefit provided for in this Section 4 be reduced by any
compensation earned by you as the result of employment by
another employer, by retirement benefits, by offset against
-36-<PAGE>
Mr. __________
Date
- -10-
any amount claimed to be owing by you to the Company, or
otherwise.
(vii) In addition to all other amounts payable to you under this
Section 4, you shall be entitled to receive all benefits
payable to you under the Company's retirement programs.
5. SUCCESSORS; BINDING AGREEMENT
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall
entitle you to compensation from the Company in the same
amount and on the same terms as you would be entitled
hereunder if you terminate your employment for Good Reason
following a change in control of the Company, except for
purposes of implementing the foregoing, the date on which any
succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees
to perform this Agreement by operation of law, or otherwise.
(ii) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If you should die while any amount
would still be payable to you hereunder if you had continued
to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement
to your devisee, legatee or other designee or, if there is no
such designee, to your estate.
6. PRIOR AGREEMENT. This Agreement is in full and complete substitution
for any prior employment agreement including, if applicable, the certain
Employment Agreement dated December 1, 1981 and the certain agreement dated
October 20, 1988.
7. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
-37-<PAGE>
Mr. __________
Date
- -11-
respective addresses set forth on the first page of this Agreement, provided
that all notice to the Company shall be directed to the attention of the Board
with a copy to the Secretary of the Company, or to such other address as
either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.
8. MISCELLANEOUS. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and such officer as may be specifically designated
by the Board. No waiver by either party hereto at any time of any breach by
the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the Commonwealth of Pennsylvania. All reference to
sections of the Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state
or local law. The obligations of the Company under Section 4 shall survive the
expiration of the term of this Agreement.
9. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Erie, Pennsylvania in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction; provided, however, that you shall be
entitled to seek specific performance of your right to be paid until the Date
of Termination during the pendency of any dispute or controversy arising under
or in connection with this Agreement.
Upon your acceptance of the terms set forth in this letter by signing and
returning a copy to the Secretary of the Company, this letter will then
constitute an agreement of the Company.
-38-<PAGE>
Mr. __________
Date
- -12-
Very truly yours,
Chairman, Management Development and
Compensation Committee of the Board of
Directors
AGREED TO this ________________ day
of ____________________ 1995
____________________________________________________
SIGNATURE
-39-
EXHIBIT 10.12 - INDEMNITY AGREEMENT
Indemnity Agreement in the form of the attached entered into with the
following Indemnitee as of the date indicated:
F.E. Sheeder August 14, 1995
-40-<PAGE>
INDEMNITY AGREEMENT
This Agreement is made as of the 1st day of May, 1995, by and
between ZURN INDUSTRIES, INC., a Pennsylvania corporation (the
"Corporation"), and __________________, ("Indemnitee"), an officer/a Director.
WHEREAS, it is essential to the Corporation to retain and attract as
Directors and Officers the most capable persons available, and
WHEREAS, the substantial increase in corporate litigation subjects
Directors and Officers to expensive litigation risks and Directors' and
Officers' liability insurance is expensive and contains many limitations,
deductibles, and exclusions, and
WHEREAS, it is now and has always been the express policy of the
Corporation to indemnify its Directors and Officers so as to provide them with
the maximum possible protection permitted by the Pennsylvania Business
Corporation Law (the "Law") and the Corporation's By-Laws, and
WHEREAS, the parties recognize the potential inadequacy of the protection
available under the Law, the Corporation's By-Laws, and by Directors' and
Officers' liability insurance, and
WHEREAS, such Law and By-Laws specifically provide that they are not
exclusive, and thereby contemplate that agreements may be entered into between
the Corporation and Directors and Officers with respect to indemnification of
such Directors and Officers, and
WHEREAS, in order to resolve such questions and thereby induce Directors
and Officers to serve in their respective capacities, the Corporation has
determined and agreed to enter into this Agreement with the Indemnitee.
NOW THEREFORE, in consideration of Indemnitee's continued service after
the date hereof, the Corporation and Indemnitee do hereby agree as follows:
1. Agreement to Serve.
Indemnitee agrees to serve as a Director or Officer (as applicable) of the
Corporation for so long as he is duly elected or appointed or until such time
as he tenders his resignation in writing.
2. Definitions.
As used in this Agreement:
(a) The term "Proceeding" shall include any threatened, pending or
completed action, suit or proceeding, whether brought by or in the
right of the Corporation or otherwise and whether of a civil,
criminal, administrative or investigative nature, in which
Indemnitee may be or may have been involved as a party or
otherwise, by reason of the fact that Indemnitee is or was a
-41-<PAGE>
Indemnity Agreement
Page 2
Director or Officer of the Corporation, by reason of any action
taken by his or of any inaction on his part while acting as a
Director or Officer, or by reason of the fact that he is or was
serving at the request of the Corporation as a director, officer,
employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise; in each case whether or not
he is acting or serving in any such capacity at the time any
liability or expense is incurred for which indemnification or
reimbursement can be provided under this Agreement.
(b) The term "Expenses" shall include, without limitation, expenses of
investigations, judicial or administrative proceedings, or
appeals, judgments, fines and penalties, amounts paid in
settlement by or on behalf of Indemnitee, attorneys' fees and
disbursements, and any expenses of establishing a right to
indemnification under Paragraph 7.
3. Indemnity in Third-Party Proceedings.
The Corporation shall indemnify Indemnitee in accordance with the
provisions of this Paragraph 3 if Indemnitee is a party to or threatened to be
made a party to or otherwise involved in any Proceeding (other than a
Proceeding by or in the right of the Corporation) by reason of the fact that
Indemnitee is or was a Director or Officer of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust, or other
enterprise, against all Expenses actually and reasonably incurred by
Indemnitee in connection with the defense or settlement of such Proceeding,
but only if Indemnitee acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Corporation and,
in the case of a criminal proceeding, in addition, had no reasonable cause to
believe that his conduct was unlawful. The termination of any such Proceeding
by judgment, order of court, settlement, conviction, or upon a plea of nolo
contendere, or its equivalent, shall not, of itself, create a presumption that
Indemnitee did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Corporation, and
with respect to any criminal proceeding, that such person had reasonable cause
to believe that his conduct was unlawful.
4. Indemnity in Proceedings by or in the Right of the Corporation.
(a) In the event the Corporation has purchased and has in effect
policies of Directors' and Officers' liability insurance at the
time of request by Indemnitee for indemnification thereunder, the
Corporation shall, subject to the provisions of Paragraph 4(c),
indemnify Indemnitee as follows: if Indemnitee is a party to or
threatened to be made a party to any Proceeding by or in the right
of the Corporation by reason of the fact that Indemnitee is or was
a Director or Officer of the Corporation, or is or was serving at
-42-<PAGE>
Indemnity Agreement
Page 3
the request of the Corporation as a director, officer, employee,
or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against all Expenses actually and
reasonably incurred by Indemnitee in connection with the defense
or settlement of such Proceeding, but only if he acted in good
faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation.
(b) In the event the Corporation is not covered by policies of
Directors' and Officers' Liability insurance which are applicable
to the indemnification claim being made by Indemnitee for
indemnification thereunder, the Corporation shall, subject to the
provisions of Paragraph 4(c), indemnify Indemnitee as follows: 1)
to the fullest extent of the coverage provided for the benefit of
Directors and Officers in the case of a Proceeding by or in the
right of the Corporation pursuant to the policy of insurance in
effect on the date of this Agreement; 2) if Indemnitee is a party
to or threatened to be made a party to any Proceeding by or in the
right of the Corporation by reason of the fact that Indemnitee is
or was a Director or Officer of the Corporation, or is or was
serving at the request of the Corporation as a director, officer,
employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against all Expenses actually
and reasonably incurred by Indemnitee in connection with the
defense or settlement of such Proceeding, but only if he acted in
good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Corporation; and 3) to
the fullest extent as may be provided to Indemnitee by the
Corporation under the Agreement, the By-Laws of the Corporation,
and the Law. The foregoing provisions shall be taken cumulatively
and construed as being consistent with one another.
(c) No indemnification for Expenses shall be made under Paragraphs
4(a) and 4(b):
(1) in respect to remuneration paid to Indemnitee if it shall be
determined by a final judgment or other final adjudication
that such remuneration was in violation of law;
(2) on account of any suit in which judgment is rendered against
Indemnitee for an accounting of profits made from the purchase
or sale by Indemnitee of securities of Corporation pursuant to
the provisions of Section 16(b) of the Securities Exchange Act
of 1934 and amendments thereto or similar provisions of any
federal, state, or local law;
(3) on account of Indemnitee's conduct which is finally adjudged
to have been knowingly fraudulent, deliberately dishonest, or
willful misconduct;
-43-<PAGE>
Indemnity Agreement
Page 4
(4) if a final decision by a Court having jurisdiction in the
matter shall determine that such indemnification is not
lawful.
5. Indemnification of Expenses of Successful Party.
Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee has been successful on the merits or otherwise in defense of any
Proceeding or in defense of any claim, issue, or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified against all
Expenses incurred in connection therewith.
6. Advances of Expenses.
Expenses incurred by the Indemnitee pursuant to Paragraphs 3 and
4 shall be paid by the Corporation in advance upon the written request
of the Indemnitee if Indemnitee shall undertake to repay such amount to the
extent that it is ultimately determined that Indemnitee is not entitled to
indemnification.
7. Right of Indemnitee to Indemnification Upon Application.
Any indemnification under Paragraphs 3 and 4 shall be made no later than
45 days after receipt by the Corporation of the written request of Indemnitee,
unless a determination is made within said 45-day period by (1) the Board of
Directors by a majority vote of a quorum consisting of directors who are not
parties to such Proceeding or (2) independent legal counsel, which counsel
shall be appointed if the quorum of the Board of Directors specified in
Paragraph 7(1) is not obtainable, in a written opinion that the Indemnitee has
not met the relevant standards for indemnification set forth in Paragraphs 3
and 4.
The right to indemnification or advances as provided by this Agreement
shall be enforceable by Indemnitee in any court of competent jurisdiction. The
burden of proving that indemnification is not appropriate shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors or independent legal counsel) to have made a determination prior to
the commencement of such action that indemnification is proper in the
circumstances because Indemnitee has met the applicable standard of conduct,
nor an actual determination by the Corporation (including its Board of
Directors or independent legal counsel) that Indemnitee has not met such
applicable standard of conduct, shall bar the action or create an irrefutable
presumption that Indemnitee has not met the applicable standard of conduct.
Indemnitee's expenses reasonably incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any such
Proceeding shall also be indemnified by the Corporation.
-44-<PAGE>
Indemnity Agreement
Page 5
8. Indemnification Thereunder Not Exclusive.
The indemnification provided by this Agreement shall not be deemed
exclusive of any other rights to which Indemnitee may be entitled under the
Bylaws, any agreement, any vote of shareholders or disinterested Directors,
Law, or otherwise, both as to action in his official capacity and as to action
in any capacity while holding such office.
The indemnification under this Agreement shall continue as to Indemnitee
even though Indemnitee may have ceased to be a Director or Officer.
9. Partial Indemnification.
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Corporation for a portion of the Expenses actually and
reasonably incurred by his in the investigation, defense, appeal, or
settlement of any Proceeding but not, however, for the total amount thereof,
the Corporation shall nevertheless indemnify Indemnitee for the portion of
such Expenses to which Indemnitee is entitled.
The Corporation shall not be liable to indemnify Indemnitee under this
Agreement for any amounts paid in settlement of any action or claim effected
without its written consent. The Corporation shall not settle any action or
claim in any manner which would impose any penalty or limitation on Indemnitee
without Indemnitee's written consent. Neither the Corporation nor the
Indemnitee will unreasonably withhold their consent to any proposed
settlement.
10. Saving Clause.
If this Agreement or any portion thereof shall be invalidated on any
ground by any court of competent jurisdiction, the Corporation shall
nevertheless indemnify Indemnitee as to Expenses with respect to any
Proceeding to the full extent permitted by any applicable portion of this
Agreement that shall not have been invalidated or by any other applicable law.
11. Notice.
Indemnitee shall, as a condition precedent to his right to be indemnified
under this Agreement, give to the Corporation notice in writing as soon as
practicable of any claim for which indemnification will or could be sought
under this Agreement. Notice to the Corporation shall be directed to Zurn
Industries, Inc., One Zurn Place, P.O. Box 2000, Erie, PA 16514-2000,
Attention: President (or such other address as the Corporation shall designate
in writing to Indemnitee). Notice shall be deemed received three days after
the date postmarked if sent by prepaid mail properly addressed. In addition,
Indemnitee shall give the Corporation such information and cooperation as it
may reasonably require.
-45-<PAGE>
Indemnity Agreement
Page 6
12. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall constitute the original.
13. Applicable Law.
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania.
14. Successors and Assigns.
This Agreement shall be binding upon the Indemnitee and upon the
Corporation, its successors and assigns, and shall inure to the benefit of the
Indemnitee's heirs, personal representatives, and assigns and to the benefit
of Corporation, its successors and assigns.
IN WITNESS WHEREOF, the parties thereby have caused this Agreement to be
duly executed and signed as of the day and year first above written.
ZURN INDUSTRIES, INC.
By: __________________________________________
Chairman, Management Development
and Compensation Committee
INDEMNITEE: _________________________________
This Agreement was approved by stockholders of Zurn Industries, Inc. at the
Annual Meeting on August 1, 1986.
-46-
EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE
(Thousands Except Per Share Amounts)
Three Months Ended Six Months Ended
September 30 September 30
1995 1994 1995 1994
Primary Earnings Per Share
Net income $ 4,075 $ 2,472 $ 8,724 $ 4,416
Preferred stock dividends 1 1 2
$ 4,075 $ 2,471 $ 8,723 $ 4,414
Shares outstanding
Weighted average common shares 12,341 12,340 12,341 12,373
Net common shares issuable on
exercise of stock options 43 24 1
Average common shares outstanding
as adjusted 12,384 12,340 12,365 12,374
Primary earnings per share $.33 $.20 $.71 $.36
Fully Diluted Earnings Per Share
Net income $ 4,075 $ 2,472 $ 8,724 $ 4,416
Interest on convertible debentures,
net of applicable income taxes 8 15
$ 4,075 $ 2,480 $ 8,724 $ 4,431
Shares outstanding
Average common shares as adjusted
for primary computation 12,384 12,340 12,365 12,374
Common shares issuable if the
preferred stock and convertible
debentures were converted at
the beginning of the year 5 60 5 51
Additional common shares issuable
on exercise of stock options 47 24 2
Average common shares outstanding
as adjusted 12,436 12,400 12,394 12,427
Fully diluted earnings per share $.33 $.20 $.71 $.36
-47-
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<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE STATEMENTS OF CONSOLIDATED FINANCIAL
POSITION AND CONSOLIDATED OPERATIONS INCLUDED IN PART I OF
THIS REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS
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0
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