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 December 31, 1994
___ 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.
February 9, 1995 -- Common Stock, $.50 Par Value -- 12,340,648
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PART I - FINANCIAL INFORMATION
CONSOLIDATED FINANCIAL POSITION
(Thousands)
December 31, March 31,
1994 1994
Assets
Current assets
Cash and equivalents $ 12,070 $ 4,137
Marketable securities 54,405 61,296
Accounts receivable 107,889 132,328
Inventories
Finished products 45,819 44,208
Work in process 13,190 16,390
Raw materials and supplies 14,122 13,386
Contracts in process 7,877 12,395
81,008 86,379
Deferred income taxes 41,880 41,880
Other current assets 5,384 5,642
Total current assets 302,636 331,662
Property, plant, and equipment 142,129 138,781
Less allowances for depreciation
and amortization 85,845 81,778
56,284 57,003
Investments 34,118 35,958
Other assets 25,135 23,270
$418,173 $447,893
Liabilities and Stockholders' Equity
Current liabilities
Trade accounts payable $ 42,895 $ 47,948
Other current liabilities 102,354 123,198
Total current liabilities 145,249 171,146
Long-term obligations 9,793 10,972
Retirement obligations 46,209 44,192
Stockholders' equity
Common stock 6,285 6,285
Other stockholders' equity 210,637 215,298
216,922 221,583
$418,173 $447,893
See notes to consolidated financial statements.
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CONSOLIDATED OPERATIONS
(Thousands Except Per Share Amounts)
Three Months Ended Nine Months Ended
December 31 December 31
1994 1993 1994 1993
Net sales $114,531 $142,724 $341,085 $646,993
Cost of sales 91,770 113,859 269,456 553,352
Marketing and administration 21,601 21,242 65,271 67,942
Unusual items 37,539
Interest income (1,539) (1,041) (3,871) (3,339)
Interest expense 999 1,060 3,060 2,064
Other income (357) (538) (1,584) (1,434)
Income (loss) before income taxes 2,057 8,142 8,753 (9,131)
Income tax expense (benefit) 695 3,220 2,975 (4,250)
Net income (loss) $ 1,362 $ 4,922 $ 5,778 $ (4,881)
Earnings (loss) per share $.11 $.40 $.47 $(.39)
Average shares outstanding 12,331 12,441 12,360 12,451
Cash dividends declared
per common share $.22 $.22 $.66 $.66
See notes to consolidated financial statements.
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CONSOLIDATED CASH FLOWS
(Thousands)
Nine Months Ended
December 31
1994 1993
Operations
Net income (loss) $ 5,778 $ (4,881)
Depreciation and amortization 7,245 7,903
Operating assets and liabilities 5,759 (19,359)
Litigation 34,573
Deferred income taxes (14,470)
Plant closing and asset write-offs 6,189
Miscellaneous (638) (457)
18,144 9,498
Investing
Marketable securities 8,578 (12,657)
Capital expenditures (6,701) (8,121)
Long-term investments (1,257) (756)
Sales of operations 382 2,508
Miscellaneous 642 167
1,644 (18,859)
Financing
Dividends paid (8,171) (8,220)
Treasury stock (1,926) (2,412)
Debt payments (1,791) (1,666)
Stock options exercised 33 1,125
(11,855) (11,173)
Cash and equivalents
Increase (decrease) 7,933 (20,534)
Beginning of year 4,137 25,491
End of period $ 12,070 $ 4,957
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 nine months ended
December 31, 1994 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.
Fiscal 1994 unusual items are $38,902,000 ($2.00 per share) in the first
quarter as a result of a jury verdict in connection with a power plant
construction contract and related legal costs and, in the second quarter,
$7,000,000 ($.34 per share) for a plant closing and asset write-offs and
benefits of $8,363,000 ($.41 per share) from the recovery of an account
receivable previously written off and $.15 per share from revaluing net
deferred tax assets. If all issues are lost on appeal of the jury verdict
which is being aggressively pursued, additional charges could reach
$22,100,000, including interest which is not being accrued.
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
Liquid assets at December 31, 1994 were invested to a greater extent in
shorter-term debt instruments classified as cash equivalents rather than as
marketable securities. Other than the collection of receivables from the
higher level of Lynx Golf sales in last year's fourth quarter, most of the
other changes in operating assets and liabilities were associated with
construction contract activities, particularly in the Power Systems segment.
Despite these changes, the Company's working capital was not significantly
affected and the current ratio increased to 2.1 to 1, slightly above its
historical level.
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 which lead to the unusual litigation
provision are lost on appeal, the resulting cash expenditure could be more
than $33,000,000 net of the ensuing income tax payment reductions.
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Results of Operations
Sales by the Company's industry segments were as set forth below.
Three Months Ended Nine Months Ended
December 31 December 31
1994 1993 1994 1993
(Thousands)
Power Systems $ 45,841 $ 66,706 $117,533 $403,502
Water Control 55,176 59,413 177,957 189,174
Lynx Golf 4,109 7,117 17,015 26,332
Others 9,405 9,488 28,580 27,985
$114,531 $142,724 $341,085 $646,993
The current year decline in Power Systems segment revenue reflects the decline
in the United States independent power generation and steam generating
equipment markets. Working from a substantially greater beginning backlog,
last year's revenues reflect the higher level of power plant construction
activity on projects having larger amounts of major equipment. Increased
Power Systems activity is not expected until next fiscal year when softness in
the domestic power generation market is expected to be partially offset by
growth in the international market.
The Water Control segment's sales of plumbing products for the quarter and
nine months increased 27% and 21%, respectively, as a result of obtaining a
greater market share and price increases in the recovering nonresidential
construction market. These results were more than offset by lower revenues
from water resource construction projects and the installation of fire
sprinkler systems by California-based businesses; however, the water resource
construction backlog was increased significantly late in the third quarter by
three new contracts totalling over $62 million.
Lynx Golf sales have been negatively impacted by intense marketplace
competition while they were bolstered last year in the second quarter by the
introduction of new metal woods and in the third quarter from the reduction of
specialty inventory items. Lynx Golf continues to suffer from surplus
capacity, but the initial market response and early bookings for the new,
technically-advanced "Black Cat" line of irons for delivery in this year's
fourth quarter and the next fiscal year are encouraging.
The lower third quarter gross profit margin is primarily attributable to lower
water resource construction margins and the effect of Lynx Golf's substan-
tially reduced sales volume which offset its reductions in compensation costs
and enhanced manufacturing efficiencies. Also, Power Systems' earnings last
year were particularly strong as several power plant projects were completed
with final profitability that was enhanced by achieving performance efficien-
cies beyond contract requirements. The higher nine months gross profit margin
is the result of the lower percentage of total sales contributed by the Power
Systems segment, margin gains on plumbing products, and cost reductions in the
Lynx Golf and fire protection sprinkler systems businesses. However, Lynx
Golf's operating loss was similar to the prior year which included a loss from
the disposition of discontinued products and its future profitability is
dependent on the success of the new line of irons.
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Marketing and administration expense reductions attributable to plant closings
and other cost reduction measures generally have been offset by commissions
and promotion costs associated with the plumbing products sales increase and
the on-going international marketing efforts of the Power Systems segment.
The unusual items and last year's revaluation of net deferred tax assets are
described in the notes to financial statements. The low effective income tax
rate this year results from tax exempt investment income being a more
significant component of pretax income.
The Company's backlog of unfilled orders by industry segment was as follows:
December September December
1994 1994 1993
(Millions)
Power Systems $ 86 $116 $150
Water Control 124 61 85
Lynx Golf 13 2 9
Others 9 11 11
$232 $190 $255
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The four civil actions against the Company and two of its subsidiaries which
had been filed in the Superior Court of Los Angeles County California in May
1991 by Continental Insurance Company, et al, seeking recovery of $76.5
million in insurance claims arising out of a 1988 building fire was settled
for $4.5 million on December 19, 1994 by the Company's insurance carrier
without liability to the Company other than its insurance deductible which had
been previously expended for legal fees.
In December 1994, the Company paid less than $1 million in settlement of its
potential liability to reimburse the United States Environmental Protection
Agency (EPA) for amounts expended for preliminary cleanup, development of a
Record of Decision, and remedial design at the Millcreek Dumpsite in Erie
County, Pennsylvania which is the subject of an EPA Administrative Order
pursuant to Section 106(a) of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980.
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.
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)
February 10, 1995 /s/ Dennis Haines
Dennis Haines
General Counsel and Secretary
February 10, 1995 /s/ John E. Rutzler III
John E. Rutzler III
Vice President-Controller
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EXHIBIT INDEX
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 Registration Statement dated May 22, 1986 by reference
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
1991 Stock Option Plan filed as Exhibit 28 to Form S-8 Incorporated
Registration Statement No. 33-49224 by reference
10.1 Supplemental Executive Retirement Plan of Zurn
Industries, Inc.
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
Agreements Relating to Employment dated June 5, 1989 with Incorporated
D.F. Fessler, W.A. Freeman, C.L. Hedrick, G.H. Schofield by reference
and J.A. Zurn filed as Exhibit 10H to Form 10-Q for the
quarter ended June 30, 1989
10.2 Agreement Relating to Employment dated October 17, 1994
with R.R. Womack
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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
10.3 Zurn Industries, Inc. Deferred Compensation Plan for
Salaried Employees
10.4 Zurn Industries, Inc. Optional Deferment Plan for
Incentive Compensation Plan Participants
10.5 Zurn Supplemental Pension Plan
Indemnity Agreements dated August 14, 1986 with Incorporated
E.J. Campbell, A.S. Cartwright, G.H. Schofield, by reference
D.W. Wallace, and J.A. Zurn filed as Exhibit 19J to
Form 10-Q for the quarter ended September 30, 1986;
dated October 20, 1986 with D.F. Fessler, W.A. Freeman,
and C.L. Hedrick 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
10.6 Indemnity Agreement dated October 17, 1994 with
R.R. Womack
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.
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 10A to Form Incorporated
10-K for the year ended March 31, 1994 by reference
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11 Statement Re Computation of Per Share Earnings
Computation of Earnings Per Share
27 Financial Data Schedule SEC Edgar
Filing Only
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EXHIBIT 10.1
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN OF
ZURN INDUSTRIES, INC.
OCTOBER 1, 1981
Prepared:
12/07/81
Amended:
10/01/82
9/16/83
6/16/86
9/01/87
6/05/89
1/28/91
1/24/92
10/27/94
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INTRODUCTION
This Supplemental Executive Retirement Plan has been authorized by the
Board of Directors of Zurn Industries, Inc. to be applicable effective on or
after August 7, 1981 to pay supplemental benefits to certain executive
employees who have qualified or may qualify for benefits under the Zurn
Industries Retirement Plan.
All benefits payable under this Plan shall be paid out of the general
assets of the Company.
SECTION 1 - DEFINITIONS
1.01 "Committee" shall mean the Management Development and Compensation
Committee of the Board of Directors.
1.02 "Average Compensation" shall mean the average annual
Compensation of a Member during the highest five out of the last
ten calendar years of Benefit Service.
1.03 "Benefit Service" shall mean the period of a Member's employment
as an employee of the Company until the earlier of the date the
Member becomes a Retiree or the first day of the month following
attainment of age 65, age 62 for a Member who becomes a Retiree
before January 1, 1991, counting completed months as one-twelfth
of a year.
1.04 "Board of Directors" shall mean the Board of Directors of Zurn
Industries, Inc.
1.05 "Company" shall mean Zurn Industries, Inc., or any successor by
merger, purchase or otherwise, with respect to its employees and
any entity which is an affiliate thereof on and after the date
such entity becomes an affiliate.
1.06 "Compensation" shall mean the total remuneration for services
rendered to the Company, including bonus, but excluding the value
of stock options and the Company's cost for any public or private
employee benefit plan including this Plan, under rules uniformly
applicable to all employees similarly situated.
1.07 "Effective Date" shall mean October 1, 1981.
1.08 "Member" shall mean any person included in the membership of the
Plan as provided in Section 2.
1.09 "Normal Retirement Date" shall mean the normal retirement date of
each participant under the Pension Plan or age 62 for a Member who
began participation in the Plan prior to January 1, 1987.
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Supplemental Executive Retirement
Plan of Zurn Industries, Inc.
1.10 "Plan" shall mean the Supplemental Executive Retirement Plan of
Zurn Industries, Inc. as described herein and as hereafter
amended.
1.11 "Prior Employer Benefit" shall mean the annual amount of any
benefit (including loans which remain unpaid when the Member
becomes a Retiree, lump-sum settlements, and deferred
distributions which shall be actuarially adjusted to a straight
life annuity form commencing with the date the Member becomes a
Retiree if not already in such form) to which a Member and/or a
Spouse is entitled as a result of the Member's prior employment
with any employer other than the Company under any plan
established for the purpose of providing retirement benefits;
provided, however, it shall not include any amount attributable to
(a) the Member's contributions to the plan or (b) contributions by
the employer to the plan in lieu of the payment to the Member of
compensation when earned pursuant to a deferred compensation,
salary reduction, or similar agreement.
1.12 "Retiree" shall mean a Member who has retired under the Pension
Plan on a normal retirement allowance, an early retirement
allowance, or a total and permanent disability allowance
commencing after attainment of age 65 (62 for Members commencing
membership prior to January 1, 1987), and who, in each case, prior
to retirement, has completed at least five years of Benefit
Service under the Plan.
1.13 "Pension Plan" shall mean the Zurn Industries Retirement Plan.
1.14 "Savings Plan" shall mean the Zurn Retirement Savings Plan, the
Zurn/NEPCO Retirement Savings Plan, or any similar plan sponsored
by the Company.
1.15 "Spouse" shall mean the individual who is the legally married
husband or wife of a Member.
SECTION 2 - MEMBERSHIP
2.01 An officer of the Company shall become a Member of the Plan on the
first day of the calendar month coincident with or next following
the date the officer is designated a Member by the Chief Executive
Officer of the Company and approved by the Committee.
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Supplemental Executive Retirement
Plan of Zurn Industries, Inc.
2.02 Membership in the Plan shall terminate if (a) employment with the
Company terminates or (b) the Committee determines that the
employee shall no longer be a Member unless, in either case, at
that time the Member is a Retiree or vested pursuant to Section 7.
SECTION 3 - AMOUNT AND PAYMENT OF SUPPLEMENTAL BENEFITS
3.01 The supplemental benefits shall be payable by the Company only to
a Member who becomes a Retiree or to a surviving Spouse pursuant
to Sections 4 or 5. Such benefits shall be payable by the Company
from its general assets in monthly installments. The annual
amount of the supplemental benefit payable to a Member shall be
equal to the amount determined pursuant to Section 3.01(a) reduced
by the amounts determined pursuant to Sections 3.01(b) through
3.01(f), as applicable.
(a) (1) 1.8% of the Average Compensation times years of Benefit
Service (up to 25) after December 31, 1990, plus
(2) 2.0% of the Average Compensation times years of Benefit
Service prior to January 1, 1991. The maximum number of
years of service for this part of the formula will be 25
reduced by the number of years of service in Section
3.01(a)(1).
(b) the annual amount of retirement allowance (ten year certain
and continuous) calculated under the Pension Plan, with such
calculation based on the assumption that the Member had
become a Participant and had been making both required and
voluntary contributions, if voluntary contributions were
permissible, to the Pension Plan since the day the Member was
first eligible to do so.
(c) the ten years certain and continuous annual actuarially
equivalent benefit (as determined by application of the
actuarial factors used in the Pension Plan) produced by the
Member's accumulated profit sharing account included in the
Pension Plan, if any.
(d) the amount of any annual benefit that would be paid by reason
of membership in the Zurn Supplemental Pension Plan assuming
such benefit had been calculated in accordance with Section
3.01(b).
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Supplemental Executive Retirement
Plan of Zurn Industries, Inc.
(e) the annual amount of any benefit (including loans which
remain unpaid when the Member becomes a Retiree, lump-sum
settlements, and deferred distributions which shall be
actuarially adjusted to a straight life annuity form
commencing with the date the Member becomes a Retiree if not
already in such form) provided by the Savings Plan; provided,
however, it shall not include any amount attributable to (1)
the Member's contributions to the Savings Plan or (2)
contributions by the Company to the Savings Plan in lieu of
the payment to the Member of compensation when earned
pursuant to a deferred compensation, salary reduction, or
similar agreement.
(f) any Prior Employer Benefit to which the Member would on
application therefore be entitled.
3.02 If a Member becomes a Retiree prior to the Normal Retirement Date,
the annual amount of the supplemental benefits calculated under
Section 3.01(a) shall be actuarially reduced 0.6% for each month
by which the date the Member becomes a Retiree precedes the Normal
Retirement Date, reduced by amounts calculated pursuant to
Sections 3.01 (b), (c), (d), (e), and (f).
3.03 In the case of a Member who was previously employed by an employer
other than the Company, the receipt of benefits under the Plan
shall be conditioned on such Member providing accurate information
to the Pension Committee of the Company concerning Prior Employer
Benefits.
3.04 If a retired Member is restored to employment with the Company,
the Member shall cease to be a Retiree and the monthly payments
under the Plan shall be discontinued. Upon subsequent retirement
from employment with the Company, the Member's benefits under the
Plan shall be recomputed in accordance with Sections 3.01 through
3.03 as applicable, and such recomputed amount shall become
payable to such Member in accordance with the provisions of the
Plan.
SECTION 4 - FORM OF PAYMENT
4.01 All benefits described in Section 3 shall be payable monthly
during the Member's lifetime with the last payment being the
monthly payment for the month in which the Member dies. If the
Member has a surviving Spouse as of the date of death, 50% of the
benefit shall be continued with the last payment being the monthly
payment for the month in which the Spouse dies.
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Supplemental Executive Retirement
Plan of Zurn Industries, Inc.
SECTION 5 - PRE-RETIREMENT DEATH BENEFITS
5.01 The surviving Spouse of a Member who dies while in the active
employment of the Company shall be eligible for an annual benefit
equal to the excess of (a) over (b), where:
(a) equals (i) .9% of the Member's Average Compensation
times years of Benefit Service after December 31,
1990, up to 25 years, plus (ii) 1% of the Member's
Average Compensation times years of Benefit
Service, up to 25 years, reduced by the number of
years of Benefit Service after December 31, 1990.
(b) equals the sum of the following:
(i) the annual preretirement Spouse's death benefit, if any,
payable under the Pension Plan, and
(ii) any Spouse's death benefits payable as a result of a
Prior Employer Benefit.
5.02 The annual benefit described in Section 5.01 shall be paid monthly
for the lifetime of the Spouse, with the last payment being the
monthly payment for the month in which the Spouse dies.
SECTION 6 - DISABILITY BENEFITS
6.01 Notwithstanding Section 3.01, all Members who become eligible for
benefits under the Long-Term Disability Plan of the Company shall
be eligible for a disability benefit under this Plan.
6.02 The annual disability benefit shall equal the excess of (a) over
(b), where:
(a) equals 50% of the Member's Average Compensation, and
(b) equals the benefit payable from the Long-Term Disability Plan
of the Company.
6.03 The annual benefit described in Section 6.02 shall become payable
upon the commencement of benefit payments under the Long-Term
Disability Plan and shall cease upon the earlier of (i) the
cessation of disability benefits under the Long-Term Disability
Plan, or (ii) the Member's Normal Retirement Date.
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Supplemental Executive Retirement
Plan of Zurn Industries, Inc.
6.04 Upon cessation of benefits under this Section 6 as a result of the
Member reaching the Normal Retirement Date, the Member shall be
considered a Retiree for purposes of Section 3 and the years of
disability shall be counted as years of Benefit Service.
SECTION 7 - VESTING - TERMINATION OF EMPLOYMENT
OR STATUS AS CORPORATE OFFICER
7.01 Vesting. On the Normal Retirement Date or upon attaining ten years
of Benefit Service, a Member shall be vested 100% in the Member's
accrued supplemental benefits.
7.02 Termination of Employment or Status as Corporate-Officer. If a
Member's employment is terminated for any reason or he remains
employed by the Company but ceases to be an officer of the Company
or a Member as provided in Section 2.02(b), the Member will retain
the right to benefits which vested under the Plan while a Member,
but shall accrue no further benefits.
7.03 Change in Control. In the event of a Change in Control of the
Company, then each and every Member, who was an active employee on
or after June 5, 1989, shall immediately receive a lump-sum
payment equal to the present value of the Member's benefit as
calculated by the independent enrolled actuary of the Pension Plan
using the same rates and assumptions as used in the Pension Plan.
For this purpose the following assumptions shall be used:
(a) Each participant is vested to the full extent as if Plan
service had been completed to the Normal Retirement Date.
(b) The Average Compensation shall be the highest annualized base
salary in any one of the three fiscal years preceding the
Change in Control and the highest single bonus received in
any such year.
(c) The Pension Plan normal retirement allowance shall be the
accrued benefit to the date of Change in Control.
7.04 A Change in Control shall be deemed to occur 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
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Supplemental Executive Retirement
Plan of Zurn Industries, Inc.
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 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; or
(b) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of
Directors, 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 7.04) whose election by the Board
of Directors or nomination for election by the Company's
stockholders 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; or
(c) the stockholders of the Company approve a merger or
consolidation of the Company with any other company, other
than (i) 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 (ii) 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 or substantially all of the
Company's assets.
-19- -7-<PAGE>
Supplemental Executive Retirement
Plan of Zurn Industries, Inc.
SECTION 8 - NON-COMPETITION
8.01 A Retiree, while receiving benefits under the Plan, agrees not
to become associated with or engage directly or indirectly in a
business in competition with the Company, otherwise there will be
a cessation of benefits under this Plan. This Section 8.01 shall
be null and void upon the occurrence of a Change in Control as
defined in Section 7.04.
SECTION 9 - ADMINISTRATION - ESTABLISHMENT OF TRUST
9.01 The administration of the Plan, the exclusive power to interpret
it, and the responsibility for carrying out its provisions are
vested in the Committee. The expenses of the Committee shall be
paid directly by the Company.
9.02 The Company shall establish a Trust with respect to the Plan and
designate a Trustee selected by the Chief Executive Officer of the
Company. The Company shall from time to time, but at least
annually, deliver to the Trustee cash and/or securities equal in
value to the present value of all accrued benefits of each
participant as determined by an independent actuary selected by
the Company. The Trust funds shall at all times be subject to
claims of general creditors of the Company in the event of
bankruptcy or insolvency.
SECTION 10 - GENERAL PROVISIONS
10.01 The Plan is purely voluntary on the part of the Company. The
establishment of the Plan shall not be construed as conferring any
legal rights upon any employee or other person for a continuation
of employment, nor shall it interfere with the rights of the
Company to discharge any employee and to treat the employee
without regard to the effect which such treatment might have upon
the employee as a Member of the Plan.
10.02 In the event that the Committee shall find that a Member or Spouse
is unable to care for their affairs because of illness or
accident, the Committee may direct that any benefit payment due
the Member or Spouse, unless claim shall have been made therefore
by a duly appointed legal representative, be paid to the Spouse, a
child, a parent or other blood relative, or to a person with whom
the Member or Spouse resides, and any such payment so made shall
be a complete discharge of the liabilities of the Plan therefore.
-20- -8-<PAGE>
Supplemental Executive Retirement
Plan of Zurn Industries, Inc.
10.03 The Company shall have the right to deduct from each payment to be
made under the Plan any taxes required by law to be withheld.
10.04 Subject to any applicable law, no benefit under the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any attempt so to
do shall be void, nor shall any benefit be in any manner liable
for or subject to garnishment, attachment, execution or levy, or
liable for or subject to the debts, contracts, liabilities,
engagements or torts of the Member. In the event that the
Committee shall find that any Member has become bankrupt or has
made any such attempt with respect to any such benefit, such
benefit shall cease and terminate, and in that event the Committee
shall hold or apply the same to or for the benefit of such Member.
10.05 In the event that a Member shall at any time be convicted of a
crime involving dishonesty or fraud on the part of such Member in
the Member's relationship with the Company, all benefits which
would otherwise be payable under the Plan shall be forfeited.
10.06 The Plan shall be construed, regulated and administered under the
laws of the Commonwealth of Pennsylvania. In the event any
provision of the Plan is held illegal or invalid for any reason,
it will not affect the remaining provisions of the Plan and the
Plan will be construed and enforced as if such illegal and invalid
provision had not been included therein.
10.07 The entire cost of benefits and administrative expenses for the
Plan shall be paid by the Company. No contributions by Members
will be required or permitted.
-21- -9-
EXHIBIT 10.2
October 17, 1994
Mr. Robert R. Womack
One Zurn Place
Erie, PA 16502
RE: Agreement Relating To Employment
Dear Mr. Womack:
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, 1989; 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
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Mr. Robert R. Womack
October 17, 1994
Page 2
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;
(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.
-23-<PAGE>
Mr. Robert R. Womack
October 17, 1994
Page 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.
(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:
-24-<PAGE>
Mr. Robert R. Womack
October 17, 1994
Page 4
(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;
-25-<PAGE>
Mr. Robert R. Womack
October 17, 1994
Page 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
-26-<PAGE>
Mr. Robert R. Womack
October 17, 1994
Page 6
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
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.
-27-<PAGE>
Mr. Robert R. Womack
October 17, 1994
Page 7
(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.
(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
-28-<PAGE>
Mr. Robert R. Womack
October 17, 1994
Page 8
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
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
-29-<PAGE>
Mr. Robert R. Womack
October 17, 1994
Page 9
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
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).
-30-<PAGE>
Mr. Robert R. Womack
October 17, 1994
Page 10
(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 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
-31-<PAGE>
Mr. Robert R. Womack
October 17, 1994
Page 11
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
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
-32-<PAGE>
Mr. Robert R. Womack
October 17, 1994
Page 12
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.
Very truly yours,
/s/ David W. Wallace
Chairman, Management Development and
Compensation Committee of the Board of
Directors
AGREED TO this 17 day
of Oct 1994.
/s/ Robert R. Womack
SIGNATURE
-33-
EXHIBIT 10.3
ZURN INDUSTRIES, INC.
DEFERRED COMPENSATION PLAN FOR SALARIED EMPLOYEES
1. Eligibility
On and after January 1, 1995, each salaried employee of Zurn
Industries, Inc. or its subsidiaries ("Company") having an annual
salary exceeding $80,000 who has been designated as being a key
employee by the Pension Committee of Zurn Industries, Inc.
("Committee"), in accordance with guidelines established by the
Committee, shall be a Participant in this Deferred Compensation Plan
for Salaried Employees ("Plan"). Prior to January 1, 1995, each
salaried employee of the Company having an annual salary in excess of
$70,000 was eligible to participate in the Plan.
2. Compensation
Compensation which is subject to deferral shall be the Participant's
annual salary and, prior to January 1, 1995, any bonuses paid under the
Company's Incentive Compensation Plan.
3. Participation
(a) Prior to the beginning of any calendar month, each Participant may
direct that 10% or more of annual salary and, prior to January 1,
1995, 10% or more of annual bonus, which would otherwise have been
payable for future service as an employee, be credited to a
deferred compensation account subject to the terms of the Plan.
(b) An election to defer salary and, prior to January 1, 1995, bonus
payments, shall be in the form of a document executed by the
Participant and filed with the Chief Financial Officer of the
Company and shall continue until the Participant ceases to be an
employee or until the Participant terminates such election by
written notice. Any such termination shall become effective as of
the end of the calendar month designated in the notice or, if not
designated, as of the end of the calendar month in which such
notice is given with respect to all salaries and bonuses payable
thereafter.
(c) A Participant who has filed a termination of election may
thereafter again file an election to defer for any period
subsequent to the filing of such election.
-34-<PAGE>
Zurn Industries, Inc.
Deferred Compensation Plan for Salaried Employees
Page 2
4. Deferred Compensation Accounts
All deferred amounts shall be credited to the Participant's account and
shall bear interest at the published prime rate at the beginning of
each month of the bank designated by the Committee, calculated monthly
and compounded quarterly.
5. Distribution
(a) At the time of each election to defer compensation, the
Participant shall also make an election for the post retirement
distribution of the amounts deferred pursuant to that election
plus accumulated interest. A Participant may elect to receive such
amounts at or after the beginning of the year following retirement
in one payment, on any specified date no more than 10 years
following retirement, or in a number of equal monthly installments
not exceeding 120, or in a number of equal annual installments not
exceeding 10. The final installment shall include the balance of
all undistributed amounts in the Participant's account. The
annual installments shall commence on the first day of any year
following retirement and the monthly installments shall commence
on the first day of any month following the year of retirement.
Amounts held pending distribution pursuant to this Section 5 shall
continue to accrue interest at the rate stated in Section 4 and
such interest shall be paid with each succeeding installment
payment.
(b) The election made pursuant to Section 5(a) shall be delivered to
the Chief Financial Officer. If no election is made, then payment
shall be made in three equal annual installments commencing on the
first day of the year following retirement.
(c) Notwithstanding an election pursuant to Section 5(b), in the event
a Participant ceases to be an employee of the Company for any
reason other than retirement, death or disability, the entire
balance of the Participant's deferred compensation, including
interest, shall be paid immediately to the Participant in a single
payment. For this purpose, an employee ceases employment with the
Company upon the sale or transfer by Zurn of its ownership of the
subsidiary or division employing such employee or a portion of
such ownership when Zurn retains less than 50% voting control.
(d) If a Participant should die or become disabled before full payment
of all amounts credited to the Participant's account, the
Participant, the designated beneficiary or the personal
-35-<PAGE>
Zurn Industries, Inc.
Deferred Compensation Plan for Salaried Employees
Page 3
representative of the Participant's estate may then elect to receive
distribution in the manner which may have been previously elected or,
upon application to the Management Development and Compensation
Committee of the Board of Directors of the Company, may at that
committee's sole discretion, receive full payment of all such amounts
immediately in a lump-sum.
6. Trust
The Company shall establish a Trust with respect to the Plan and
designate a Trustee selected by the President. The Company shall
deliver to the Trustee cash and/or securities equal in value to all
amounts credited to the account of each Participant and shall continue
to so deliver with compensation deferments by Participants. An
adjustment shall be made at least annually to assure that the total
current market value of the Trust equals the total of all Participants'
accounts. If there is a shortage in such value of more than 10%, the
Company shall deliver additional cash or securities to make up the
shortage. If there is an overage of more than 10%, the Company may
withhold its contributions to the Trust until the overage is
eliminated. The Trust funds shall at all times be subject to claims of
general creditors of the Company in the event of bankruptcy or
insolvency.
7. Change in Control
In the event of a Change in Control of the Company, each Participant
shall receive immediate payment of all amounts credited to the
Participant's account, including principal and interest in a lump-sum
single payment.
A Change in Control shall be deemed to occur 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 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;
-36-<PAGE>
Zurn Industries, Inc.
Deferred Compensation Plan for Salaried Employees
Page 4
(b) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the
Company, 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 of Directors of the Company
or nomination for election by the Company's stockholders 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;
(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 or substantially all of the
Company's assets.
8. Miscellaneous
(a) The right of a Participant to any deferred compensation and/or
interest thereon shall be solely that of an unsecured creditor
claiming wages, salaries or compensation for services and shall
not be subject to sale or assignment by the Participant or the
Participant's beneficiary or personal representative.
(b) The Board of Directors may, without the consent of Participants or
their beneficiaries, amend or terminate the Plan at any time,
provided that the amendment or termination may not divest any
Participant of rights to which the Participant is entitled with
-37-<PAGE>
Zurn Industries, Inc.
Deferred Compensation Plan for Salaried Employees
Page 5
respect to the Participant's deferred compensation account. If
terminated, distribution of all credits to Participants' accounts
as of date of termination shall be made in accordance with the
elections for distribution made pursuant to Section 5 provided
that the Board of Directors may by amendment in conjunction with
the termination specify a manner of distribution commencing in the
year following termination either in a lump-sum or in monthly or
annual installments over a period not exceeding 10 years.
(c) In the event that the Company should merge or consolidate its
business with another corporation or business entity, the Company
agrees that it will require its successor to expressly assume the
obligation of this Plan. The Company further agrees that it will
not terminate its existence or cease its business activities
without having made adequate provision for fulfilling its
obligations hereunder.
(d) The payment to be made under this Plan shall be independent of and
in addition to any other employment agreement that may exist from
time to time between the Company and any Participant, or any other
compensation payable by the Company to the Participant whether as
salary, bonus or otherwise. This Plan shall not be deemed to
constitute a contract of employment between the Company and any
Participant, nor shall any provision hereof restrict the right of
the Company to discharge the Participant or restrict the right of
the Participant to terminate employment.
APPROVED: 1/18/81
REVISED: 9/26/83
2/03/84
10/12/84
11/25/85
6/16/86
4/17/89
6/05/89
11/29/94
-38-
EXHIBIT 10.4
ZURN INDUSTRIES, INC.
OPTIONAL DEFERMENT PLAN
FOR INCENTIVE COMPENSATION PLAN PARTICIPANTS
1. On and after October 24, 1994, each participant in the Zurn Industries,
Inc. Incentive Compensation Plan ("Incentive Plan") having Eligible
Compensation exceeding $80,000 who has been designated as being a key
employee by the Pension Committee of Zurn Industries, Inc. ("Company"), in
accordance with guidelines established by such committee, shall be a
Participant in this Optional Deferment Plan for Incentive Compensation Plan
Participants ("Deferment Plan") and eligible to defer the receipt of payment
of the Participant's annual award in total or in amounts of 25%, 50% or 75%
of such award. Eligible Compensation shall be the sum of the Participant's
annualized salary as of the beginning of the fiscal year for which the
annual award is earned and the amount of the annual award received by the
Participant in the immediately preceding fiscal year. Prior to October 24,
1994, each participant in the Incentive Plan was eligible to participate in
this Deferment Plan.
2. An election to defer an annual award shall be in the form of a document
executed by the Participant and filed with the Chief Financial Officer of
the Company prior to the beginning of the fiscal year for which the annual
award is earned. If the election does not specify the fiscal year to which
it applies, the election shall continue until a Participant ceases to be an
employee of the Company or until the Participant terminates such election by
written notice. Any such termination shall become effective as of the end
of the fiscal year in which such notice is given with respect to awards for
subsequent fiscal years.
3. A Participant who has filed a termination of election may thereafter
file an election to defer for any fiscal year or years beginning subsequent
to the filing of such election.
4. All deferred amounts shall be held in the general funds of the Company,
shall be credited to each Participant's account and, unless an election is
made to have the Participant's deferrals accounted for as if they were
invested in the Company's common stock as set forth in Paragraph 5, the
deferrals shall bear interest at the published prime rate at the beginning
of each month of the bank designated by the Pension Committee, calculated
monthly and compounded quarterly.
5. At the option of the Participant, the Participant may, when electing to
defer, designate that any portion not less than 25% of the Participant's
account (subject to the requirements of the Company's Management Development
and Compensation Committee ["Committee"]), be accounted for as if it were
invested in common stock of the Company. The number of shares of Company
common stock to be credited shall be the number of full shares which the
deferred amount would purchase at a price equal to the Market Value on the
-39-<PAGE>
Zurn Industries, Inc.
Optional Deferment Plan for
Incentive Compensation Plan Participants
Page 2
date immediately preceding the date that payment would have been made had it
not been deferred. Each account, to the extent accounted for as if it were
invested in Company stock, shall be credited with amounts equivalent to the
dividends which would have been declared thereon if such Company common
stock had been issued and outstanding. Such dividend equivalents shall be
credited on the date of payment of such declared dividend. Where the
dividend has been declared payable in cash, the dividend equivalent shall
consist of the number of shares (including fractional shares) that could
have been purchased with such dividends at the Market Value of Company
common stock on the dividend payment date. Where the dividend has been
declared payable in property other than cash or Company common stock, the
dividend equivalent shall consist of the number of shares (including
fractional shares) that could have been purchased at the Company's common
stock price as set forth above, with the market value of the property on
dividend payment date as determined by the Committee.
6. Each account, to the extent accounted for as if it were invested in
Company common stock, shall be valued at Market Value on the date of
distribution of each installment.
7. Market Value in all cases shall be the closing price on The New York
Stock Exchange on the applicable date or, if no sales occurred on such date,
then on the next preceding date on which there were such sales.
8. A Participant or the Participant's legal representative may elect once
each calendar year, during or after employment, to change the method of
accounting for the Participant's accounts from an interest bearing account
to a Company stock account or vice versa, but no less than 25% (or such
other requirement as determined by the Committee) of the Participant's total
account may be so changed. For this purpose, the value of the portion of
the Participant's account to be switched from the interest bearing account
to the Company stock account or vice versa shall be determined as of the
date that a properly executed account switching form is received by the
Chief Financial Officer of the Company ("Account Switching Date"). The
value of the Participant's interest bearing account shall include interest
to the Account Switching Date and the value of the Participant's Company
stock account shall be the number of shares in the Participant's account
multiplied by the Market Value on the Account Switching Date.
9. At the time of any election to defer an annual award, the Participant
shall also make an election for the post retirement distribution of the
amounts to be deferred under the Deferment Plan plus accumulated earnings
which include market gains and losses. A Participant may elect to receive
such amounts on or after the first day of the calendar year following
-40-<PAGE>
Zurn Industries, Inc.
Optional Deferment Plan for
Incentive Compensation Plan Participants
Page 3
retirement in one payment, on any specified date no more than 10 years
following retirement, or in a number of equal monthly installments not
exceeding 120, or in a number of equal annual installments not exceeding 10.
The final installment shall include the balance of all undistributed amounts
in the Participant's account. The annual installments shall commence on the
first day of any year following retirement and the monthly installments
shall commence on the first day of any month following the year of
retirement. Amounts held pending distribution pursuant to this paragraph
shall continue to accrue interest and/or dividends as stated above and such
interest and/or dividends and market gains and losses shall be paid with
each succeeding installment payment.
10. The election for distribution shall be delivered to the Chief Financial
Officer and will apply to future deferrals and earnings thereon until a
later election is made which shall apply only to subsequent deferrals and
earnings on those subsequent deferrals. If no election is made, then
payment shall be made in three equal annual installments commencing on the
first day of the calendar year following retirement.
11. Notwithstanding a Participant's election for distribution, in the event
a Participant ceases to be an employee of the Company or one of its
subsidiaries for any reason other than retirement, death or disability, the
entire balance of the Participant's deferred compensation plus accumulated
earnings which include market gains and losses shall be paid to the
Participant immediately in a single payment. For this purpose, an employee
ceases employment with the Company upon sale or transfer by Zurn of its
ownership of the subsidiary or division employing such employee or a portion
of such ownership when Zurn retains less than 50% voting control.
12. If a Participant should die or become disabled before full payment of
all amounts credited to the Participant's account, the Participant, the
designated beneficiary or the personal representative of the Participant's
estate may then elect to receive distribution in the manner which may have
been previously elected or upon application to the Committee may, at the
Committee's sole discretion, receive full payment of all such amounts
immediately in a lump-sum.
13. If payment of deferred amounts in the number of installments under the
standard or elected payout provisions results in the total of all
installments for any calendar year, other than the year in which payments
commence, being less than $5,000 (excluding the value of any related
interest or dividend equivalents), payment will be accelerated so that each
annual installment, or the sum of all monthly installments for the calendar
year, shall be $5,000 and the final installment, if less than $5,000, may be
combined with the next prior installment.
-41-<PAGE>
Zurn Industries, Inc.
Optional Deferment Plan for
Incentive Compensation Plan Participants
Page 4
14. Notwithstanding the provisions for a standard number of installments or
an elective number of installments, the Committee shall have the authority,
in its discretion, to accelerate or defer the payment of all or part of any
or all deferred amounts or remaining unpaid installments thereof if it deems
equitable or desirable under the circumstances.
15. The Company shall establish a Trust with respect to the Deferment Plan
and designate a Trustee selected by the President. The Company shall
deliver to the Trustee, cash and/or securities equal in value to all amounts
credited to the account of each Participant, and shall continue to so
deliver with compensation deferments by Participants. An adjustment shall
be made at least annually to assure that the total current market value of
the Trust equals the total of all Participants' accounts. If there is a
shortage in such value of more than 10%, the Company shall deliver
additional cash or securities to make up the shortage. If there is an
overage of more than 10%, the Company may withhold its contributions to the
Trust until the overage is eliminated. The Trust funds shall at all times
be subject to claims of general creditors of the Company in the event of
bankruptcy or insolvency.
16. In the event of a Change in Control of the Company, each Participant
shall receive immediate payment of all amounts credited to the Participant's
account, including deferred amounts and accumulated earnings which include
market gains and losses, in a lump-sum single payment.
A Change in Control shall be deemed to occur 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 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, individuals who at the
beginning of such period constitute the Board of Directors of the
Company, 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
-42-<PAGE>
Zurn Industries, Inc.
Optional Deferment Plan for
Incentive Compensation Plan Participants
Page 5
paragraph) whose election by the Board of Directors of the Company
or nomination for election by the Company's stockholders 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;
(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 or substantially all of the
Company's assets.
17. The right of a Participant to any deferred compensation and/or earnings
thereon shall be solely that of an unsecured creditor claiming wages,
salaries or compensation for services and shall not be subject to sale or
assignment by the Participant or the Participant's beneficiary or personal
representative.
18. The Board of Directors may, without the consent of Participants or
their beneficiaries, amend or terminate the Plan at any time, provided that
the amendment or termination may not divest any Participant of rights to
which the Participant is entitled with respect to the Participant's deferred
compensation account. If terminated, distribution of all credits to
Participants' accounts as of date of termination shall be made in accordance
with the elections for distribution made pursuant to Paragraphs 9 through 14
provided that the Board of Directors may by amendment in conjunction with
the termination specify a manner of distribution commencing in the year
following termination either in a lump-sum or in monthly or annual
installments over a period not exceeding 10 years.
-43-<PAGE>
Zurn Industries, Inc.
Optional Deferment Plan for
Incentive Compensation Plan Participants
Page 6
19. This Plan shall not be deemed to constitute a contract of employment
between the Company and any Participant, nor shall any provision hereof
restrict the right of the Company to discharge the Participant or restrict
the right of the Participant to terminate employment.
APPROVED BY BOARD OF DIRECTORS: August 2, 1984
Revised: 11/25/85
6/16/86
4/17/89
6/05/89
11/29/94
-44-
EXHIBIT 10.5
ZURN SUPPLEMENTAL PENSION PLAN
Adopted November 25, 1985 Effective As Of January 1, 1986
Amended and Restated October 24, 1994 Effective As Of January 1, 1994
-45-
<PAGE>
ZURN SUPPLEMENTAL PENSION PLAN
(Amended and Restated as of January 1, 1994)
WHEREAS, Zurn Industries, Inc. (the "Company") had established, effective
January 1, 1986, the Zurn Industries, Inc. Supplemental Pension Plan for
Participants in the Deferred Compensation Plan for Salaried Employees (the
"Supplemental Plan") so as to restore benefits lost by Participants under
certain qualified pension plans due to the Participants' deferral of earnings
otherwise used in the determination of the amount of pension benefits; and
WHEREAS, the Company desires to amend the Supplemental Plan for the primary
purpose of providing an additional formula designed to replace the benefits
lost by an Employee under any qualified pension plan maintained by an
Employer on account of restrictions imposed upon said plan by Section
401(a)(17) of the Internal Revenue Code of 1986, as amended;
NOW, THEREFORE, the Company hereby amends the Supplemental Plan, restates it
in its entirety as follows, and renames such plan the "Zurn Supplemental
Pension Plan," all effective as of January 1, 1994.
Article 1. Purpose
1.01 The purpose of this Supplemental Plan is to provide for the payment of
supplemental retirement benefits to Employees whose benefits payable
under a Qualified Plan are (i) reduced on account of the Employees'
deferral of earnings otherwise used in the determination of the amount
of pension benefits, and/or (ii) subject to certain benefit limitations
imposed by Section 401(a)(17) of the Code.
Article 2. Incorporation of the Qualified Plans
2.01 Except where inconsistent with the provisions of this Supplemental Plan,
the substantive provisions of the Qualified Plans, with any amendments
thereto in effect as of January 1, 1994, are hereby incorporated by
reference into and shall be a part of this Supplemental Plan as fully as
if set forth herein verbatim. Subject to this same exception, any
amendments made to said substantive provisions shall also be
incorporated by reference into, and form a part of, this Supplemental
Plan effective as of the effective date of such amendments. As respects
any Participant, all terms with initial capital letters which are used
in the Applicable Qualified Plan and in this Supplemental Plan shall
have the meanings assigned to them under the provisions of the
Applicable Qualified Plan unless otherwise specified herein or as
otherwise qualified by the context in which the term is used in this
Supplemental Plan.
-46- -1-<PAGE>
Zurn Supplemental Pension Plan
2.02 Without limiting the generality of Section 2.01, the following
terms shall be given the meanings described in this Section 2.02:
(a) "Actuarial Equivalent" shall mean a benefit of equivalent value to
the benefit otherwise payable in the normal form under the
Applicable Qualified Plan as determined on the basis of the
actuarial assumptions specified under the Applicable Qualified
Plan as of the date of determination, including, in determinations
of a benefit payable hereunder as a lump sum, the use of the
UP-1984 mortality table and the interest rates which would be used
as of the January 1 of the year in which distribution is made by
the Pension Benefit Guaranty Corporation for purposes of
determining the present value of a lump sum distribution on plan
termination.
(b) "Applicable Qualified Plan" shall mean the Qualified Plan
applicable to the Participant in question, as such Qualified Plan
is existing as of the date the relevant determination is being
made under this Supplemental Plan.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Company" shall mean Zurn Industries, Inc. or any successor by
merger, purchase or otherwise.
(e) "Deferral Restoration Benefit" shall mean the benefit provided
under Article 4.
(f) "Employee" shall mean any common law employee of an Employer who
is eligible to participate in a Qualified Plan.
(g) "Employer" shall mean the Company and any other company more than
fifty percent (50%) owned by the Company which sponsors or
participates in a Qualified Plan, or any successor to these
entities by merger, purchase or otherwise.
(h) "Participant" shall mean an Employee who has become a Participant
in accordance with Sections 3.02 or 3.03. Participant shall also
include a former Employee who had met the foregoing criteria as an
Employee and who is, at the time of determination, receiving a
benefit (or entitled to receive a benefit) from the Supplemental
Plan.
(i) "Pension Committee" shall mean the Pension Committee of Zurn
Industries, Inc.
-47- -2-<PAGE>
Zurn Supplemental Pension Plan
(j) "Post-1993 Adjusted Compensation Limitation" shall mean, for any
given year beginning on and after January 1, 1994, $150,000, as
adjusted to the amount determined in the manner provided under
Section 401(a)(17) of the Code for the applicable year of
determination.
(k) "Qualified Plan" shall mean, collectively or distributively as the
context may indicate, the Zurn Industries Retirement Plan, The
Cosco Fire Protection Pension Plan for Salaried Employees and the
NEPCO Pension Plan.
(l) "Section 401(a)(17) Excess Benefit" shall mean the benefit
provided under Article 5.
(m) "Supplemental Plan" shall mean the Zurn Supplemental Pension Plan,
as the same may be amended from time to time.
(n) "Supplemental Plan Benefits" shall mean, to the extent applicable
to any given Participant, the Deferral Restoration Benefit and the
Section 401(a)(17) Excess Benefit. Notwithstanding the foregoing,
effective upon a Change in Control within the meaning of Section
9.02, "Supplemental Plan Benefits" shall mean such benefits as
determined under Section 9.01.
2.03 Any terms used in this Supplemental Plan in the masculine shall be read
and construed in the feminine where they would so apply, and any terms
used in the singular shall be read and construed in the plural if so
applicable.
Article 3. Eligibility and Participation
3.01 Any Employee may participate in the Supplemental Plan, provided,
however, that an Employee shall become a Participant hereunder only as
provided under Sections 3.02 and 3.03.
3.02 An Employee shall become a Participant in the Supplemental Plan (if not
already a Participant under Section 3.03) upon becoming eligible for a
Deferral Restoration Benefit. An Employee shall become eligible for a
Deferral Restoration Benefit as of the first day of the month coincident
with or next following the date on which he has first entered into a
Qualified Deferral Agreement (as hereinafter defined) as a participant
under a nonqualified deferred compensation plan sponsored by the Company
or an Employer; provided, however, that any Deferral Restoration
Benefit shall become payable to a Participant (or his surviving spouse
or beneficiary) only in the event that such individual is entitled to
-48- -3-<PAGE>
Zurn Supplemental Pension Plan
receive a benefit under the Applicable Qualified Plan. For purposes
hereof, the term "Qualified Deferral Agreement" shall mean an Employee's
written agreement with his Employer to defer into a nonqualified
deferred compensation plan sponsored by an Employer a portion of his
compensation which, absent the deferral, might otherwise be considered
in the determination of his pension benefit under the Applicable
Qualified Plan.
3.03 An Employee shall become a Participant in the Supplemental Plan (if not
already a Participant under Section 3.02) as of the first day of the
calendar year in which his benefit under the Applicable Qualified Plan
is first affected by the Post-1993 Adjusted Compensation Limitation.
The determination of whether, and at which time, an eligible Employee is
affected by the Post-1993 Adjusted Compensation Limitation shall be made
by the Pension Committee; provided, however, the Pension Committee's
failure to make such determination shall not preclude an Employee from
becoming a Participant if the Employee would otherwise be eligible for a
Section 401(a)(17) Excess Benefit. Notwithstanding the foregoing, a
Participant (or his surviving spouse or beneficiary) may become eligible
for a Section 401(a)(17) Excess Benefit only in the event that:
(a) such individual is entitled to receive a benefit under
the Applicable Qualified Plan; and
(b) payment of such Applicable Qualified Plan benefit is restricted by
the application of Section 401(a)(17) of the Code, as in effect on
or after January 1, 1994.
Article 4. Amount of Deferral Restoration Benefit
4.01 The annual Deferral Restoration Benefit determined with respect to a
Participant eligible therefor under Section 3.02 (or to his surviving
spouse or beneficiary) shall be the result obtained by subtracting (b)
from (a), where:
(a) equals the annual benefit which would have been payable under the
normal form under the Applicable Qualified Plan to such
Participant, or, on his behalf, to his surviving spouse or other
beneficiary or beneficiaries under the Applicable Qualified Plan
(pursuant to the same benefit formula used to determine the
benefit in (b) below), had the Participant's compensation for
purposes of the Applicable Qualified Plan included the amounts
deferred pursuant to a Qualified Deferral Agreement and if the
provisions of the Applicable Qualified Plan were administered
without regard to the annual limitation on compensation set forth
in Section 401(a)(17) of the Code; and
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(b) equals the annual benefit which would have been payable under the
normal form under the Applicable Qualified Plan to such
Participant, or, on his behalf, to his surviving spouse or other
beneficiary or beneficiaries under the Applicable Qualified Plan,
if the provisions of the Applicable Qualified Plan were
administered without regard to the annual limitation on
compensation set forth in Section 401(a)(17) of the Code.
Article 5. Amount of Section 401(a)17) Excess Benefit
5.01 The annual Section 401(a)(17) Excess Benefit determined with respect to
a Participant eligible therefor under Section 3.03 (or to his surviving
spouse or beneficiary), shall be the result obtained by subtracting (b)
from (a), where:
(a) equals the annual benefit which would have been payable under the
normal form under the Applicable Qualified Plan to such
Participant, or, on his behalf, to his surviving spouse or other
beneficiary or beneficiaries under the Applicable Qualified Plan,
if the provisions of the Applicable Qualified Plan were
administered without regard to the annual limitation on
compensation set forth in Section 401(a)(17) of the Code; and
(b) equals the annual benefit which is payable under the normal form
under the Applicable Qualified Plan to such Participant, or, on
his behalf, to his surviving spouse or other beneficiary or
beneficiaries under the Applicable Qualified Plan.
The Section 401(a)(17) Excess Benefits payable under the Supplement Plan
to, or on behalf of, a Participant shall be computed in accordance with
the foregoing and with the objective that the Participant, his surviving
spouse or other beneficiary or beneficiaries, should receive under the
Supplemental Plan and the Applicable Qualified Plan, the total amount
which would otherwise have been payable to that recipient solely under
the Applicable Qualified Plan, as of the date payment is made, had the
provisions of Section 401(a)(17) of the Code not been applicable
thereto.
5.02 Notwithstanding any provision of this Supplemental Plan to the contrary,
the Supplemental Plan Benefits provided under Articles 4 and 5 shall be
determined and coordinated by the Pension Committee so as to prevent any
duplication of Supplemental Plan Benefits or duplication of benefits
provided by any other plan sponsored by the Employer or any individual
agreement between the Employee and the Employer providing for retirement
benefits.
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Article 6. Commencement and Form of Supplemental Plan Payments
6.01 Supplemental Plan Benefits hereunder shall become payable to a
Participant, surviving spouse or beneficiary when such Participant,
surviving spouse or beneficiary first begins to receive pension benefits
under the Applicable Qualified Plan. Such Supplemental Plan Benefits
shall be payable in the form of payment elected by the Participant,
surviving spouse or beneficiary under the Applicable Qualified Plan and
shall be the Actuarial Equivalent of the Participant's Supplemental Plan
Benefits determined under the normal form under the Applicable Qualified
Plan.
Article 7. Administration
7.01 The Pension Committee shall be charged with the administration of the
Supplemental Plan. The Pension Committee shall have all such powers as
may be necessary to discharge its duties relative to the administration
of the Supplemental Plan, including by way of illustration and not
limitation, discretionary authority to interpret and construe the
Supplemental Plan, to decide any dispute arising hereunder, to determine
the right of any employee with respect to benefits payable under the
Supplemental Plan and to adopt, alter and repeal such administrative
rules, regulations and practices governing the operation of the
Supplemental Plan as it, in its sole discretion, may from time to time
deem advisable. No member of the Pension Committee shall be liable to
any person for any action taken or omitted in connection with the
interpretation and administration of the Supplemental Plan unless
attributable to willful misconduct or lack of good faith. The Pension
Committee shall be entitled to conclusively rely upon all tables,
valuations, certificates, opinions and reports furnished by any actuary,
accountant, controller, counsel or other person employed or engaged by
the Pension Committee or the Company with respect to the Supplemental
Plan. Members of the Committee shall not participate in any action or
determination regarding solely their own benefits payable hereunder.
Except as provided in Section 7.03, decisions of the Pension Committee
made in good faith shall be final, conclusive and binding upon all
parties.
7.02 Whenever the Pension Committee denies, in whole or in part, a claim for
benefits filed by any person (hereinafter referred to as a "Claimant"),
the Pension Committee shall transmit a written notice setting forth, in
a manner calculated to be understood by the Claimant, a statement of the
specific reasons for the denial of the claim, references to the specific
provisions of the Supplemental Plan on which the denial is based, a
description of any additional needed material or information and why
such material or information is necessary, and an explanation of the
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claims review procedure as set forth herein. In addition, the written
notice shall contain the date on which the notice was sent and a
statement advising the Claimant that, within ninety (90) days of the
date on which such notice is received, he may obtain review of the
Pension Committee's decision.
7.03 Within ninety (90) days of the date on which the notice of denial of
claim is received by the Claimant, the Claimant or his authorized
representative may request that the claim denial be reviewed by filing
with the Pension Committee a written request therefor, which request
shall contain the following information:
(a) the date on which the notice of denial of claim was received by
the Claimant;
(b) the date on which the Claimant's request was filed with the
Pension Committee; provided, however, that the date on which the
Claimant's request for review was in fact filed with the Pension
Committee shall control in the event that the date of the actual
filing is later than the date stated by the Claimant pursuant to
this clause (b);
(c) the specific portions of the denial of his claim which the
Claimant requests the Pension Committee to review;
(d) a statement by the Claimant setting forth the basis upon which he
believes the Pension Committee should reverse its previous denial
of his claim for benefits and accept his claim as made; and
(e) any written material (included as exhibits) which the Claimant
desires the Pension Committee to examine in its consideration of
his position as stated pursuant to clause (d).
Within sixty (60) days of the date determined pursuant to clause (b)
hereof (or, if special circumstances require an extension of time,
within one hundred-twenty (120) days of such date), the Pension
Committee shall conduct a full and fair review of the decision denying
the Claimant's claim for benefits and shall deliver, to the Claimant in
writing, its decision. Such written decision shall set forth, in a
manner calculated to be understood by the Claimant, a statement of the
specific reasons for its decision, including references to the specific
provisions of this Supplemental Plan which were relied upon. The
decision will be final and binding on all persons concerned.
Article 8. Amendment and Termination
8.01 The Company expects to continue the Supplemental Plan indefinitely, but
reserves the right to amend or terminate the Supplemental Plan at any
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time, if, in its sole judgment, such amendment or termination is
necessary or desirable. Any such amendment or termination shall be made
pursuant to a resolution of the Board of Directors of the Company and
shall be effective as of the date specified in such resolution. No
amendment or termination of the Supplemental Plan shall directly or
indirectly deprive any Participant, surviving spouse or beneficiary of
all or any portion of the Supplemental Plan Benefits earned by the
Participant as of the date of amendment or termination. In the event of
a termination of the Supplemental Plan, the Company (or any transferee,
purchaser or successor entity) shall be obligated to pay Supplemental
Plan Benefits to Participants, surviving spouses and beneficiaries at
such time or times as provided under the terms of the Supplemental Plan.
8.02 The Supplemental Plan shall not be automatically terminated by a
transfer or sale of the Company or other Employer or by the merger or
consolidation of the Company or other Employer into or with any other
corporation or other entity, but the Supplemental Plan shall be
continued after such sale, merger or consolidation only if and to the
extent that the transferee, purchaser or successor entity agrees to
continue the Supplemental Plan. In the event the Supplemental
Plan is not continued by the transferee, purchaser or successor
entity, then the Supplemental Plan as it applies to the Employer
which is sold, merged or consolidated shall terminate subject to
the provisions of Section 8.01.
Article 9. Provisions Effective Upon Change in Control
9.01 Notwithstanding any provision of this Supplemental Plan to the contrary,
in the event of a Change in Control of the Company (as defined in
Section 9.02), each and every Participant in this Supplemental Plan (or,
in the case of a deceased Participant, his surviving spouse or
beneficiary) shall be entitled to an immediate lump sum payment equal to
the Actuarial Equivalent of the Participant's Accrued Supplemental Plan
Benefits Payable at Normal Retirement (as hereinafter defined). For
purposes hereof, the term "Accrued Supplemental Plan Benefits Payable at
Normal Retirement" shall mean (i) with respect to any Participant not
currently receiving payments under this Supplemental Plan, the sum of
the Deferral Restoration Benefit and the Section 401(a)(17) Excess
Benefit accrued hereunder as of the date of the Change in Control event,
determined as if the Participant had then attained his Normal
Retirement Date, and (ii) with respect to any Participant currently
receiving payments under this Supplemental Plan and any surviving spouse
or beneficiary of any deceased Participant, the expected future
Supplemental Plan Benefit payments to be made to such Participant,
surviving spouse or beneficiary.
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9.02 For purposes of this Section, a Change in Control shall be deemed to
occur 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 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, individuals who at the
beginning of such period constitute the Board of Directors of the
Company, 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 paragraphs (a), (c) or (d) of
this Section) whose election by the Board of Directors of the
Company or nomination for election by the Company's stockholders
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;
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other company, other than (i) 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 (ii) 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 or substantially all of the
Company's assets.
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Zurn Supplemental Pension Plan
Article 10. Miscellaneous
10.01 No Effect on Employment Rights. Nothing contained herein shall be
construed as creating any contract of employment between the Company or
other Employer and any Employee nor shall any provision hereof confer
upon any Participant the right to be retained in the service of an
Employer nor limit the right of an Employer to discharge or otherwise
deal with Participants without regard to the existence of the
Supplemental Plan.
10.02 Plan Unfunded. Notwithstanding any provision herein to the contrary,
the benefits offered hereunder shall constitute nothing more than an
unfunded, unsecured promise by the Company or other Employer to pay
benefits determined hereunder which are accrued by Participants while
such Participants are employed by the Company or other Employer. No
provision shall at any time be made with respect to segregating any
assets of the Company or other Employer for payment of any benefits
hereunder, other than the transfer of funds to a grantor trust (the
"Trust") which has been established or, in the discretion of the Company
or other Employer, may be established; provided, however, that all
assets of the Trust shall be held for the benefit of the grantor's
general creditors pursuant to the terms of the trust agreement in the
event of the grantor's insolvency. No Participant, beneficiary or any
other person shall have any interest in any particular assets of the
Company or other Employer by reason of the right to receive a benefit
under the Supplemental Plan and any such Participant, beneficiary or
other person shall have only the rights of a general unsecured creditor
of the Company or other Employer with respect to any rights under the
Supplemental Plan. Nothing contained in the Supplemental Plan shall
constitute a guaranty by the Company or any other entity or person that
the assets of the Company or other Employer will be sufficient to pay
any benefit hereunder. All expenses and fees incurred in the
administration of the Supplemental Plan and the Trust shall be paid by
the Company or other Employer.
10.03 Binding on Employers, Employees and their Successors. The Supplemental
Plan shall be binding upon and inure to the benefit of the Employers,
their successors and assigns and the Employee and his heirs, executors,
administrators and legal representatives. Except as provided in Article
9 in the event of the merger or consolidation of an Employer with or
into any other corporation, or in the event substantially all of the
assets of an Employer shall be transferred to another corporation, the
successor corporation resulting from the merger or consolidation, or the
transferee of such assets, as the case may be, shall, as a condition to
the consummation of the merger, consolidation or sale, assume the
obligations of an Employer hereunder and shall be substituted for the
Employer hereunder.
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Zurn Supplemental Pension Plan
10.04 Spendthrift Provisions. No benefit payable under the Supplemental Plan
shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or charge prior to actual
receipt thereof by the payee; and any attempt so to anticipate,
alienate, sell, transfer, assign, pledge, encumber or charge prior to
such receipt shall be void; and the Employers shall not be liable in any
manner for or subject to the debts, contracts, liabilities, torts or
engagements of any person entitled to any benefit under the Supplemental
Plan.
10.05 Disclosure. Copies of the Supplemental Plan and the rules and
regulations used by the Pension Committee in administering the
Supplemental Plan shall be provided to any Participant requesting the
Pension Committee to provide such copies.
10.06 State Law. The Supplemental Plan is established under and will be
construed according to the laws of the Commonwealth of Pennsylvania to
the extent that such laws are not preempted by the Employee Retirement
Income Security Act of 1974, as amended, and regulations promulgated
thereunder.
10.07 Notices. Every notice authorized or required hereunder shall be
deemed delivered to the Company, any other Employer or the Pension
Committee as the case may be: (a) on the date it is personally
delivered to the Secretary of the Pension Committee (with a copy
to the Company's General Counsel) at the Company's offices at One
Zurn Place, Erie, Pennsylvania 16505 or (b) three business days
after it is sent by registered or certified mail, postage prepaid,
addressed to the Secretary of the Pension Committee (with a copy
to the Company's General Counsel) at the offices indicated above,
and shall be deemed delivered to a Participant, surviving spouse
or beneficiary: (a) on the date it is personally delivered to such
individual, or (b) three business days after it is sent by
registered or certified mail, postage prepaid, addressed to such
individual at the last address shown for him on the records of the
Company or other Employer. Any notice required hereunder may be
waived by the person entitled thereto.
10.08 Counterparts. This Supplemental Plan may be executed in any number of
counterparts, each of which shall be considered as an original, and no
other counterparts need be produced.
10.09 Severability. In the event any provision of this Supplemental Plan
shall be held illegal or invalid for any reason, such illegality or
invalidity shall not affect the remaining provisions of the Supplemental
Plan. This Supplemental Plan shall be construed and enforced as if such
illegal or invalid provision had never been contained herein.
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Zurn Supplemental Pension Plan
10.10 Headings. The headings of Sections of this Supplemental Plan are for
convenience of reference only and shall have no substantive effect on
the provisions of this Supplemental Plan.
Amended and restated by resolution of the Board of Directors of Zurn
Industries, Inc. on October 24, 1994, effective as of January 1, 1994, and
executed by the Company on its behalf and on behalf of each other Employer at
Erie, Pennsylvania, this 15th day of November, 1994.
ATTEST: ZURN INDUSTRIES, INC.
/s/ Dennis Haines By: /s/ W.A. Freeman
Dennis Haines William A. Freeman
Secretary President
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EXHIBIT 10.6
INDEMNITY AGREEMENT
This Agreement is made as of the 17th day of October, 1994, by and
between ZURN INDUSTRIES, INC., a Pennsylvania corporation (the
"Corporation"), and ROBERT R. WOMACK ("Indemnitee"), a Director and Officer.
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 she is duly elected or appointed or until such
time as she tenders her resignation in writing.
2. Definitions.
As used in this Agreement:
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Indemnity Agreement - Robert R. Womack
October 17, 1994
Page 2
(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
Director or Officer of the Corporation, by reason of any action
taken by her or of any inaction on her part while acting as a
Director or Officer, or by reason of the fact that she 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 she 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 she
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 her 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 she 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 her conduct was unlawful.
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Indemnity Agreement - Robert R. Womack
October 17, 1994
Page 3
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 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 she acted in good faith and in a manner which she
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
she acted in good faith and in a manner which she 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.
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Indemnity Agreement - Robert R. Womack
October 17, 1994
Page 4
(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;
(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
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Indemnity Agreement - Robert R. Womack
October 17, 1994
Page 5
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 her right to indemnification, in whole or in part, in any such
Proceeding shall also be indemnified by the Corporation.
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 her 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 her 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
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Indemnity Agreement - Robert R. Womack
October 17, 1994
Page 6
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 her 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.
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.
-63-<PAGE>
Indemnity Agreement - Robert R. Womack
October 17, 1994
Page 7
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: /s/ David W. Wallace
Chairman, Management Development
and Compensation Committee
INDEMNITEE: /s/ Robert R. Womack
This Agreement was approved by stockholders of Zurn Industries, Inc. at the
Annual Meeting on August 1, 1986.
-64-
EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE
(Thousands Except Per Share Amounts)
Three Months Ended Nine Months Ended
December 31 December 31
1994 1993 1994 1993
Primary Earnings Per Share
Net income (loss) $ 1,362 $ 4,922 $ 5,778 $(4,881)
Preferred stock dividends 2 2
$ 1,362 $ 4,922 $ 5,776 $(4,883)
Shares outstanding
Weighted average common shares 12,331 12,441 12,359 12,451
Net common shares issuable on Anti- Anti-
exercise of stock options dilutive 1 dilutive
Average common shares outstanding
as adjusted 12,331 12,441 12,360 12,451
Primary earnings (loss) per share $.11 $.40 $.47 $(.39)
Fully Diluted Earnings Per Share
Net income 1,362 A 5,778 A
Interest on convertible debentures, n n
net of applicable income taxes (7) t 8 t
1,355 i 5,786 i
d d
i i
Shares outstanding l l
Average common shares as adjusted u u
for primary computation 12,331 t 12,360 t
Common shares issuable if the i i
preferred stock and convertible v v
debentures were converted at e e
the beginning of the year 22 41
Additional common shares issuable
on exercise of stock options 1
Average common shares outstanding
as adjusted 12,353 12,402
Fully diluted earnings per share $.11 $.47
-65-
<TABLE> <S> <C>
<ARTICLE> 5
<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
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> DEC-31-1994
<PERIOD-TYPE> 9-MOS
<CASH> 12,070
<SECURITIES> 54,405
<RECEIVABLES> 107,889
<ALLOWANCES> 0
<INVENTORY> 81,008
<CURRENT-ASSETS> 302,636
<PP&E> 142,129
<DEPRECIATION> 85,845
<TOTAL-ASSETS> 418,173
<CURRENT-LIABILITIES> 145,249
<BONDS> 9,793
0
0
<COMMON> 6,285
<OTHER-SE> 210,637
<TOTAL-LIABILITY-AND-EQUITY> 418,173
<SALES> 341,085
<TOTAL-REVENUES> 0
<CGS> 269,456
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,060
<INCOME-PRETAX> 8,753
<INCOME-TAX> 2,975
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,778
<EPS-PRIMARY> .47
<EPS-DILUTED> 0
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