<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-6706
BADGER METER, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 39-0143280
--------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4545 West Brown Deer Road, Milwaukee, Wisconsin 53223
- ------------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (414) 355-0400
--------------
None
------------------------------------------------------
(Former name, former address and former fiscal year, if
changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at October 15, 1999
- ----------------------------- -------------------------------
Common Stock, $1.00 par value 3,348,335
<PAGE> 2
BADGER METER, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
Part I. Financial Information:
<S> <C>
Item 1 Financial Statements:
Consolidated Condensed Balance Sheets - -
September 30, 1999 and December 31, 1998 3
Consolidated Condensed Statements of Operations - -
Three and Nine Months Ended September 30, 1999 and 1998 4
Consolidated Condensed Statements of Cash Flows - -
Nine Months Ended September 30, 1999 and 1998 5
Notes to Consolidated Condensed Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II. Other Information:
Item 6(a) Exhibits 10
Item 6(b) Reports on Form 8-K 10
Exhibit Index 12
</TABLE>
-2-
<PAGE> 3
Part I - Financial Information
BADGER METER, INC.
Item 1 Financial Statements
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Assets September 30, December 31,
------ 1999 1998
---- ----
(Unaudited)
<S> <C> <C>
Current assets:
Cash $ 918 $ 2,371
Receivables 22,713 19,814
Inventories:
Finished goods 4,941 5,270
Work in process 8,603 10,089
Raw materials and purchased parts 7,111 7,044
--------- ---------
Total inventories 20,655 22,403
Prepaid expenses 1,330 1,064
--------- ---------
Total current assets 45,616 45,652
Property, plant and equipment, at cost 87,716 79,934
Less accumulated depreciation (46,470) (42,523)
--------- ---------
41,246 37,411
Intangible assets, at cost less accumulated amortization 1,121 1,452
Prepaid pension 5,884 6,262
Deferred income taxes 2,927 2,930
Other assets 4,478 3,238
--------- ---------
Total assets $ 101,272 $ 96,945
========= =========
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Short-term debt $ 9,044 $ 14,287
Current portion long-term debt 5,172 28
Payables 10,084 10,174
Accrued compensation and employee benefits 5,739 5,521
Other accrued liabilities 4,579 4,386
Income and other taxes 1,283 480
--------- ---------
Total current liabilities 35,901 34,876
Accrued non-pension postretirement benefits 7,092 7,459
Other accrued employee benefits 4,564 4,162
Long-term debt 12,377 2,600
Shareholders' equity:
Common Stock 4,519 3,392
Class B Common Stock 0 111
Capital in excess of par value 12,733 12,732
Reinvested earnings 44,758 39,198
Less: Employee benefit stock (2,589) (2,606)
Treasury stock, at cost (18,083) (4,979)
--------- ---------
Total shareholders' equity 41,338 47,848
--------- ---------
Total liabilities and shareholders' equity $ 101,272 $ 96,945
========= =========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
-3-
<PAGE> 4
BADGER METER, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 37,551 $ 39,370 $ 114,460 $ 109,299
Cost of sales 22,660 23,627 69,325 65,846
---------- ---------- ---------- ----------
Gross margin 14,891 15,743 45,135 43,453
Selling, engineering and
administration 10,602 11,754 32,253 32,990
---------- ---------- ---------- ----------
Operating earnings 4,289 3,989 12,882 10,463
Interest expense 354 99 842 347
---------- ---------- ---------- ----------
Earnings before income taxes 3,935 3,890 12,040 10,116
Provision for income taxes 1,515 1,486 4,635 3,820
---------- ---------- ---------- ----------
Net earnings $ 2,420 $ 2,404 $ 7,405 $ 6,296
========== ========== ========== ==========
Per share amounts:*
Earnings per share:
Basic $ .70 $ .66 $ 2.08 $ 1.74
========== ========== ========== ==========
Diluted $ .65 $ .62 $ 1.95 $ 1.61
========== ========== ========== ==========
Dividends declared -
Common Stock $ .18 $ .15 $ .54 $ .45
========== ========== ========== ==========
Dividends declared -
Class B Common Stock $ .00 $ .14 $ .32 $ .41
========== ========== ========== ==========
Shares used in computation of:
Basic 3,471,997 3,630,008 3,562,166 3,624,776
Impact of dilutive stock
options 236,278 246,364 238,271 277,620
---------- ---------- ---------- ----------
Diluted 3,708,275 3,876,372 3,800,437 3,902,396
========== ========== ========== ==========
</TABLE>
* Earnings per share is computed independently for each of the quarters
presented. Therefore, the sum of the quarterly earnings per share does not
necessarily equal the total for the year. All of the outstanding Class B Common
Stock was converted to Common Stock on August 17, 1999.
See accompanying notes to consolidated condensed financial statements.
-4-
<PAGE> 5
BADGER METER, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------
1999 1998
---- ----
<S> <C> <C>
Operating activities:
Net earnings $ 7,405 $ 6,296
Adjustments to reconcile net
earnings to net cash provided
by (used for) operations:
Depreciation 4,418 3,600
Amortization 140 126
Noncurrent employee benefits 430 744
Deferred income taxes 0 0
Changes in:
Receivables (2,899) (3,270)
Inventory 1,748 (300)
Current liabilities other than short-term debt 1,124 5,505
Prepaid expenses and other (263) (9)
-------- --------
Total adjustments 4,698 6,396
-------- --------
Net cash provided by (used for) operations 12,103 12,692
-------- --------
Investing activities:
Property, plant and equipment (8,253) (13,980)
Other - net (1,049) 1,774
-------- --------
Net cash provided by (used for) investing activities (9,302) (12,206)
-------- --------
Financing activities:
Net increase (decrease) short-term debt (5,533) 70
Issuance of long-term debt 15,000 0
Repayments of long-term debt 211 (147)
Dividends (1,845) (1,583)
Stock options and ESSOP 1,017 2,150
Treasury stock transactions (13,104) (1,192)
-------- --------
Net cash provided by (used for)
financing activities (4,254) (702)
-------- --------
Increase (decrease) in cash (1,453) (216)
Beginning of year 2,371 1,055
-------- --------
End of period $ 918 $ 839
======== ========
Supplemental disclosures of cash flow information:
Cash paid (refunded) during the period for:
Income taxes $ 4,189 $ 4,433
======== ========
Interest (1998 includes $208,000 of interest $ 819 $ 520
capitalized during facility construction) ======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
-5-
<PAGE> 6
BADGER METER, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited consolidated
condensed financial statements of Badger Meter, Inc. (the "Company")
contain all adjustments (consisting only of normal recurring accruals)
necessary to present fairly the consolidated condensed financial position
at September 30, 1999 and the results of operations for the three and
nine-month periods ended September 30, 1999 and 1998 and the cash flows for
the nine-month periods ended September 30, 1999 and 1998. The results of
operations for any interim period are not necessarily indicative of the
results to be expected for the full year. Certain reclassifications have
been made to the 1998 data to conform to the 1999 presentation.
2. The consolidated condensed balance sheet at December 31, 1998, was derived
from amounts included in the Annual Report to Shareholders which was
incorporated by reference in the Company's annual report on Form 10-K for
the year ended December 31, 1998. Refer to the footnotes in those reports
for a description of the accounting policies, which have been continued
without change, and additional details of the Company's financial
condition. The details in those notes have not changed except as discussed
below and as a result of normal transactions in the interim.
3. In August of 1999, the Company borrowed $15,000,000 of long-term, unsecured
debt from a local bank. The debt bears interest at 7.15% and is due in
monthly installments through August, 2002. Principal payments total
$1,519,000 for 1999, $4,756,000 for 2000, $5,115,000 for 2001 and
$3,610,000 for 2002.
The proceeds of the debt were used to retire short-term debt and to
repurchase 303,914 shares of the Company's common stock for $11,200,000.
The stock was repurchased from certain trusts for the benefit of the Wright
family and from one current and one retired officer of the Company.
Including all transactions, the Company repurchased a total of 358,185
shares of common stock for an aggregate purchase price of $13,047,000
during the nine months ended September 30, 1999.
In addition, the Wright Family Voting Trust and certain other trusts
converted all of their Class B common stock to common stock. As a result,
all Class B stock, for a total of 1,072,086 shares, converted on a
share-for-share basis into common stock, leaving the Company with only one
class of stock. In connection with the stock repurchase, the Wright Family
Voting Trust was dissolved.
4. The Company entered into change of control contracts with seven corporate
officers and five business unit officers.
5. The Company continues to address the year 2000 software issues as discussed
in the Company's Annual Report to Shareholders for the year ended December
31, 1998. All systems have been updated but system testing continues.
Management does not expect to incur any significant costs in excess of
normal software upgrade costs. If the Company and its vendors do not
properly address this issue, the Company could incur additional transaction
processing costs and there could be interruptions in the Company's supply
chain, resulting in increased costs as the Company obtains alternate
vendors. However, the Company does not expect to have any significant
problems with its products, systems or vendors as a result of this issue.
6. In the ordinary course of business, the Company enters into various
material purchase agreements with its vendors, some of which contain
minimum purchase quantity commitments extending beyond one year. Future
purchase commitments are not expected to exceed normal usage requirements.
-6-
<PAGE> 7
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition
Receivables as of September 30, 1999 increased 14.6%, or $2,899,000, from the
December 31, 1998 balance primarily due to the increased sales for the third
quarter of 1999 compared to the fourth quarter of 1998. Inventories decreased
7.8% as efficient inventory management offset increased production requirements.
Property, plant and equipment (at cost) increased $7,782,000 in connection with
completion of the Milwaukee facility expansion and remodeling plus other
equipment purchases. Prepaid pension decreased $378,000 since December 31, 1998,
due to the recording of normal pension expense with no funding payments required
due to the overfunded status of the plan.
The decrease in intangible assets of $331,000 and the related increase in other
assets of $1,240,000 were due primarily to the sale of the Company's natural gas
instrumentation product line during the third quarter of 1999. The sale included
patents, inventory and some fixed assets, in return for a long-term receivable
included in other assets. There was no gain or loss recorded as a result of the
sale.
Income and other taxes payable increased $803,000 due to the timing of estimated
tax payments and a higher tax rate for 1999 compared to 1998. Changes in accrued
non-pension postretirement benefits and other accrued employee benefits since
December 31, 1998, were primarily due to the timing of benefit payments.
Long-term debt and the current maturities of long-term debt increased
$14,921,000 primarily due to the $15,000,000 of new borrowing in August, 1999 as
discussed in the Notes to Consolidated Condensed Financial Statements.
Since December 31, 1998, common stock and capital in excess of par value both
increased due to new shares issued in connection with stock options exercised
and ESSOP purchases. Treasury stock increased due to shares repurchased by the
Company as discussed in the Notes to Consolidated Condensed Financial
Statements.
The Company paid down short-term debt by $5,243,000 since December 31, 1998,
using a portion of the proceeds of the new long-term debt and using cash
generated by operations, which exceeded cash requirements for fixed asset
additions and dividends.
As of September 30, 1999, the Company had approximately $56,500,000 of credit
lines with domestic and foreign banks of which $26,247,000 was in use. This
compares to $11,315,000 in use at September 30, 1998 and $14,315,000 at December
31, 1998. The Company believes that the present lines of credit are adequate to
meet operating requirements.
Results of Operations
Net sales for the third quarter of 1999 of $37,551,000 reflect a 4.6% decrease
over the third quarter of 1998. This decrease was primarily due to lower sales
of certain industrial flow meters and valves due to a softening of the
industrial markets, and lower sales of residential water meters. There were
significant shipments of residential water meters in the third quarter of 1998
in connection with the City of Philadelphia project, which was completed in
early 1999 and therefore impacted the quarter-to-quarter comparison. Also, there
were no shipments in the third quarter of 1999 for a large metering program for
the City of Houston. However, management believes that this project will
continue.
For the nine-month period ended September 30, 1999, sales of $114,460,000
represented a 4.7% increase over the first nine months of 1998. This increase
was primarily due to higher unit sales of both residential and
commercial/industrial water meters, which offset lower sales of valves and
industrial flow meters.
Gross margins remained relatively flat, at 39.7% for the third quarter of 1999
compared to 40.0% for the third quarter of 1998 and 39.4% for the first nine
months of 1999 compared to 39.8% for the same period in 1998. The slight
decreases were due primarily to product mix.
-7-
<PAGE> 8
Selling, engineering and administrative costs decreased 9.8% for the third
quarter of 1999 compared to the same quarter in 1998 due primarily to lower
incentive and environmental accruals. For the nine-month periods, the 2.2%
decrease was due to these same factors, but partially offset by normal personnel
and expense increases. Interest expense increased between the periods due to
higher debt balances, including debt associated with the increased ESSOP loan
and the August, 1999 long-term debt. Also, interest related to the Milwaukee
facility expansion was capitalized during 1998, but no such offset was made in
1999 due to completion of the expansion.
The effective tax rates for both the quarter and nine-month periods of 1999 were
estimated to be 38.5%, which is slightly higher than the 1998 rates due to
favorable tax credits in 1998 and impacts of foreign tax rates.
Earnings for the third quarter of 1999 were $2,420,000, an increase of .7% over
third quarter 1998 earnings of $2,404,000. These relatively flat earnings were
due primarily to lower sales revenues and margins and higher interest expense,
offset by lower selling, engineering and administration expenses. For the
nine-month periods, the 17.6% increase in net earnings was primarily due to the
4.7% increase in sales, while selling, engineering and administration expenses
decreased 2.2%.
Basic and diluted earnings per share both increased substantially more than the
increases in net earnings for both the quarter and nine-month periods. This was
primarily due to the August, 1999 stock repurchase discussed in the Notes to
Consolidated Condensed Financial Statements.
Other Matters
The Company is subject to contingencies relative to environmental laws and
regulations. Currently, the Company is in the process of resolving issues
relative to two landfill sites and litigation filed by the owner of property
near one of the Company's plants, which alleges damage to property value by
virtue of alleged spillage from past Company operations. Also, the Company is in
the process of settling a suit alleging violation of Proposition 65,
California's environmental regulation. The Company does not believe the ultimate
resolution of these claims will have a material adverse effect on the Company's
financial position or results of operations. Provision has been made for all
known settlement costs. No other risks or uncertainties were identified that
could have a material impact on operations and no long-lived assets have become
permanently impaired in value.
The Company has an alliance and distribution agreement with Itron, Inc.
("Itron") and a product license agreement with CellNet Data Systems, Inc.
("CellNet"). Under these agreements, the Company has developed, and is
continuing to develop, products with compatible radio-frequency communication
technology. Both the Itron and CellNet systems utilize frequencies that are
licensed by the Federal Communications Commission ("FCC"). During the third
quarter of 1999, the FCC issued a Notice of Proposed Rule Making which stated
that new applications for the use of these frequencies will not be accepted.
This notification has no impact on existing licenses. Although both Itron and
CellNet are seeking resolution of this issue, both companies have indicated that
they may experience delays in projects and related revenues. The uncertainty
associated with this issue will prevent Badger Meter from selling Itron and
CellNet sytems to new customers until the issue is resolved. Management is
unable to estimate the amount or duration of the impact. It should be noted,
however, that this FCC action has no impact on the Company's TRACE(R) automated
meter reading systems, which utilize a different frequency.
On September 9, 1999, a fire at one of the Company's major vendors damaged a
significant amount of equipment used in the production of most of the Company's
meter castings. A portion of Badger's requirements is being supplied through the
use of alternate equipment that was not damaged by the fire. The vendor is
working to rebuild the facility and equipment. Although the fire did not have a
significant impact on third quarter sales due to the availability of inventory,
management believes that there may be some impact on fourth quarter sales. The
Company carries business interruption insurance, which specifically addresses
this situation. However, at this time, management is unable to estimate the
amount of any potential sales loss or potential insurance recovery.
-8-
<PAGE> 9
Forward Looking Statements
Certain statements in this report, as well as other information provided from
time to time by the Company or its employees, may contain forward looking
statements that involve risks and uncertainties that could cause actual results
to differ materially from those in the forward looking statements. The words
"anticipate," "believe," "estimate," "expect," "think," and "objective" or
similar expressions are intended to identify forward looking statements. The
forward looking statements are based on the Company's current views and
assumptions and involve risks and uncertainties that include, among other
things: the success or failure of new product offerings; the actions of
competitors and alliance partners; changes in domestic conditions, including
housing starts; changes in foreign economic conditions, including currency
fluctuations; changes in laws and regulations; changes in customer demand and
fluctuations in the prices of and availability of purchased raw materials and
parts. Some or all of those factors are beyond the Company's control.
-9-
<PAGE> 10
Part II - Other Information
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits:
(3.0) (i) Restated Articles of Incorporation
(10.0) Material Contracts
(27.0) Financial Data Schedule
(b) Reports on Form 8-K:
A current report on Form 8-K, dated August 17, 1999, reporting under Item
1 "Changes in Control of Registrant" the conversion of outstanding Class B
Common Stock to Common Stock and the repurchase of Common Stock from
various trusts and individuals.
-10-
<PAGE> 11
SIGNATURE
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.
BADGER METER, INC.
Dated: October 26, 1999 By /S/ Richard A. Meeusen
---------------------------------------
Richard A. Meeusen
Vice President - Finance and Treasurer
Chief Financial Officer
By /S/ Beverly L.P. Smiley
---------------------------------------
Beverly L.P. Smiley
Corporate Controller
-11-
<PAGE> 12
EXHIBIT INDEX
Page Number
(3.0)(i) Restated Articles of Incorporation 13
(10.0) Material Contracts 15
(27.0) Financial Data Schedule
-12-
<PAGE> 1
EXHIBIT (3.0) (i)
RESTATED
ARTICLES OF INCORPORATION
OF
BADGER METER, INC.
-------------------------------
The following Restated Articles of Incorporation duly adopted
pursuant to the authority and provisions of Chapter 180 of the Wisconsin
Statutes supersede and take the place of the existing articles of incorporation
and amendments thereto:
ARTICLE FIRST
The name of this Corporation is "BADGER METER, INC."
ARTICLE SECOND
The Corporation may engage in any lawful activity within the
purposes for which corporations may be organized under the Wisconsin Business
Corporation Law.
ARTICLE THIRD
(1) Stock.
(a) The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is forty (40) million
shares, consisting of a single class designated "Common Stock" having a par
value of one dollar ($1.00) per share.
(b) Any and all such shares of Common Stock may be issued for
such consideration, not less than the par value thereof, as shall be fixed from
time to time by the Board of Directors. Any and all such shares so issued, the
full consideration for which has been paid or delivered, shall be deemed fully
paid stock and shall not be liable to any further call or assessment thereon,
and the holders of such shares shall not be liable for any further payments
except as otherwise provided by applicable Wisconsin law.
(2) Voting Rights and Powers.
With respect to all matters upon which shareholders are
entitled to vote or to which shareholders are entitled to give consent, every
holder of any outstanding shares of Common Stock shall be entitled to cast
thereon one (1) vote in person or by proxy for each share of Common Stock
standing in his name on the stock transfer records of the Corporation.
(3) Dividends and Distributions.
The holders of Common Stock shall be entitled to receive
dividends when and if declared by the Board of Directors out of any funds
legally available for the payment of such dividends.
(4) No Preemptive Rights.
No holder of shares of stock or other securities of the
Corporation shall be entitled as a matter of right to subscribe for, purchase or
receive any part of any issue of stock of the Corporation of any class either at
present authorized or of any future increase or creation, including without
limitation, any securities convertible into stock of any class, except as the
Corporation in the discretion of the Board of Directors may elect or contract to
extend such right.
-13-
<PAGE> 2
ARTICLE FOURTH
(1) Number, Classification and Tenure of Directors.
There shall be a Board of Directors which shall consist of
such number of Directors as shall from time to time be specified in the Bylaws
but which shall not be less than three (3). The Directors shall be divided into
three classes, designated Class I, Class II, and Class III, and all classes
shall be as nearly equal in number as possible. The terms of office of the
Directors initially classified shall be as follows: at the 1998 Annual Meeting
of Shareholders, Class I Directors shall be elected for a one-year term expiring
at the next Annual Meeting of Shareholders, Class II Directors shall be elected
for a two-year term expiring at the second succeeding Annual Meeting of
Shareholders, and Class III Directors shall be elected for a three-year term
expiring at the third succeeding Annual Meeting of Shareholders. At each Annual
Meeting of Shareholders after such initial classification, Directors to replace
those whose terms expire at such Annual Meeting shall be elected to hold office
until the third succeeding Annual Meeting. Each Director shall hold office until
the expiration of his term and until his successor is elected and qualified or
until his earlier death, resignation or removal. If the number of Directors is
changed, (a) any newly created directorships or any decrease in directorship
shall be so portioned among the classes as to make all classes as nearly as
equal as possible, and (b) when the number of Directors is increased by the
Board of Directors and any newly created directorships are filled by the Board
of Directors, there shall be no classification of the additional Directors
until, and the terms of the additional Directors shall expire at, the next
Annual Meeting of Shareholders.
(2) Removal of Directors.
A Director may be removed only for cause and only by the
shareholders by the affirmative votes of a majority of the votes entitled to be
cast upon removing him at a meeting called for the purpose of removing him, and
the meeting notice must state that the purpose, or one of the purposes, of the
meeting is removal of the Director and must state the reason or reasons why the
Director is subject to removal.
(3) Amendments.
Notwithstanding any other provision of these Restated Articles
of Incorporation, the provisions of this Article Fourth shall be amended,
altered, changed or repealed only by the affirmative vote of shareholders
holding at least seventy percent (70%) of the voting power of the then
outstanding shares of all classes of capital stock of the Company, considered
for this purpose as a single class.
ARTICLE FIFTH
The majority affirmative voting requirements of Section
180.25(2) of the Wisconsin Statutes are hereby expressly elected and deemed
applicable to this Corporation as if this Corporation had been organized after
January 1, 1973. These Restated Articles of Incorporation may be amended by
resolution setting forth such amendment or amendments adopted at any meeting of
the shareholders of the Corporation by a vote of at least a majority of the
votes represented by shares of all of the Common Stock of the Corporation then
outstanding, except as set forth herein or as restricted by the statutes of the
State of Wisconsin.
ARTICLE SIXTH
The address of the registered office of the corporation at the
time of adoption of these Restated Articles of Incorporation is 4545 West Brown
Deer Road, Brown Deer, Wisconsin (P.O. address: Milwaukee, Wisconsin 53223); and
the name of the registered agent at such address is Deirdre C. Elliott.
* * *
-14-
<PAGE> 1
EXHIBIT (10.0)
KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AGREEMENT, made and entered into as of the ___ day of
_______, _____, by and between Badger Meter, Inc., a Wisconsin corporation
(hereinafter referred to as the "Company"), and _______________ (hereinafter
referred to as the "Executive").
W I T N E S S E T H :
WHEREAS, the Executive is employed by the Company and/or a
subsidiary of the Company in a key executive capacity, and the Executive's
services are valuable to the conduct of the business of the Company;
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that circumstances may arise in which a change in control of the
Company occurs, through acquisition or otherwise, thereby causing uncertainty
about the Executive's future employment with the Company and/or any such
subsidiary without regard to the Executive's competence or past contributions,
which uncertainty may result in the loss of valuable services of the Executive
to the detriment of the Company and its shareholders, and the Company and the
Executive wish to provide reasonable security to the Executive against changes
in the Executive's relationship with the Company in the event of any such change
in control;
WHEREAS, the Company and the Executive desire that any
proposal for a change in control or acquisition of the Company will be
considered by the Executive objectively and with reference only to the best
interests of the Company and its shareholders; and
WHEREAS, the Executive will be in a better position to
consider the Company's best interests if the Executive is afforded reasonable
security, as provided in this Agreement, against altered conditions of
employment which could result from any such change in control or acquisition.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto
mutually covenant and agree as follows:
1. Definitions. The following terms are used in this Agreement as defined in
Exhibit A:
Act Covered Termination
Accrued Benefits Effective Date
Affiliate and Associate Employer
Annual Cash Compensation Good Reason
Cause Normal Retirement
Change in Control Notice of Termination
Code Person
Competitive Activity Termination Date
-15-
<PAGE> 2
2. Termination or Cancellation Prior to the Effective Date.
The Employer shall retain the right to terminate the employment of the Executive
at any time prior to the Effective Date. If the Executive's employment is
terminated prior to the Effective Date, then this Agreement shall be terminated
and cancelled and of no further force or effect and any and all rights and
obligations of the parties hereunder shall cease. In addition, this Agreement
shall terminate upon the Executive ceasing to be an officer of the Employer
prior to a Change in Control unless the Executive can reasonably demonstrate
that such change in status occurred under circumstances described in clause
(iii)(B)(1) or (iii)(B)(2) of the definition of "Effective Date" in Exhibit A.
3. Employment Period. If the Executive is employed by the
Employer on the Effective Date, then the Company will, or will cause the
Employer to, continue thereafter to employ the Executive during the Employment
Period (as hereinafter defined), and the Executive will remain in the employ of
the Employer, in accordance with and subject to the terms and provisions of this
Agreement. For purposes of this Agreement, the term "Employment Period" means a
period (i) commencing on the Effective Date, and (ii) ending at 11:59 p.m.
Milwaukee Time on the third anniversary of such date.
4. Duties. During the Employment Period, the Executive shall
devote the Executive's best efforts and all of the Executive's business time,
attention and skill to the business and affairs of the Employer, as such
business and affairs now exist and as they may hereafter be conducted.
5. Compensation. During the Employment Period, the Executive
shall be compensated as follows:
(a) The Executive shall receive, at reasonable intervals (but
not less often than monthly) and in accordance with such standard policies as
may be in effect immediately prior to the Effective Date, an annual base salary
in cash equivalent of not less than twelve times the Executive's highest monthly
base salary for the twelve-month period immediately preceding the month in which
the Effective Date occurs or, if higher, annual base salary at the rate in
effect immediately prior to the Effective Date (which base salary shall, unless
otherwise agreed in writing by the Executive, include the current receipt by the
Executive of any amounts which, prior to the Effective Date, the Executive had
elected to defer, whether such compensation is deferred under Section 401(k) of
the Code or otherwise), subject to upward adjustment as provided in Section 6
(such salary amount as adjusted upward from time to time is hereafter referred
to as the "Annual Base Salary").
(b) The Executive shall receive fringe benefits at least equal
in value to those provided for the Executive at any time during the 180-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, those provided generally at any time after the Effective Date to any
executives of the Company and its Affiliates of comparable status and position
to the Executive. The Executive shall be reimbursed, at such intervals and in
accordance with such standard policies that are most favorable to the Executive
that were in effect at any time during the 180-day period immediately preceding
the Effective Date or, if more favorable to the Executive, those provided
generally at any time after the Effective Date to any executives of the Company
and its Affiliates of comparable status and position to the Executive, for any
and all monies advanced in connection with the Executive's employment for
reasonable and necessary expenses incurred by the Executive on behalf of the
Company and its Affiliates, including travel expenses.
(c) The Executive and/or the Executive's family, as the case
may be, shall be included, to the extent eligible thereunder (which eligibility
shall not be conditioned on the Executive's salary grade or on any other
requirement that excludes executives of the Company and its Affiliates of
comparable status and position to the Executive unless such exclusion was in
effect for such plan or an equivalent plan on the date 180 days prior to the
Effective Date), in any and all welfare benefit plans, practices, policies and
programs providing benefits for the Company's salaried employees in general or,
if more favorable to the Executive, to any executives of the Company and its
Affiliates of comparable status and position to the Executive, including but not
limited to group life insurance, hospitalization, medical and dental plans;
provided, that, in no event shall the aggregate level of benefits under such
plans, practices, policies and programs in which the Executive is included be
less than the greater of: (i) the aggregate level of benefits under plans,
practices, policies and programs of the type referred to in this Section 5(c) in
which the
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Executive was participating at any time during the 180-day period immediately
preceding the Effective Date and (ii) the aggregate level of benefits under
plans, practices, policies and programs of the type referred to in this Section
5(c) provided at any time after the Effective Date to any executive of the
Company and its Affiliates of comparable status and position to the Executive.
(d) The Executive shall annually be entitled to not less than
the amount of paid vacation and not fewer than the number of paid holidays to
which the Executive was entitled annually at any time during the 180-day period
immediately preceding the Effective Date or such greater amount of paid vacation
and number of paid holidays as may be made available annually to any other
executive of the Company and its Affiliates of comparable status and position to
the Executive at any time after the Effective Date.
(e) The Executive shall be included in all plans providing
additional benefits to any executives of the Company and its Affiliates of
comparable status and position to the Executive, including but not limited to
deferred compensation, split-dollar life insurance, retirement, supplemental
retirement, stock option, stock appreciation, stock bonus and similar or
comparable plans; provided, that, in no event shall the aggregate level of
benefits under such plans be less than the greater of: (i) the aggregate level
of benefits under plans of the type referred to in this Section 5(e) in which
the Executive was participating at any time during the 180-day period
immediately preceding the Effective Date and (ii) the aggregate level of
benefits under plans of the type referred to in this Section 5(e) provided at
any time after the Effective Date to any executive of the Company and its
Affiliates of comparable status and position to the Executive. The Company's
obligation to include the Executive in bonus or incentive compensation plans
shall be determined by Section 5(f).
(f) To assure that the Executive will have an opportunity to
earn incentive compensation after the Effective Date, the Executive shall be
included in a bonus plan of the Company that shall satisfy the standards
described below (the "Bonus Plan"). Bonuses under the Bonus Plan shall be
payable with respect to achieving such financial or other goals reasonably
related to the business of the Company, including the Employer, as the Company
shall establish (the "Goals"), all of which Goals shall be attainable, prior to
the end of the Employment Period, with approximately the same degree of
probability as the goals under the Employer's annual incentive plan currently in
effect, or the successor to such plan, in the form most favorable to the
Executive that was in effect at any time during the 180-day period prior to the
Effective Date (the "Existing Plan") and in view of the Company's existing and
projected financial and business circumstances applicable at the time. The
amount of the bonus (the "Bonus Amount") that the Executive is eligible to earn
under the Bonus Plan shall be no less than the amount of the Executive's highest
maximum potential award under the Existing Plan at any time during the 180-day
period prior to the Effective Date or, if higher, any maximum potential award
under the Bonus Plan or any other bonus or incentive compensation plan in effect
after the Effective Date for the Executive or for any executive of the Company
and its Affiliates of comparable status and position to the Executive (such
bonus amount herein referred to as the "Targeted Bonus"), and if the Goals are
not achieved (and, therefore, the entire Targeted Bonus is not payable), then
the Bonus Plan shall provide for a payment of a Bonus Amount not less than a
portion of the Targeted Bonus reasonably related to that portion of the Goals
that were achieved. Payment of the Bonus Amount (i) shall be in cash, unless
otherwise agreed by the Executive, and (ii) shall not be affected by any
circumstance occurring subsequent to the end of the Employment Period, including
termination of the Executive's employment.
6. Annual Compensation Adjustments. During the Employment
Period, the Board of Directors of the Company (or an appropriate committee
thereof) will consider and appraise, at least annually, the contributions of the
Executive to the Employer, and in accordance with the Company's practice prior
to the Effective Date, due consideration shall be given, at least annually, to
the upward adjustment of the Executive's Annual Base Salary (i) commensurate
with increases generally given to other executives of the Company and its
Affiliates of comparable status and position to the Executive, and (ii) as the
scope of the Company's operations or the Executive's duties expand.
7. Termination During Employment Period.
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(a) Right to Terminate. During the Employment Period, (i) the
Company shall be entitled to terminate the Executive's employment (A) for Cause,
(B) by reason of the Executive's disability pursuant to Section 11, or (C) for
any other reason, and (ii) the Executive shall be entitled to terminate the
Executive's employment for any reason. Any such termination shall be subject to
the procedures set forth in Section 12 and shall be subject to any consequences
of such termination set forth in this Agreement. Any termination of the
Executive's employment during the Employment Period by the Employer shall be
deemed a termination by the Company for purposes of this Agreement.
(b) Termination for Cause or Without Good Reason. If there is
a Covered Termination for Cause under the circumstances described in clause
(i)(B) of the definition of Cause, or due to the Executive's voluntarily
terminating the Executive's employment other than for Good Reason, then the
Executive shall be entitled to receive only Accrued Benefits. If there is a
Covered Termination for Cause under the circumstances described in any of
clauses (i)(A), (i)(C), (i)(D) or (i)(E) of the definition of Cause, then the
Executive shall not be entitled to receive Accrued Benefits or any other payment
or benefit under this Agreement, and shall only be entitled to receive payments
or benefits to which the Executive is entitled under applicable law.
(c) Termination Giving Rise to a Termination Payment. If there
is a Covered Termination by the Executive for Good Reason, or by the Company
other than by reason of (i) death, (ii) disability pursuant to Section 11, or
(iii) Cause, then the Executive shall be entitled to receive, and the Company
shall promptly pay, Accrued Benefits and, in lieu of further base salary for
periods following the Termination Date, as liquidated damages and additional
severance pay and in consideration of the covenant of the Executive set forth in
Section 13(a), the Termination Payment pursuant to Section 8(a).
8. Payments Upon Termination.
(a) Termination Payment.
(i) Subject to the limits set forth in Section
8(a)(ii), for purposes of this Agreement, the "Termination Payment"
shall be an amount equal to the Annual Cash Compensation multiplied by
the number of years or fractional portion thereof remaining in the
Employment Period determined as of the Termination Date, except that
the Termination Payment shall not be less than the amount of Annual
Cash Compensation. The Termination Payment shall be paid to the
Executive in cash not later than ten business days after the
Termination Date. The Executive shall not be required to mitigate the
amount of the Termination Payment by securing other employment or
otherwise, nor will such Termination Payment be reduced by reason of
the Executive securing other employment or for any other reason.
(ii) Notwithstanding any other provision of this
Agreement, if any portion of the Termination Payment or any other
payment under this Agreement, or under any other agreement with or plan
of the Company or the Employer (in the aggregate "Total Payments"),
would constitute an "excess parachute payment," then the Total Payments
to be made to the Executive shall be reduced such that the value of the
aggregate Total Payments that the Executive is entitled to receive
shall be One Dollar ($1) less than the maximum amount which the
Executive may receive without becoming subject to the tax imposed by
Section 4999 of the Code (or any successor provision) or which the
Company may pay without loss of deduction under Section 280G(a) of the
Code (or any successor provision). For purposes of this Agreement, the
terms "excess parachute payment" and "parachute payments" shall have
the meanings assigned to them in Section 280G of the Code (or any
successor provision), and such "parachute payments" shall be valued as
provided therein. Present value for purposes of this Agreement shall be
calculated in accordance with Section 1274(b)(2) of the Code (or any
successor provision). Within sixty days following delivery of the
Notice of Termination or notice by the Company to the Executive of its
belief that there is a payment or benefit due the Executive which will
result in an excess parachute payment as defined in Section 280G of the
Code (or any successor provision), the Executive and the Company, at
the Company's expense, shall obtain the opinion (which need not be
unqualified) of nationally recognized tax counsel selected by the
Company's independent auditors and acceptable to the Executive in the
Executive's sole
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discretion, which sets forth (A) the amount of the Base Period Income,
(B) the amount and present value of Total Payments and (C) the amount
and present value of any excess parachute payments without regard to
the limitations of this Section 8(a)(ii). As used in this Section
8(a)(ii), the term "Base Period Income" means an amount equal to the
Executive's "annualized includable compensation for the base period" as
defined in Section 280G(d)(1) of the Code (or any successor provision).
For purposes of such opinion, the value of any noncash benefits or any
deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of Sections
280G(d)(3) and (4) of the Code (or any successor provisions), which
determination shall be evidenced in a certificate of such auditors
addressed to the Company and the Executive. Such opinion shall be dated
as of the Termination Date and addressed to the Company and the
Executive and shall be binding upon the Company and the Executive. If
such opinion determines that there would be an excess parachute
payment, then the Termination Payment hereunder or any other payment
determined by such counsel to be includable in Total Payments shall be
reduced or eliminated as specified by the Executive in writing
delivered to the Company within thirty days of the Executive's receipt
of such opinion or, if the Executive fails to so notify the Company,
then as the Company shall reasonably determine, so that under the bases
of calculations set forth in such opinion there will be no excess
parachute payment. If such counsel so requests in connection with the
opinion required by this Section, the Executive and the Company shall
obtain, at the Company's expense, and the counsel may rely on in
providing the opinion, the advice of a firm of recognized executive
compensation consultants as to the reasonableness of any item of
compensation to be received by the Executive. Notwithstanding the
foregoing, the provisions of this Section 8(a)(ii), including the
calculations, notices and opinions provided for herein, shall be based
upon the conclusive presumption that the following are reasonable: (1)
the compensation and benefits provided for in Section 5 and (2) any
other compensation, including but not limited to the Accrued Benefits,
earned prior to the Termination Date by the Executive pursuant to the
Company's compensation programs if such payments would have been made
in the future in any event, even though the timing of such payment is
triggered by the Change in Control or the Termination Date. If the
provisions of Sections 280G and 4999 of the Code (or any successor
provisions) are repealed without succession, then this Section 8(a)(ii)
shall be of no further force or effect.
(b) Additional Benefits. If there is a Covered Termination and
the Executive is entitled to Accrued Benefits and the Termination Payment, then
the Executive shall be entitled to the following additional benefits:
(i) The Executive will be entitled to pension
benefits in addition to the most favorable benefits provided for the
Executive under any version of the Badger Meter Pension Plan and the
Badger Meter, Inc. Executive Supplemental Plan (or any successors to
such plans) in effect at any time during the 180-day period prior to
the Effective Date (the "Retirement Plans"). The amount of additional
pension benefits will be equal to the difference between the amount the
Executive (or in the event of the Executive's death, the Executive's
surviving spouse or other beneficiary) would be actually entitled to
receive upon retirement under the terms and conditions of the
Retirement Plans and the amount the Executive (or such surviving spouse
or beneficiary) would have been entitled to receive under such terms
and conditions if the Executive's benefits under the Retirement Plans
had been fully vested on the Termination Date and the Executive had
continued to work for the remainder of the Employment Period at a
salary rate equal to the Executive's Annual Base Salary; provided,
however, that in no event will the assumed period of continued
employment extend beyond the date on which the Executive elects to
begin receiving the additional pension benefits. The Executive shall
receive the Executive's additional pension benefits in the same form
and at the same time (e.g. joint and survivor) that would have been
payable to the Executive under the terms and conditions of the
Retirement Plans.
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(ii) Until the earlier of the end of the Employment
Period or such time as the Executive has obtained new employment and is
covered by benefits which in the aggregate are at least equal in value
to the following benefits, the Executive shall continue to be covered,
at the expense of the Company, by the most favorable life insurance,
hospitalization, medical and dental coverage and other welfare benefits
provided to the Executive and the Executive's family during the 180-day
period immediately preceding the Effective Date or at any time
thereafter or, if more favorable to the Executive, coverage as was
required hereunder with respect to the Executive immediately prior to
the date Notice of Termination is given; provided, however, that if the
Executive is otherwise entitled to receive hospitalization and/or
medical coverage under a plan or plans for early retirees sponsored by
the Company or a subsidiary thereof, then the Executive shall not be
eligible for such hospitalization or medical coverage under this
Section 8(b)(ii). If the Executive is eligible for Medicare, the
Executive shall be obligated to apply for coverage thereunder at the
earliest opportunity and the Company will reimburse the Executive for
the Part B premium cost.
(iii) The Executive shall receive, at the expense of
the Company, outplacement services, on an individualized basis at a
level of service commensurate with the Executive's most senior status
with the Company during the 180-day period prior to the Effective Date
(or, if higher, at any time after the Effective Date), provided by a
nationally recognized executive placement firm selected by the Company
with the consent of the Executive, which consent will not be
unreasonably withheld; provided that the cost to the Company of such
services shall not exceed 15% of the Executive's Annual Base Salary.
(iv) The Company shall bear up to $5,000 in the
aggregate of fees and expenses of consultants and/or legal or
accounting advisors engaged by the Executive to advise the Executive as
to matters relating to the computation of benefits due and payable
under this Section 8.
9. Death. (a) In the event of a Covered Termination due to the
Executive's death, the Executive's estate, heirs and beneficiaries shall receive
all the Executive's Accrued Benefits through the Termination Date.
(b) If the Executive dies after a Notice of Termination is
given (i) by the Company or (ii) by the Executive for Good Reason, then the
Executive's estate, heirs and beneficiaries shall be entitled to the benefits
described in Section 9(a) and, subject to the provisions of this Agreement, to
such Termination Payment to which the Executive would have been entitled had the
Executive lived. In such event, the Termination Date shall be thirty days
following the giving of the Notice of Termination, subject to extension pursuant
to the definition of "Termination Date" in Exhibit A.
10. Retirement. If, during the Employment Period, the
Executive and the Employer shall execute an agreement providing for the early
retirement of the Executive from the Employer, or the Executive shall otherwise
give notice that the Executive is voluntarily choosing to retire early from the
Employer, then the Executive shall receive Accrued Benefits through the
Termination Date; provided, that if the Executive's employment is terminated by
the Executive for Good Reason or by the Company other than by reason of death,
disability or Cause and the Executive also, in connection with such termination,
elects voluntary early retirement, then the Executive shall also be entitled to
receive a Termination Payment pursuant to Section 8(a).
11. Termination for Disability. If, during the Employment
Period, as a result of the Executive's disability due to physical or mental
illness or injury (regardless of whether such illness or injury is job-related),
the Executive shall have been absent from the Executive's duties hereunder on a
full-time basis for a period of 182 days and, within thirty days after the
Company notifies the Executive in writing that it intends to terminate the
Executive's employment (which notice shall not constitute the Notice of
Termination contemplated below), the Executive shall not have returned to the
performance of the Executive's duties hereunder on a full-time basis, then the
Company may terminate the Executive's employment for purposes of this Agreement
pursuant to a Notice of Termination. If the Executive's
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employment is terminated on account of the Executive's disability in accordance
with this Section, then the Executive shall receive Accrued Benefits in
accordance with Section 8(a) and shall remain eligible for all benefits provided
by any disability programs of the Employer in effect with respect to the
Executive at the time the Company sends notice to the Executive of its intent to
terminate pursuant to this Section.
12. Termination Notice and Procedure. (a) Any termination of
the Executive's employment during the Employment Period by the Company or the
Executive (other than a termination of the Executive's employment referenced in
the second sentence of the definition of "Effective Date" in Exhibit A) shall be
communicated by written Notice of Termination to the Executive, if such Notice
is given by the Company, and to the Company, if such Notice is given by the
Executive, all in accordance with the following procedures and those set forth
in Section 22:
(i) If such termination is for disability, Cause or
Good Reason, the Notice of Termination shall indicate in reasonable
detail the facts and circumstances alleged to provide a basis for such
termination.
(ii) Any Notice of Termination by the Company shall
have been approved, prior to the giving thereof to the Executive, by a
resolution duly adopted by a majority of the directors of the Company
(or any successor corporation) then in office, a copy of which shall
accompany the Notice.
(iii) If the Notice is given by the Executive for
Good Reason, then the Executive may cease performing the Executive's
duties hereunder on or after the date 15 days after the delivery of
Notice of Termination (unless the Notice of Termination is based upon
clause (vii) of the definition of "Good Reason" in Exhibit A, in which
case the Executive may cease performing his duties at the time the
Executive's employment is terminated) and shall in any event cease
employment on the Termination Date, if any, arising from the delivery
of such Notice. If the Notice is given by the Company, then the
Executive may cease performing the Executive's duties hereunder on the
date of receipt of the Notice of Termination, subject to the
Executive's rights hereunder.
(iv) The recipient of any Notice of Termination shall
deliver in accordance with Section 22 written notice of any dispute
relating to such Notice of Termination to the party giving such Notice
within fifteen days after receipt thereof. After the expiration of such
fifteen days, in the absence of such notice of dispute, the contents of
the Notice of Termination shall become final and not subject to
dispute.
Notwithstanding the foregoing, (A) if the Executive terminates the Executive's
employment after a Change in Control without complying with this Section 12,
then the Executive will be deemed to have voluntarily terminated the Executive's
employment other than for Good Reason and deemed to have delivered a written
Notice of Termination to that effect to the Company as of the date of such
termination and (B) if the Company terminates the Executive's employment after a
Change in Control without complying with this Section 12, then the Company will
be deemed to have terminated the Executive's employment other than by reason of
death, disability or Cause and the Company will be deemed to have delivered a
written Notice of Termination to that effect to the Executive as of the date of
such termination.
(b) If a Change in Control occurs and the Executive's
employment with the Employer terminates (whether by the Company, the Executive
or otherwise) within 180 days prior to the Change in Control, then the Executive
may assert that such termination is a Covered Termination by sending a written
Notice of Termination to the Company at any time prior to the first anniversary
of the Change in Control in accordance with the procedures set forth in this
Section 12(b) and those set forth in Section 22. If the Executive asserts that
the Executive terminated the Executive's employment for Good Reason or that the
Company terminated the Executive's employment other than for disability or
Cause, then the Notice of Termination shall indicate in reasonable detail the
facts and circumstances alleged to provide a basis for such assertions. The
Company shall, in accordance with Section 22, give written notice of any
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dispute relating to such Notice of Termination to the Executive within fifteen
days after receipt thereof. After the expiration of such fifteen days, in the
absence of such notice of dispute, the contents of the Notice of Termination
shall become final and not subject to dispute.
13. Further Obligations of the Executive.
(a) Competition. The Executive agrees that, in the event of
any Covered Termination where the Executive is entitled to (and receives)
Accrued Benefits and the Termination Payment, the Executive shall not, for a
period of six months after the Termination Date, without the prior written
approval of the Company's Board of Directors, engage in any Competitive
Activity.
(b) Confidentiality. During and following the Executive's
employment by the Employer, the Executive shall hold in confidence and not
directly or indirectly disclose or use or copy or make lists of any confidential
information or proprietary data of the Company (including that of the Employer),
except to the extent authorized in writing by the Board of Directors of the
Company or required by any court or administrative agency, other than to an
employee of the Company or a person to whom disclosure is reasonably necessary
or appropriate in connection with the performance by the Executive of duties as
an executive of the Company or the Employer. Confidential information shall not
include any information known generally to the public or any information of a
type not otherwise considered confidential by persons engaged in the same
business or a business similar to that of the Company. All records, files,
documents and materials, or copies thereof, relating to the business of the
Company which the Executive shall prepare, or use, or come into contact with,
shall be and remain the sole property of the Company and shall be promptly
returned to the Company upon termination of employment with the Employer.
14. Expenses and Interest. If, after the Effective Date, (i) a
dispute arises with respect to the enforcement of the Executive's rights under
this Agreement, (ii) any legal or arbitration proceeding shall be brought to
enforce or interpret any provision contained herein or to recover damages for
breach hereof, or (iii) any tax audit or proceeding is commenced that is
attributable in part to the application of Section 4999 of the Code, in any case
so long as the Executive is not acting in bad faith, then the Company shall
reimburse the Executive for any reasonable attorneys' fees and necessary costs
and disbursements incurred as a result of such dispute, legal or arbitration
proceeding or tax audit or proceeding ("Expenses"), and prejudgment interest on
any money judgment or arbitration award obtained by the Executive calculated at
the rate of interest announced by Firstar Bank, Milwaukee, Wisconsin, from time
to time as its prime or base lending rate from the date that payments to the
Executive should have been made under this Agreement. Within ten days after the
Executive's written request therefor, the Company shall pay to the Executive, or
such other person or entity as the Executive may designate in writing to the
Company, the Executive's reasonable Expenses in advance of the final disposition
or conclusion of any such dispute, legal or arbitration proceeding.
15. Payment Obligations Absolute. The Company's obligation
during and after the Employment Period to pay the Executive the amounts and to
make the benefit and other arrangements provided herein shall be absolute and
unconditional and shall not be affected by any circumstances, including, without
limitation, any setoff, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or anyone else. Except as provided in
Section 14, all amounts payable by the Company hereunder shall be paid without
notice or demand. Each and every payment made hereunder by the Company shall be
final, and the Company will not seek to recover all or any part of such payment
from the Executive, or from whomsoever may be entitled thereto, for any reason
whatsoever.
16. Successors. (a) If the Company sells, assigns or transfers
all or substantially all of its business and assets to any Person or if the
Company merges into or consolidates or otherwise combines (where the Company
does not survive such combination) with any Person (any such event, a "Sale of
Business"), then the Company shall assign all of its right, title and interest
in this Agreement as of the date of such event to such Person, and the Company
shall cause such Person, by written agreement in form and substance reasonably
satisfactory to the Executive, to expressly assume and agree to perform from and
after the date of such assignment all of the terms, conditions and provisions
imposed by
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this Agreement upon the Company. Failure of the Company to obtain such agreement
prior to the effective date of such Sale of Business shall be a breach of this
Agreement constituting "Good Reason" hereunder, except that for purposes of
implementing the foregoing, the date upon which such Sale of Business becomes
effective shall be deemed the Termination Date. In case of such assignment by
the Company and of assumption and agreement by such Person, as used in this
Agreement, "Company" shall thereafter mean such Person which executes and
delivers the agreement provided for in this Section 16 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law, and this Agreement shall inure to the benefit of, and be enforceable by,
such Person. The Executive shall, in the Executive's discretion, be entitled to
proceed against any or all of such Persons, any Person which theretofore was
such a successor to the Company (as defined in the first paragraph of this
Agreement) and the Company (as so defined) in any action to enforce any rights
of the Executive hereunder. Except as provided in this Subsection, this
Agreement shall not be assignable by the Company. This Agreement shall not be
terminated by the voluntary or involuntary dissolution of the Company.
(b) This Agreement and all rights of the Executive shall inure
to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, heirs and beneficiaries. In the
event of the Executive's death after a Covered Termination, all amounts payable
to the Executive under Sections 7, 8, 9, 10, 11 and 14 if the Executive had
lived shall be PAID TO THE Executive's heirs and representatives; provided,
however, that the foregoing shall not be construed to modify any terms of any
benefit plan of the Employer, as such terms are in effect on the Effective Date,
that expressly govern benefits under such plan in the event of the Executive's
death.
17. Severability. The provisions of this Agreement shall be
regarded as divisible, and if any of said provisions or any part hereof are
declared invalid or unenforceable by a court of competent jurisdiction, then the
validity and enforceability of the remainder of such provisions or parts hereof
and the applicability thereof shall not be affected thereby.
18. Amendment. This Agreement may not be amended or modified
at any time except by written instrument executed by the Company and the
Executive.
19. Withholding. The Employer shall be entitled to withhold
from amounts to be paid to the Executive hereunder any federal, state or local
withholding or other taxes or charges which it is from time to time required to
withhold; provided, that the amount so withheld shall not exceed the minimum
amount required to be withheld by law. The Employer shall be entitled to rely on
an opinion of nationally recognized tax counsel if any question as to the amount
or requirement of any such withholding shall arise.
20. Certain Rules of Construction. No party shall be
considered as being responsible for the drafting of this Agreement for the
purpose of applying any rule construing ambiguities against the drafter or
otherwise. No draft of this Agreement shall be taken into account in construing
this Agreement. Any provision of this Agreement which requires an agreement in
writing shall be deemed to require that the writing in question be signed by the
Executive and an authorized representative of the Company.
21. Governing Law; Resolution of Disputes. (a) This Agreement
and the rights and obligations hereunder shall be governed by and construed in
accordance with the internal laws of the State of Wisconsin (excluding any
choice of law rules that may direct the application of the laws of another
jurisdiction) except that Section 21(b) shall be construed in accordance with
the Federal Arbitration Act if arbitration is chosen by the Executive as the
method of dispute resolution.
(b) Any dispute arising out of this Agreement shall, at the
Executive's election, be determined by arbitration under the rules of the
American Arbitration Association then in effect (but subject to any evidentiary
standards set forth in this Agreement), in which case both parties shall be
bound by the arbitration award, or by litigation. Whether the dispute is to be
settled by arbitration or litigation, the venue for the arbitration or
litigation shall be Milwaukee, Wisconsin or, at the Executive's election, if the
Executive is no longer residing or working in the Milwaukee, Wisconsin
metropolitan area, in the judicial district encompassing the city in which the
Executive resides; provided, that, if the Executive is not then
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residing in the United States, the election of the Executive with respect to
such venue shall be either Milwaukee, Wisconsin or in the judicial district
encompassing that city in the United States among the thirty cities having the
largest population (as determined by the most recent United States Census data
available at the Termination Date) that is closest to the Executive's residence.
The parties consent to personal jurisdiction in each trial court in the selected
venue having subject matter jurisdiction notwithstanding their residence or
situs, and each party irrevocably consents to service of process in the manner
provided hereunder for the giving of notices.
22. Notice. Notices given pursuant to this Agreement shall be
in writing and shall be deemed given when actually received by the Executive or
actually received by the Company's Secretary or any officer of the Company other
than the Executive. For purposes of the notice of dispute provided for under
Sections 12(a)(iv) and 12(b), notice is deemed given on the earlier of the date
when actually delivered to the recipient or when mailed. If mailed, such notices
shall be mailed by United States registered or certified mail, return receipt
requested, addressee only, postage prepaid, if to the Company, to Badger Meter,
Inc., Attention: Secretary (or, if the Executive is then Secretary, to the Chief
Executive Officer), 4545 West Brown Deer Road, Milwaukee, Wisconsin 53223, or if
to the Executive, at the address set forth below the Executive's signature to
this Agreement, or to such other address as the party to be notified shall have
theretofore given to the other party in writing.
23. Additional Payment. (a) If, notwithstanding the provisions
of Section 8(a)(ii), but subject to subsection (b), it is ultimately determined
by a court or pursuant to a final determination by the Internal Revenue Service
that any portion of Total Payments is subject to the tax (the "Excise Tax")
imposed by Section 4999 of the Code (or any successor provision), then the
Company shall pay to the Executive an additional amount (the "Gross-Up Payment")
such that the net amount retained by the Executive after deduction of any Excise
Tax and any interest charges or penalties in respect of the imposition of such
Excise Tax (but not any federal, state or local income tax) on the Total
Payments, and any federal, state and local income tax and Excise Tax upon the
payment provided for by this Section 23 shall be equal to the Total Payments.
For purposes of determining the amount of the Gross-Up Payment, the Executive
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 rates of
taxation in the state and locality of the Executive's domicile for income tax
purposes on the date the Gross-Up Payment is made, net of the maximum reduction
in federal income taxes that could be obtained from deduction of such state and
local taxes.
(b) If legislation is enacted that would require the Company's
shareholders to approve this Agreement, prior to a Change in Control, due solely
to the provision contained in subsection (a) of this Section 23, then
(i) from and after such time as shareholder approval
would be required, until shareholder approval is obtained as required
by such legislation, subsection (a) shall be of no force and effect;
(ii) if the Company seeks shareholder approval of any
other agreement providing similar benefits to any other executive of
the Company, then the Company shall seek shareholder approval of this
Agreement at the same shareholders' meeting or meetings at which the
shareholders consider any such other agreement; and
(iii) the Company and the Executive shall use their
best efforts to consider and agree in writing upon an amendment to this
Section 23 such that, as amended, this Subsection would provide the
Executive with the benefits intended to be afforded to the Executive by
subsection (a) without requiring shareholder approval.
24. No Waiver. The Executive's or the Company's failure to
insist upon strict compliance with any provision of this Agreement or the
failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good
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<PAGE> 11
Reason, shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement.
25. Headings. The headings herein contained are for reference
only and shall not affect the meaning or interpretation of any provision of this
Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first written above.
BADGER METER, INC.
By: ____________________________________
Attest:__________________________________
EXECUTIVE
_________________________________(SEAL)
EXHIBIT A
CERTAIN DEFINED TERMS
For purposes of this Agreement,
(a) Act. The term "Act" means the Securities Exchange Act of
1934, as amended.
(b) Accrued Benefits. The term "Accrued Benefits" shall
include the following amounts, payable as described herein: (i) all base salary
for the time period ending with the Termination Date; (ii) reimbursement for any
and all monies advanced in connection with the Executive's employment for
reasonable and necessary expenses incurred by the Executive on behalf of the
Company and its Affiliates for the time period ending with the Termination Date;
(iii) any and all other cash earned through the Termination Date and deferred at
the election of the Executive or pursuant to any deferred compensation plan then
in effect; (iv) notwithstanding any provision of any bonus or incentive
compensation plan applicable to the Executive, a lump sum amount, in cash, equal
to the sum of (A) any bonus or incentive compensation that has been allocated or
awarded to the Executive for a fiscal year or other measuring period under the
plan that ends prior to the Termination Date but has not yet been paid (pursuant
to Section 5(f) or otherwise) and (B) a pro rata portion to the Termination Date
of the aggregate value of all contingent bonus or incentive compensation awards
to the Executive for all uncompleted periods under the plan calculated as to
each such award as if the Goals with respect to such bonus or incentive
compensation award had been attained; and (v) all other payments and benefits to
which the Executive (or in the event of the Executive's death, the Executive's
surviving spouse or other beneficiary) may be entitled as compensatory fringe
benefits or under the terms of any benefit plan of the Employer, including
severance payments under the Employer's severance policies and practices in the
form most favorable to the Executive that were in effect at any time during the
180-day period prior to the Effective Date. Payment of Accrued Benefits shall be
made promptly in accordance with the Employer's prevailing practice with respect
to clauses (i) and (ii) or, with respect to clauses (iii), (iv) and (v),
pursuant to the terms of the benefit plan or practice establishing such
benefits.
(c) Affiliate and Associate. The terms "Affiliate" and
"Associate" shall have the respective meanings ascribed to such terms in Rule
12b-2 of the General Rules and Regulations of the Act.
(d) Annual Cash Compensation. The term "Annual Cash
Compensation" shall mean the sum of (A) the Executive's Annual Base Salary, plus
(B) the highest of (1) the highest annual bonus or incentive compensation award
earned by the Executive under any cash bonus or incentive compensation plan of
the Company or any of its Affiliates during the three complete fiscal years of
the Company immediately preceding the Termination Date or, if more favorable to
the Executive, during the three
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<PAGE> 13
complete fiscal years of the Company immediately preceding the Effective Date;
(2) the Executive's bonus or incentive compensation Targeted Bonus for the
fiscal year in which the Termination Date occurs; or (3) the highest average
annual bonus and/or incentive compensation earned during the three complete
fiscal years of the Company immediately preceding the Termination Date (or, if
more favorable to the Executive, during the three complete fiscal years of the
Company immediately preceding the Effective Date) under any cash bonus or
incentive compensation plan of the Company or any of its Affiliates by the group
of executives of the Company and its Affiliates participating under such plan
during such fiscal years at a status or position comparable to that at which the
Executive participated or would have participated pursuant to the Executive's
most senior position at any time during the 180 days preceding the Effective
Date or thereafter until the Termination Date.
(e) Cause. The Company may terminate the Executive's
employment after the Effective Date for "Cause" only if the conditions set forth
in paragraphs (i) and (ii) have been met and the Company otherwise complies with
this Agreement:
(i) the Executive has committed any act of fraud,
embezzlement or theft in connection with the Executive's duties as an
Executive or in the course of employment with the Company and/or its
subsidiaries; (B) the Executive has willfully and continually failed to
perform substantially the Executive's duties with the Company or any of
its Affiliates (other than any such failure resulting from incapacity
due to physical or mental illness or injury, regardless of whether such
illness or injury is job-related) for an appropriate period, which
shall not be less than 30 days, after the Chief Executive Officer of
the Company (or, if the Executive is then Chief Executive Officer, the
Board) has delivered a written demand for performance to the Executive
that specifically identifies the manner in which the Chief Executive
Officer (or the Board, as the case may be) believes the Executive has
not substantially performed the Executive's duties; (C) the Executive
has willfully engaged in illegal conduct or gross misconduct that is
materially and demonstrably injurious to the Company; (D) the Executive
has willfully and wrongfully disclosed any trade secret or other
confidential information of the Company or any of its Affiliates; or
(E) the Executive has engaged in any Competitive Activity; and in any
such case the act or omission shall have been determined by the Board
to have been materially harmful to the Company and its subsidiaries
taken as a whole.
For purposes of this provision, (1) no act or failure to act
on the part of the Executive shall be considered "willful" unless it is done, or
omitted to be done, by the Executive in bad faith or without reasonable belief
that the Executive's action or omission was in the best interests of the Company
and (2) any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or upon the instructions of the Chief
Executive Officer or a senior officer of the Company or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or omitted to
be done, by the Executive in good faith and in the best interests of the
Company.
(ii) The Company terminates the Executive's
employment by delivering a Notice of Termination to the Executive, (B)
prior to the time the Company has terminated the Executive's employment
pursuant to a Notice of Termination, the Board, by the affirmative vote
of not less than three-quarters (3/4) of the entire membership of the
Board, has adopted a resolution finding that the Executive was guilty
of conduct set forth in this definition of Cause, and specifying the
particulars thereof in detail, at a meeting of the Board called and
held for the purpose of considering such termination (after reasonable
notice to the Executive and an opportunity for the Executive, together
with the Executive's counsel, to be heard before the Board) and (C) the
Company delivers a copy of such resolution to the Executive with the
Notice of Termination at the time the Executive's employment is
terminated.
In the event of a dispute regarding whether the Executive's employment has been
terminated for Cause, no claim by the Company that the Company has terminated
the Executive's employment for Cause in accordance with this Agreement shall be
given effect unless the Company establishes by clear and convincing evidence
that the Company has complied with the requirements of this Agreement to
terminate the Executive's employment for Cause.
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<PAGE> 14
(f) Change in Control. A "Change in Control" shall be deemed
to have occurred if the event set forth in any one of the following paragraphs
shall have occurred:
(i) any Person (other than (A) the Company or any of
its subsidiaries, (B) a trustee or other fiduciary holding securities
under any employee benefit plan of the Company or any of its
subsidiaries, (C) an underwriter temporarily holding securities
pursuant to an offering of such securities or (D) a corporation owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock in the
Company ("Excluded Persons")) is or becomes the "Beneficial Owner" (as
such term is defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company or its Affiliates after July 31, 1999
pursuant to express authorization by the Board that refers to this
exception and not including securities of the Company subject to
proxies held by such Person, but including securities of the Company
subject to exercisable options held by such Person) representing 20% or
more of either the then outstanding shares of common stock of the
Company or the combined voting power of the Company's then outstanding
voting securities; or
(ii) the following individuals cease for any reason
to constitute a majority of the number of directors then serving:
individuals who, on July 31, 1999, constituted the Board and any new
director (other than a director whose initial assumption of office is
in connection with an actual or threatened election contest, including
but not limited to a consent solicitation, relating to the election of
directors of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A under the Act) whose appointment or election by the
Board or nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors on July 31, 1999 or whose
appointment, election or nomination for election was previously so
approved; or
(iii) the shareholders of the Company approve a
merger, consolidation or share exchange of the Company with any other
corporation or approve the issuance of voting securities of the Company
in connection with a merger, consolidation or share exchange of the
Company (or any direct or indirect subsidiary of the Company) pursuant
to applicable stock exchange requirements, other than (A) a merger,
consolidation or share exchange which would result in the voting
securities of the Company outstanding immediately prior to such merger,
consolidation or share exchange continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity or any parent thereof) at least 50% of the
combined voting power of the voting securities of the Company or such
surviving entity or any parent thereof outstanding immediately after
such merger, consolidation or share exchange, or (B) a merger,
consolidation or share exchange effected to implement a
recapitalization of the Company (or similar transaction) in which no
Person (other than an Excluded Person) is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its Affiliates after
July 31, 1999 pursuant to express authorization by the Board that
refers to this exception) representing 20% or more of either the then
outstanding shares of common stock of the Company or the combined
voting power of the Company's then outstanding voting securities; or
(iv) the shareholders of the Company approve a plan
of complete liquidation or dissolution of the Company or an agreement
for the sale or disposition by the Company of all or substantially all
of the Company's assets (in one transaction or a series of related
transactions within any period of 24 consecutive months), other than a
sale or disposition by the Company of all or substantially all of the
Company's assets to an entity at least 75% of the combined voting power
of the voting securities of which are owned by Persons in substantially
the same proportions as their ownership of the Company immediately
prior to such sale.
Notwithstanding the foregoing, no "Change in Control" shall be
deemed to have occurred if there is consummated any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity that owns all or
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<PAGE> 15
substantially all of the assets or voting securities of the Company immediately
following such transaction or series of transactions.
(g) Code. The term "Code" means the Internal Revenue Code of
1986, including any amendments thereto or successor tax codes thereof.
(h) Competitive Activity. The Executive shall engage in a
"Competitive Activity" if the Executive participates in the management of, is
employed by or owns any interest in any business enterprise at a location within
the United States that engages in substantial competition with the Company or
its subsidiaries, where such enterprise's revenues from any competitive
activities amount to 10% or more of such enterprise's consolidated net revenues
and sales for its most recently completed fiscal year; provided, however, that
owning stock or other securities of a competitor amounting to less than five
percent of the outstanding capital stock of such competitor shall not be a
"Competitive Activity".
(i) Covered Termination. The term "Covered Termination" means
any termination of the Executive's employment during the Employment Period where
the Termination Date or the date Notice of Termination is delivered is any date
on or prior to the end of the Employment Period.
(j) Effective Date. The term "Effective Date" shall mean the
first date on which a Change in Control occurs. Anything in this Agreement to
the contrary notwithstanding, if (i) a Change in Control occurs, (ii) the
Executive's employment with the Employer terminates (whether by the Company, the
Executive or otherwise) within 180 days prior to the Change in Control and (iii)
it is reasonably demonstrated by the Executive that (A) any such termination of
employment by the Employer (1) was at the request of a third party who has taken
steps reasonably calculated to effect a Change in Control or (2) otherwise arose
in connection with or in anticipation of a Change in Control, or (B) any such
termination of employment by the Executive took place subsequent to the
occurrence of an event described in clause (ii), (iii), (iv) or (v) of the
definition of "Good Reason" which event (1) occurred at the request of a third
party who has taken steps reasonably calculated to effect a Change in Control or
(2) otherwise arose in connection with or in anticipation of a Change in
Control, then for all purposes of this Agreement the term "Effective Date" shall
mean the day immediately prior to the date of such termination of employment.
(k) Employer. The term "Employer" means the Company and/or any
subsidiary of the Company that employed the Executive immediately prior to the
Effective Date.
(l) Good Reason. The Executive shall have a "Good Reason" for
termination of employment on or after the Effective Date if the Executive
determines in good faith that any of the following events has occurred:
(i) any breach of this Agreement by the Company,
including specifically any breach by the Company of its agreements
contained in Section 4, Section 5 or Section 6, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith that
the Company remedies promptly after receipt of notice thereof given by
the Executive;
(ii) any reduction in the Executive's base salary,
percentage of base salary available as incentive compensation or bonus
opportunity or benefits, in each case relative to those most favorable
to the Executive in effect at any time during the 180-day period prior
to the Effective Date or, to the extent more favorable to the
Executive, those in effect after the Effective Date;
(iii) a material adverse change, without the
Executive's prior written consent, in the Executive's working
conditions or status with the Company or the Employer from such working
conditions or status in effect during the 180-day period prior to the
Effective Date or, to the extent more favorable to the Executive, those
in effect after the Effective Date, including but not limited to (A) a
material change in the nature or scope of the Executive's titles,
authority, powers, functions, duties, reporting requirements or
responsibilities, or (B) a material reduction in the level of support
services, staff, secretarial and other assistance, office space and
accoutrements, but excluding for this purpose an isolated,
insubstantial and inadvertent event not occurring in bad faith that the
Company remedies promptly after receipt of notice thereof given by the
Executive;
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<PAGE> 16
(iv) the relocation of the Executive's principal
place of employment to a location more than 35 miles from the
Executive's principal place of employment on the date 180 days prior to
the Effective Date;
(v) the Employer requires the Executive to travel on
Employer business to a materially greater extent than was required
during the 180-day period prior to the Effective Date;
(vi) failure by the Company to obtain the agreement
referred to in Section 16(a) as provided therein; or
(vii) the Company or the Employer terminates the
Executive's employment after a Change in Control without delivering a
Notice of Termination in accordance with Section 12;
provided that (A) any such event occurs following the Effective Date or (B) in
the case of any event described in clauses (ii), (iii), (iv) or (v) above, such
event occurs on or prior to the Effective Date under circumstances described in
clause (iii)(B)(1) or (iii)(B)(2) of the definition of "Effective Date." In the
event of a dispute regarding whether the Executive terminated the Executive's
employment for "Good Reason" in accordance with this Agreement, no claim by the
Company that such termination does not constitute a Covered Termination shall be
given effect unless the Company establishes by clear and convincing evidence
that such termination does not constitute a Covered Termination. Any election by
the Executive to terminate the Executive's employment for Good Reason shall not
be deemed a voluntary termination of employment by the Executive for purposes of
any other employee benefit or other plan.
(m) Normal Retirement Date. The term "Normal Retirement Date"
means the date the Executive reaches "Normal Retirement Age" as defined in the
Badger Meter Pension Plan as in effect on the date hereof, or the corresponding
date under any successor plan of the Employer as in effect on the Effective
Date.
(n) Notice of Termination. The term "Notice of Termination"
means a written notice as contemplated by Section 12.
(o) Person. The term "Person" shall have the meaning given in
Section 3(a)(9) of the Act, as modified and used in Sections 13(d) and 14(d)
thereof.
(p) Termination Date. Except as otherwise provided in Section
9(b) and Section 16(a), the term "Termination Date" means (i) if the Executive's
employment is terminated by the Executive's death, the date of death; (ii) if
the Executive's employment is terminated by reason of voluntary early
retirement, as agreed in writing by the Company and the Executive, the date of
such early retirement that is set forth in such written agreement; (iii) if the
Executive's employment is terminated for purposes of this Agreement by reason of
disability pursuant to Section 11, thirty days after the Notice of Termination
is given; (iv) if the Executive's employment is terminated by the Executive
voluntarily (other than for Good Reason), the date the Notice of Termination is
given; and (v) if the Executive's employment is terminated by the Company (other
than by reason of disability pursuant to Section 11) or by the Executive for
Good Reason, thirty days after the Notice of Termination is given.
Notwithstanding the foregoing,
(A) If the Executive shall in good faith give a Notice of
Termination for Good Reason and the Company notifies the Executive that a
dispute exists concerning the termination within the fifteen-day period
following receipt thereof, then the Executive may elect to continue the
Executive's employment during such dispute and the Termination Date shall be
determined under this paragraph. If the Executive so elects and it is thereafter
determined that the Executive terminated the Executive's employment for Good
Reason in accordance with this Agreement, then the Termination Date shall be the
earlier of (1) the date on which the dispute is finally determined, either (x)
by mutual written agreement of the parties or (y) in accordance with Section 21
or (2) the date of the Executive's death. If the Executive so elects and it is
thereafter determined that the Executive did not terminate the Executive's
employment for Good Reason in accordance with this Agreement, then the
employment of the Executive hereunder shall continue after such determination as
if the Executive had not delivered the Notice of Termination asserting Good
Reason and there shall be no Termination Date arising out of such Notice. In
either case, this Agreement
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continues, until the Termination Date, if any, as if the Executive had not
delivered the Notice of Termination except that, if it is finally determined
that the Executive terminated the Executive's employment for Good Reason in
accordance with this Agreement, then the Executive shall in no case be denied
the benefits described in Section 8 (including a Termination Payment) based on
events occurring after the Executive delivered the Executive's Notice of
Termination.
(B) If an opinion is required to be delivered pursuant to
Section 8(a)(ii) and such opinion shall not have been delivered, then the
Termination Date shall be the date on which such opinion is delivered.
(C) Except as provided in paragraph (A) above, if the party
receiving the Notice of Termination notifies the other party that a dispute
exists concerning the termination within the fifteen-day period following
receipt thereof and it is finally determined that termination of the Executive's
employment for the reason asserted in such Notice of Termination was not in
accordance with this Agreement, then (1) if such Notice was delivered by the
Executive, then the Executive will be deemed to have voluntarily terminated the
Executive's employment other than for Good Reason by means of such Notice and
(2) if delivered by the Company, then the Company will be deemed to have
terminated the Executive's employment other than by reason of death, disability
or Cause by means of such Notice.
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<PAGE> 18
KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AGREEMENT, made and entered into as of the ____ day of
______, ____, by and between Badger Meter, Inc., a Wisconsin corporation
(hereinafter referred to as the "Company"), and __________________ (hereinafter
referred to as the "Executive").
W I T N E S S E T H :
WHEREAS, the Executive is employed by the Company and/or a
subsidiary of the Company in a key executive capacity, and the Executive's
services are valuable to the conduct of the business of the Company;
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that circumstances may arise in which a change in control of the
Company occurs, through acquisition or otherwise, thereby causing uncertainty
about the Executive's future employment with the Company and/or any such
subsidiary without regard to the Executive's competence or past contributions,
which uncertainty may result in the loss of valuable services of the Executive
to the detriment of the Company and its shareholders, and the Company and the
Executive wish to provide reasonable security to the Executive against changes
in the Executive's relationship with the Company in the event of any such change
in control;
WHEREAS, the Company and the Executive desire that any
proposal for a change in control or acquisition of the Company will be
considered by the Executive objectively and with reference only to the best
interests of the Company and its shareholders; and
WHEREAS, the Executive will be in a better position to
consider the Company's best interests if the Executive is afforded reasonable
security, as provided in this Agreement, against altered conditions of
employment which could result from any such change in control or acquisition.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto
mutually covenant and agree as follows:
1. Definitions. The following terms are used in this Agreement as defined in
Exhibit A:
Act Covered Termination
Accrued Benefits Effective Date
Affiliate and Associate Employer
Annual Cash Compensation Good Reason
Cause Normal Retirement
Change in Control Notice of Termination
Code Person
Competitive Activity Termination Date
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2. Termination or Cancellation Prior to the Effective Date.
The Employer shall retain the right to terminate the employment of the Executive
at any time prior to the Effective Date. If the Executive's employment is
terminated prior to the Effective Date, then this Agreement shall be terminated
and cancelled and of no further force or effect and any and all rights and
obligations of the parties hereunder shall cease. In addition, this Agreement
shall terminate upon the Executive ceasing to be an officer of the Employer
prior to a Change in Control unless the Executive can reasonably demonstrate
that such change in status occurred under circumstances described in clause
(iii)(B)(1) or (iii)(B)(2) of the definition of "Effective Date" in Exhibit A.
3. Employment Period. If the Executive is employed by the
Employer on the Effective Date, then the Company will, or will cause the
Employer to, continue thereafter to employ the Executive during the Employment
Period (as hereinafter defined), and the Executive will remain in the employ of
the Employer, in accordance with and subject to the terms and provisions of this
Agreement. For purposes of this Agreement, the term "Employment Period" means a
period (i) commencing on the Effective Date, and (ii) ending at 11:59 p.m.
Milwaukee Time on the second anniversary of such date.
4. Duties. During the Employment Period, the Executive shall
devote the Executive's best efforts and all of the Executive's business time,
attention and skill to the business and affairs of the Employer, as such
business and affairs now exist and as they may hereafter be conducted.
5. Compensation. During the Employment Period, the Executive
shall be compensated as follows:
(a) The Executive shall receive, at reasonable intervals (but
not less often than monthly) and in accordance with such standard policies as
may be in effect immediately prior to the Effective Date, an annual base salary
in cash equivalent of not less than twelve times the Executive's highest monthly
base salary for the twelve-month period immediately preceding the month in which
the Effective Date occurs or, if higher, annual base salary at the rate in
effect immediately prior to the Effective Date (which base salary shall, unless
otherwise agreed in writing by the Executive, include the current receipt by the
Executive of any amounts which, prior to the Effective Date, the Executive had
elected to defer, whether such compensation is deferred under Section 401(k) of
the Code or otherwise), subject to upward adjustment as provided in Section 6
(such salary amount as adjusted upward from time to time is hereafter referred
to as the "Annual Base Salary").
(b) The Executive shall receive fringe benefits at least equal
in value to those provided for the Executive at any time during the 180-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, those provided generally at any time after the Effective Date to any
executives of the Company and its Affiliates of comparable status and position
to the Executive. The Executive shall be reimbursed, at such intervals and in
accordance with such standard policies that are most favorable to the Executive
that were in effect at any time during the 180-day period immediately preceding
the Effective Date or, if more favorable to the Executive, those provided
generally at any time after the Effective Date to any executives of the Company
and its Affiliates of comparable status and position to the Executive, for any
and all monies advanced in connection with the Executive's employment for
reasonable and necessary expenses incurred by the Executive on behalf of the
Company and its Affiliates, including travel expenses.
(c) The Executive and/or the Executive's family, as the case
may be, shall be included, to the extent eligible thereunder (which eligibility
shall not be conditioned on the Executive's salary grade or on any other
requirement that excludes executives of the Company and its Affiliates of
comparable status and position to the Executive unless such exclusion was in
effect for such plan or an equivalent plan on the date 180 days prior to the
Effective Date), in any and all welfare benefit plans, practices, policies and
programs providing benefits for the Company's salaried employees in general or,
if more favorable to the Executive, to any executives of the Company and its
Affiliates of comparable status and position to the Executive, including but not
limited to group life insurance, hospitalization, medical and dental plans;
provided, that, in no event shall the aggregate level of benefits under such
plans, practices, policies and programs in which the Executive is included be
less than the greater of: (i) the aggregate level of benefits under plans,
practices, policies and programs of the type referred to in this Section 5(c) in
which the Executive was participating at any time during the 180-day period
immediately preceding the Effective
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Date and (ii) the aggregate level of benefits under plans, practices, policies
and programs of the type referred to in this Section 5(c) provided at any time
after the Effective Date to any executive of the Company and its Affiliates of
comparable status and position to the Executive.
(d) The Executive shall annually be entitled to not less than
the amount of paid vacation and not fewer than the number of paid holidays to
which the Executive was entitled annually at any time during the 180-day period
immediately preceding the Effective Date or such greater amount of paid vacation
and number of paid holidays as may be made available annually to any other
executive of the Company and its Affiliates of comparable status and position to
the Executive at any time after the Effective Date.
(e) The Executive shall be included in all plans providing
additional benefits to any executives of the Company and its Affiliates of
comparable status and position to the Executive, including but not limited to
deferred compensation, split-dollar life insurance, retirement, supplemental
retirement, stock option, stock appreciation, stock bonus and similar or
comparable plans; provided, that, in no event shall the aggregate level of
benefits under such plans be less than the greater of: (i) the aggregate level
of benefits under plans of the type referred to in this Section 5(e) in which
the Executive was participating at any time during the 180-day period
immediately preceding the Effective Date and (ii) the aggregate level of
benefits under plans of the type referred to in this Section 5(e) provided at
any time after the Effective Date to any executive of the Company and its
Affiliates of comparable status and position to the Executive. The Company's
obligation to include the Executive in bonus or incentive compensation plans
shall be determined by Section 5(f).
(f) To assure that the Executive will have an opportunity to
earn incentive compensation after the Effective Date, the Executive shall be
included in a bonus plan of the Company that shall satisfy the standards
described below (the "Bonus Plan"). Bonuses under the Bonus Plan shall be
payable with respect to achieving such financial or other goals reasonably
related to the business of the Company, including the Employer, as the Company
shall establish (the "Goals"), all of which Goals shall be attainable, prior to
the end of the Employment Period, with approximately the same degree of
probability as the goals under the Employer's annual incentive plan currently in
effect, or the successor to such plan, in the form most favorable to the
Executive that was in effect at any time during the 180-day period prior to the
Effective Date (the "Existing Plan") and in view of the Company's existing and
projected financial and business circumstances applicable at the time. The
amount of the bonus (the "Bonus Amount") that the Executive is eligible to earn
under the Bonus Plan shall be no less than the amount of the Executive's highest
maximum potential award under the Existing Plan at any time during the 180-day
period prior to the Effective Date or, if higher, any maximum potential award
under the Bonus Plan or any other bonus or incentive compensation plan in effect
after the Effective Date for the Executive or for any executive of the Company
and its Affiliates of comparable status and position to the Executive (such
bonus amount herein referred to as the "Targeted Bonus"), and if the Goals are
not achieved (and, therefore, the entire Targeted Bonus is not payable), then
the Bonus Plan shall provide for a payment of a Bonus Amount not less than a
portion of the Targeted Bonus reasonably related to that portion of the Goals
that were achieved. Payment of the Bonus Amount (i) shall be in cash, unless
otherwise agreed by the Executive, and (ii) shall not be affected by any
circumstance occurring subsequent to the end of the Employment Period, including
termination of the Executive's employment.
6. Annual Compensation Adjustments. During the Employment
Period, the Board of Directors of the Company (or an appropriate committee
thereof) will consider and appraise, at least annually, the contributions of the
Executive to the Employer, and in accordance with the Company's practice prior
to the Effective Date, due consideration shall be given, at least annually, to
the upward adjustment of the Executive's Annual Base Salary (i) commensurate
with increases generally given to other executives of the Company and its
Affiliates of comparable status and position to the Executive, and (ii) as the
scope of the Company's operations or the Executive's duties expand.
7. Termination During Employment Period.
(a) Right to Terminate. During the Employment Period, (i) the
Company shall be entitled to terminate the Executive's employment (A) for Cause,
(B) by reason of the Executive's disability pursuant to Section 11, or (C) for
any other reason, and (ii) the Executive shall be entitled to terminate the
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Executive's employment for any reason. Any such termination shall be subject to
the procedures set forth in Section 12 and shall be subject to any consequences
of such termination set forth in this Agreement. Any termination of the
Executive's employment during the Employment Period by the Employer shall be
deemed a termination by the Company for purposes of this Agreement.
(b) Termination for Cause or Without Good Reason. If there is
a Covered Termination for Cause under the circumstances described in clause
(i)(B) of the definition of Cause, or due to the Executive's voluntarily
terminating the Executive's employment other than for Good Reason, then the
Executive shall be entitled to receive only Accrued Benefits. If there is a
Covered Termination for Cause under the circumstances described in any of
clauses (i)(A), (i)(C), (i)(D) or (i)(E) of the definition of Cause, then the
Executive shall not be entitled to receive Accrued Benefits or any other payment
or benefit under this Agreement, and shall only be entitled to receive payments
or benefits to which the Executive is entitled under applicable law.
(c) Termination Giving Rise to a Termination Payment. If there
is a Covered Termination by the Executive for Good Reason, or by the Company
other than by reason of (i) death, (ii) disability pursuant to Section 11, or
(iii) Cause, then the Executive shall be entitled to receive, and the Company
shall promptly pay, Accrued Benefits and, in lieu of further base salary for
periods following the Termination Date, as liquidated damages and additional
severance pay and in consideration of the covenant of the Executive set forth in
Section 13(a), the Termination Payment pursuant to Section 8(a).
8. Payments Upon Termination.
(a) Termination Payment.
(i) Subject to the limits set forth in Section
8(a)(ii), for purposes of this Agreement, the "Termination Payment"
shall be an amount equal to the Annual Cash Compensation multiplied by
the number of years or fractional portion thereof remaining in the
Employment Period determined as of the Termination Date, except that
the Termination Payment shall not be less than the amount of Annual
Cash Compensation. The Termination Payment shall be paid to the
Executive in cash not later than ten business days after the
Termination Date. The Executive shall not be required to mitigate the
amount of the Termination Payment by securing other employment or
otherwise, nor will such Termination Payment be reduced by reason of
the Executive securing other employment or for any other reason.
(ii) Notwithstanding any other provision of this
Agreement, if any portion of the Termination Payment or any other
payment under this Agreement, or under any other agreement with or plan
of the Company or the Employer (in the aggregate "Total Payments"),
would constitute an "excess parachute payment," then the Total Payments
to be made to the Executive shall be reduced such that the value of the
aggregate Total Payments that the Executive is entitled to receive
shall be One Dollar ($1) less than the maximum amount which the
Executive may receive without becoming subject to the tax imposed by
Section 4999 of the Code (or any successor provision) or which the
Company may pay without loss of deduction under Section 280G(a) of the
Code (or any successor provision). For purposes of this Agreement, the
terms "excess parachute payment" and "parachute payments" shall have
the meanings assigned to them in Section 280G of the Code (or any
successor provision), and such "parachute payments" shall be valued as
provided therein. Present value for purposes of this Agreement shall be
calculated in accordance with Section 1274(b)(2) of the Code (or any
successor provision). Within sixty days following delivery of the
Notice of Termination or notice by the Company to the Executive of its
belief that there is a payment or benefit due the Executive which will
result in an excess parachute payment as defined in Section 280G of the
Code (or any successor provision), the Executive and the Company, at
the Company's expense, shall obtain the opinion (which need not be
unqualified) of nationally recognized tax counsel selected by the
Company's independent auditors and acceptable to the Executive in the
Executive's sole discretion, which sets forth (A) the amount of the
Base Period Income, (B) the amount and present value of Total Payments
and (C) the amount and present value of any excess parachute payments
without regard to the limitations of this Section 8(a)(ii). As used in
this Section 8(a)(ii), the term "Base Period Income" means an amount
equal to the Executive's "annualized includable
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compensation for the base period" as defined in Section 280G(d)(1) of
the Code (or any successor provision). For purposes of such opinion,
the value of any noncash benefits or any deferred payment or benefit
shall be determined by the Company's independent auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code (or any
successor provisions), which determination shall be evidenced in a
certificate of such auditors addressed to the Company and the
Executive. Such opinion shall be dated as of the Termination Date and
addressed to the Company and the Executive and shall be binding upon
the Company and the Executive. If such opinion determines that there
would be an excess parachute payment, then the Termination Payment
hereunder or any other payment determined by such counsel to be
includable in Total Payments shall be reduced or eliminated as
specified by the Executive in writing delivered to the Company within
thirty days of the Executive's receipt of such opinion or, if the
Executive fails to so notify the Company, then as the Company shall
reasonably determine, so that under the bases of calculations set forth
in such opinion there will be no excess parachute payment. If such
counsel so requests in connection with the opinion required by this
Section, the Executive and the Company shall obtain, at the Company's
expense, and the counsel may rely on in providing the opinion, the
advice of a firm of recognized executive compensation consultants as to
the reasonableness of any item of compensation to be received by the
Executive. Notwithstanding the foregoing, the provisions of this
Section 8(a)(ii), including the calculations, notices and opinions
provided for herein, shall be based upon the conclusive presumption
that the following are reasonable: (1) the compensation and benefits
provided for in Section 5 and (2) any other compensation, including but
not limited to the Accrued Benefits, earned prior to the Termination
Date by the Executive pursuant to the Company's compensation programs
if such payments would have been made in the future in any event, even
though the timing of such payment is triggered by the Change in Control
or the Termination Date. If the provisions of Sections 280G and 4999 of
the Code (or any successor provisions) are repealed without succession,
then this Section 8(a)(ii) shall be of no further force or effect.
(b) Additional Benefits. If there is a Covered Termination and
the Executive is entitled to Accrued Benefits and the Termination Payment, then
the Executive shall be entitled to the following additional benefits:
(i) The Executive will be entitled to pension
benefits in addition to the most favorable benefits provided for the
Executive under any version of the Badger Meter Pension Plan and the
Badger Meter, Inc. Executive Supplemental Plan (or any successors to
such plans) in effect at any time during the 180-day period prior to
the Effective Date (the "Retirement Plans"). The amount of additional
pension benefits will be equal to the difference between the amount the
Executive (or in the event of the Executive's death, the Executive's
surviving spouse or other beneficiary) would be actually entitled to
receive upon retirement under the terms and conditions of the
Retirement Plans and the amount the Executive (or such surviving spouse
or beneficiary) would have been entitled to receive under such terms
and conditions if the Executive's benefits under the Retirement Plans
had been fully vested on the Termination Date and the Executive had
continued to work for the remainder of the Employment Period at a
salary rate equal to the Executive's Annual Base Salary; provided,
however, that in no event will the assumed period of continued
employment extend beyond the date on which the Executive elects to
begin receiving the additional pension benefits. The Executive shall
receive the Executive's additional pension benefits in the same form
and at the same time (e.g. joint and survivor) that would have been
payable to the Executive under the terms and conditions of the
Retirement Plans.
(ii) Until the earlier of the end of the Employment
Period or such time as the Executive has obtained new employment and is
covered by benefits which in the aggregate are at least equal in value
to the following benefits, the Executive shall continue to be covered,
at the expense of the Company, by the most favorable life insurance,
hospitalization, medical and dental coverage and other welfare benefits
provided to the Executive and the Executive's family during the 180-day
period immediately preceding the Effective Date or at any time
thereafter or, if more favorable to the Executive, coverage as was
required hereunder with respect to the Executive immediately prior to
the date Notice of Termination is given; provided, however, that if the
Executive is otherwise entitled to receive hospitalization and/or
medical coverage under a plan or plans for early retirees sponsored by
the Company or a subsidiary thereof, then the Executive
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shall not be eligible for such hospitalization or medical coverage
under this Section 8(b)(ii). If the Executive is eligible for Medicare,
the Executive shall be obligated to apply for coverage thereunder at
the earliest opportunity and the Company will reimburse the Executive
for the Part B premium cost.
(iii) The Executive shall receive, at the expense of
the Company, outplacement services, on an individualized basis at a
level of service commensurate with the Executive's most senior status
with the Company during the 180-day period prior to the Effective Date
(or, if higher, at any time after the Effective Date), provided by a
nationally recognized executive placement firm selected by the Company
with the consent of the Executive, which consent will not be
unreasonably withheld; provided that the cost to the Company of such
services shall not exceed 15% of the Executive's Annual Base Salary.
(iv) The Company shall bear up to $5,000 in the
aggregate of fees and expenses of consultants and/or legal or
accounting advisors engaged by the Executive to advise the Executive as
to matters relating to the computation of benefits due and payable
under this Section 8.
9. Death. (a) In the event of a Covered Termination due to the
Executive's death, the Executive's estate, heirs and beneficiaries shall receive
all the Executive's Accrued Benefits through the Termination Date.
(b) If the Executive dies after a Notice of Termination is
given (i) by the Company or (ii) by the Executive for Good Reason, then the
Executive's estate, heirs and beneficiaries shall be entitled to the benefits
described in Section 9(a) and, subject to the provisions of this Agreement, to
such Termination Payment to which the Executive would have been entitled had the
Executive lived. In such event, the Termination Date shall be thirty days
following the giving of the Notice of Termination, subject to extension pursuant
to the definition of "Termination Date" in Exhibit A.
10. Retirement. If, during the Employment Period, the
Executive and the Employer shall execute an agreement providing for the early
retirement of the Executive from the Employer, or the Executive shall otherwise
give notice that the Executive is voluntarily choosing to retire early from the
Employer, then the Executive shall receive Accrued Benefits through the
Termination Date; provided, that if the Executive's employment is terminated by
the Executive for Good Reason or by the Company other than by reason of death,
disability or Cause and the Executive also, in connection with such termination,
elects voluntary early retirement, then the Executive shall also be entitled to
receive a Termination Payment pursuant to Section 8(a).
11. Termination for Disability. If, during the Employment
Period, as a result of the Executive's disability due to physical or mental
illness or injury (regardless of whether such illness or injury is job-related),
the Executive shall have been absent from the Executive's duties hereunder on a
full-time basis for a period of 182 days and, within thirty days after the
Company notifies the Executive in writing that it intends to terminate the
Executive's employment (which notice shall not constitute the Notice of
Termination contemplated below), the Executive shall not have returned to the
performance of the Executive's duties hereunder on a full-time basis, then the
Company may terminate the Executive's employment for purposes of this Agreement
pursuant to a Notice of Termination. If the Executive's employment is terminated
on account of the Executive's disability in accordance with this Section, then
the Executive shall receive Accrued Benefits in accordance with Section 8(a) and
shall remain eligible for all benefits provided by any disability programs of
the Employer in effect with respect to the Executive at the time the Company
sends notice to the Executive of its intent to terminate pursuant to this
Section.
12. Termination Notice and Procedure. (a) Any termination of
the Executive's employment during the Employment Period by the Company or the
Executive (other than a termination of the Executive's employment referenced in
the second sentence of the definition of "Effective Date" in Exhibit A) shall be
communicated by written Notice of Termination to the Executive, if such Notice
is given by the Company, and to the Company, if such Notice is given by the
Executive, all in accordance with the following procedures and those set forth
in Section 22:
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(i) If such termination is for disability, Cause or
Good Reason, the Notice of Termination shall indicate in reasonable
detail the facts and circumstances alleged to provide a basis for such
termination.
(ii) Any Notice of Termination by the Company shall
have been approved, prior to the giving thereof to the Executive, by a
resolution duly adopted by a majority of the directors of the Company
(or any successor corporation) then in office, a copy of which shall
accompany the Notice.
(iii) If the Notice is given by the Executive for
Good Reason, then the Executive may cease performing the Executive's
duties hereunder on or after the date 15 days after the delivery of
Notice of Termination (unless the Notice of Termination is based upon
clause (vii) of the definition of "Good Reason" in Exhibit A, in which
case the Executive may cease performing his duties at the time the
Executive's employment is terminated) and shall in any event cease
employment on the Termination Date, if any, arising from the delivery
of such Notice. If the Notice is given by the Company, then the
Executive may cease performing the Executive's duties hereunder on the
date of receipt of the Notice of Termination, subject to the
Executive's rights hereunder.
(iv) The recipient of any Notice of Termination shall
deliver in accordance with Section 22 written notice of any dispute
relating to such Notice of Termination to the party giving such Notice
within fifteen days after receipt thereof. After the expiration of such
fifteen days, in the absence of such notice of dispute, the contents of
the Notice of Termination shall become final and not subject to
dispute.
Notwithstanding the foregoing, (A) if the Executive terminates the Executive's
employment after a Change in Control without complying with this Section 12,
then the Executive will be deemed to have voluntarily terminated the Executive's
employment other than for Good Reason and deemed to have delivered a written
Notice of Termination to that effect to the Company as of the date of such
termination and (B) if the Company terminates the Executive's employment after a
Change in Control without complying with this Section 12, then the Company will
be deemed to have terminated the Executive's employment other than by reason of
death, disability or Cause and the Company will be deemed to have delivered a
written Notice of Termination to that effect to the Executive as of the date of
such termination.
(b) If a Change in Control occurs and the Executive's
employment with the Employer terminates (whether by the Company, the Executive
or otherwise) within 180 days prior to the Change in Control, then the Executive
may assert that such termination is a Covered Termination by sending a written
Notice of Termination to the Company at any time prior to the first anniversary
of the Change in Control in accordance with the procedures set forth in this
Section 12(b) and those set forth in Section 22. If the Executive asserts that
the Executive terminated the Executive's employment for Good Reason or that the
Company terminated the Executive's employment other than for disability or
Cause, then the Notice of Termination shall indicate in reasonable detail the
facts and circumstances alleged to provide a basis for such assertions. The
Company shall, in accordance with Section 22, give written notice of any dispute
relating to such Notice of Termination to the Executive within fifteen days
after receipt thereof. After the expiration of such fifteen days, in the absence
of such notice of dispute, the contents of the Notice of Termination shall
become final and not subject to dispute.
13. Further Obligations of the Executive.
(a) Competition. The Executive agrees that, in the event of
any Covered Termination where the Executive is entitled to (and receives)
Accrued Benefits and the Termination Payment, the Executive shall not, for a
period of six months after the Termination Date, without the prior written
approval of the Company's Board of Directors, engage in any Competitive
Activity.
(b) Confidentiality. During and following the Executive's
employment by the Employer, the Executive shall hold in confidence and not
directly or indirectly disclose or use or copy or make lists of any confidential
information or proprietary data of the Company (including that of the Employer),
except to the extent authorized in writing by the Board of Directors of the
Company or required by any court or
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administrative agency, other than to an employee of the Company or a person to
whom disclosure is reasonably necessary or appropriate in connection with the
performance by the Executive of duties as an executive of the Company or the
Employer. Confidential information shall not include any information known
generally to the public or any information of a type not otherwise considered
confidential by persons engaged in the same business or a business similar to
that of the Company. All records, files, documents and materials, or copies
thereof, relating to the business of the Company which the Executive shall
prepare, or use, or come into contact with, shall be and remain the sole
property of the Company and shall be promptly returned to the Company upon
termination of employment with the Employer.
14. Expenses and Interest. If, after the Effective Date, (i) a
dispute arises with respect to the enforcement of the Executive's rights under
this Agreement, (ii) any legal or arbitration proceeding shall be brought to
enforce or interpret any provision contained herein or to recover damages for
breach hereof, or (iii) any tax audit or proceeding is commenced that is
attributable in part to the application of Section 4999 of the Code, in any case
so long as the Executive is not acting in bad faith, then the Company shall
reimburse the Executive for any reasonable attorneys' fees and necessary costs
and disbursements incurred as a result of such dispute, legal or arbitration
proceeding or tax audit or proceeding ("Expenses"), and prejudgment interest on
any money judgment or arbitration award obtained by the Executive calculated at
the rate of interest announced by Firstar Bank, Milwaukee, Wisconsin, from time
to time as its prime or base lending rate from the date that payments to the
Executive should have been made under this Agreement. Within ten days after the
Executive's written request therefor, the Company shall pay to the Executive, or
such other person or entity as the Executive may designate in writing to the
Company, the Executive's reasonable Expenses in advance of the final disposition
or conclusion of any such dispute, legal or arbitration proceeding.
15. Payment Obligations Absolute. The Company's obligation
during and after the Employment Period to pay the Executive the amounts and to
make the benefit and other arrangements provided herein shall be absolute and
unconditional and shall not be affected by any circumstances, including, without
limitation, any setoff, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or anyone else. Except as provided in
Section 14, all amounts payable by the Company hereunder shall be paid without
notice or demand. Each and every payment made hereunder by the Company shall be
final, and the Company will not seek to recover all or any part of such payment
from the Executive, or from whomsoever may be entitled thereto, for any reason
whatsoever.
16. Successors. (a) If the Company sells, assigns or transfers
all or substantially all of its business and assets to any Person or if the
Company merges into or consolidates or otherwise combines (where the Company
does not survive such combination) with any Person (any such event, a "Sale of
Business"), then the Company shall assign all of its right, title and interest
in this Agreement as of the date of such event to such Person, and the Company
shall cause such Person, by written agreement in form and substance reasonably
satisfactory to the Executive, to expressly assume and agree to perform from and
after the date of such assignment all of the terms, conditions and provisions
imposed by this Agreement upon the Company. Failure of the Company to obtain
such agreement prior to the effective date of such Sale of Business shall be a
breach of this Agreement constituting "Good Reason" hereunder, except that for
purposes of implementing the foregoing, the date upon which such Sale of
Business becomes effective shall be deemed the Termination Date. In case of such
assignment by the Company and of assumption and agreement by such Person, as
used in this Agreement, "Company" shall thereafter mean such Person which
executes and delivers the agreement provided for in this Section 16 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law, and this Agreement shall inure to the benefit of, and be
enforceable by, such Person. The Executive shall, in the Executive's discretion,
be entitled to proceed against any or all of such Persons, any Person which
theretofore was such a successor to the Company (as defined in the first
paragraph of this Agreement) and the Company (as so defined) in any action to
enforce any rights of the Executive hereunder. Except as provided in this
Subsection, this Agreement shall not be assignable by the Company. This
Agreement shall not be terminated by the voluntary or involuntary dissolution of
the Company.
(b) This Agreement and all rights of the Executive shall inure
to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, heirs and beneficiaries. In the
event of the Executive's death after a Covered Termination, all amounts payable
to
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the Executive under Sections 7, 8, 9, 10, 11 and 14 if the Executive had lived
shall be paid to the Executive's heirs and representatives; provided, however,
that the foregoing shall not be construed to modify any terms of any benefit
plan of the Employer, as such terms are in effect on the Effective Date, that
expressly govern benefits under such plan in the event of the Executive's death.
17. Severability. The provisions of this Agreement shall be
regarded as divisible, and if any of said provisions or any part hereof are
declared invalid or unenforceable by a court of competent jurisdiction, then the
validity and enforceability of the remainder of such provisions or parts hereof
and the applicability thereof shall not be affected thereby.
18. Amendment. This Agreement may not be amended or modified
at any time except by written instrument executed by the Company and the
Executive.
19. Withholding. The Employer shall be entitled to withhold
from amounts to be paid to the Executive hereunder any federal, state or local
withholding or other taxes or charges which it is from time to time required to
withhold; provided, that the amount so withheld shall not exceed the minimum
amount required to be withheld by law. The Employer shall be entitled to rely on
an opinion of nationally recognized tax counsel if any question as to the amount
or requirement of any such withholding shall arise.
20. Certain Rules of Construction. No party shall be
considered as being responsible for the drafting of this Agreement for the
purpose of applying any rule construing ambiguities against the drafter or
otherwise. No draft of this Agreement shall be taken into account in construing
this Agreement. Any provision of this Agreement which requires an agreement in
writing shall be deemed to require that the writing in question be signed by the
Executive and an authorized representative of the Company.
21. Governing Law; Resolution of Disputes. (a) This Agreement
and the rights and obligations hereunder shall be governed by and construed in
accordance with the internal laws of the State of Wisconsin (excluding any
choice of law rules that may direct the application of the laws of another
jurisdiction) except that Section 21(b) shall be construed in accordance with
the Federal Arbitration Act if arbitration is chosen by the Executive as the
method of dispute resolution.
(b) Any dispute arising out of this Agreement shall, at the
Executive's election, be determined by arbitration under the rules of the
American Arbitration Association then in effect (but subject to any evidentiary
standards set forth in this Agreement), in which case both parties shall be
bound by the arbitration award, or by litigation. Whether the dispute is to be
settled by arbitration or litigation, the venue for the arbitration or
litigation shall be Milwaukee, Wisconsin or, at the Executive's election, if the
Executive is no longer residing or working in the Milwaukee, Wisconsin
metropolitan area, in the judicial district encompassing the city in which the
Executive resides; provided, that, if the Executive is not then residing in the
United States, the election of the Executive with respect to such venue shall be
either Milwaukee, Wisconsin or in the judicial district encompassing that city
in the United States among the thirty cities having the largest population (as
determined by the most recent United States Census data available at the
Termination Date) that is closest to the Executive's residence. The parties
consent to personal jurisdiction in each trial court in the selected venue
having subject matter jurisdiction notwithstanding their residence or situs, and
each party irrevocably consents to service of process in the manner provided
hereunder for the giving of notices.
22. Notice. Notices given pursuant to this Agreement shall be
in writing and shall be deemed given when actually received by the Executive or
actually received by the Company's Secretary or any officer of the Company other
than the Executive. For purposes of the notice of dispute provided for under
Sections 12(a)(iv) and 12(b), notice is deemed given on the earlier of the date
when actually delivered to the recipient or when mailed. If mailed, such notices
shall be mailed by United States registered or certified mail, return receipt
requested, addressee only, postage prepaid, if to the Company, to Badger Meter,
Inc., Attention: Secretary (or, if the Executive is then Secretary, to the Chief
Executive Officer), 4545 West Brown Deer Road, Milwaukee, Wisconsin 53223, or if
to the Executive, at the address set forth below the Executive's signature to
this Agreement, or to such other address as the party to be notified shall have
theretofore given to the other party in writing.
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23. Additional Payment. (a) If, notwithstanding the provisions
of Section 8(a)(ii), but subject to subsection (b), it is ultimately determined
by a court or pursuant to a final determination by the Internal Revenue Service
that any portion of Total Payments is subject to the tax (the "Excise Tax")
imposed by Section 4999 of the Code (or any successor provision), then the
Company shall pay to the Executive an additional amount (the "Gross-Up Payment")
such that the net amount retained by the Executive after deduction of any Excise
Tax and any interest charges or penalties in respect of the imposition of such
Excise Tax (but not any federal, state or local income tax) on the Total
Payments, and any federal, state and local income tax and Excise Tax upon the
payment provided for by this Section 23 shall be equal to the Total Payments.
For purposes of determining the amount of the Gross-Up Payment, the Executive
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 rates of
taxation in the state and locality of the Executive's domicile for income tax
purposes on the date the Gross-Up Payment is made, net of the maximum reduction
in federal income taxes that could be obtained from deduction of such state and
local taxes.
(b) If legislation is enacted that would require the Company's
shareholders to approve this Agreement, prior to a Change in Control, due solely
to the provision contained in subsection (a) of this Section 23, then
(i) from and after such time as shareholder approval
would be required, until shareholder approval is obtained as required
by such legislation, subsection (a) shall be of no force and effect;
(ii) if the Company seeks shareholder approval of any
other agreement providing similar benefits to any other executive of
the Company, then the Company shall seek shareholder approval of this
Agreement at the same shareholders' meeting or meetings at which the
shareholders consider any such other agreement; and
(iii) the Company and the Executive shall use their
best efforts to consider and agree in writing upon an amendment to this
Section 23 such that, as amended, this Subsection would provide the
Executive with the benefits intended to be afforded to the Executive by
subsection (a) without requiring shareholder approval.
24. No Waiver. The Executive's or the Company's failure to
insist upon strict compliance with any provision of this Agreement or the
failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason, shall not be deemed to be a waiver of such provision
or right or any other provision or right of this Agreement.
25. Headings. The headings herein contained are for reference
only and shall not affect the meaning or interpretation of any provision of this
Agreement.
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<PAGE> 28
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first written above.
BADGER METER, INC.
By: ___________________________________
Attest:________________________________
EXECUTIVE
_________________________________(SEAL)
EXHIBIT A
CERTAIN DEFINED TERMS
For purposes of this Agreement,
(a) Act. The term "Act" means the Securities Exchange Act of
1934, as amended.
(b) Accrued Benefits. The term "Accrued Benefits" shall
include the following amounts, payable as described herein: (i) all base salary
for the time period ending with the Termination Date; (ii) reimbursement for any
and all monies advanced in connection with the Executive's employment for
reasonable and necessary expenses incurred by the Executive on behalf of the
Company and its Affiliates for the time period ending with the Termination Date;
(iii) any and all other cash earned through the Termination Date and deferred at
the election of the Executive or pursuant to any deferred compensation plan then
in effect; (iv) notwithstanding any provision of any bonus or incentive
compensation plan applicable to the Executive, a lump sum amount, in cash, equal
to the sum of (A) any bonus or incentive compensation that has been allocated or
awarded to the Executive for a fiscal year or other measuring period under the
plan that ends prior to the Termination Date but has not yet been paid (pursuant
to Section 5(f) or otherwise) and (B) a pro rata portion to the Termination Date
of the aggregate value of all contingent bonus or incentive compensation awards
to the Executive for all uncompleted periods under the plan calculated as to
each such award as if the Goals with respect to such bonus or incentive
compensation award had been attained; and (v) all other payments and benefits to
which the Executive (or in the event of the Executive's death, the Executive's
surviving spouse or other beneficiary) may be entitled as compensatory fringe
benefits or under the terms of any benefit plan of the Employer, including
severance payments under the Employer's severance policies and practices in the
form most favorable to the Executive that were in effect at any time during the
180-day period prior to the Effective Date. Payment of Accrued Benefits shall be
made promptly in accordance with the Employer's prevailing practice with respect
to clauses (i) and (ii) or, with respect to clauses (iii), (iv) and (v),
pursuant to the terms of the benefit plan or practice establishing such
benefits.
(c) Affiliate and Associate. The terms "Affiliate" and
"Associate" shall have the respective meanings ascribed to such terms in Rule
12b-2 of the General Rules and Regulations of the Act.
(d) Annual Cash Compensation. The term "Annual Cash
Compensation" shall mean the sum of (A) the Executive's Annual Base Salary, plus
(B) the highest of (1) the highest annual bonus or incentive compensation award
earned by the Executive under any cash bonus or incentive compensation plan of
the Company or any of its Affiliates during the three complete fiscal years of
the Company immediately preceding the Termination Date or, if more favorable to
the Executive, during the three complete fiscal years of the Company immediately
preceding the Effective Date; (2) the Executive's bonus or incentive
compensation Targeted Bonus for the fiscal year in which the Termination Date
occurs; or (3) the highest average annual bonus and/or incentive compensation
earned during the three complete fiscal years of the Company immediately
preceding the Termination Date (or, if more favorable to the
-42-
<PAGE> 29
Executive, during the three complete fiscal years of the Company immediately
preceding the Effective Date) under any cash bonus or incentive compensation
plan of the Company or any of its Affiliates by the group of executives of the
Company and its Affiliates participating under such plan during such fiscal
years at a status or position comparable to that at which the Executive
participated or would have participated pursuant to the Executive's most senior
position at any time during the 180 days preceding the Effective Date or
thereafter until the Termination Date.
(e) Cause. The Company may terminate the Executive's
employment after the Effective Date for "Cause" only if the conditions set forth
in paragraphs (i) and (ii) have been met and the Company otherwise complies with
this Agreement:
(i) the Executive has committed any act of fraud,
embezzlement or theft in connection with the Executive's duties as an
Executive or in the course of employment with the Company and/or its
subsidiaries; (B) the Executive has willfully and continually failed to
perform substantially the Executive's duties with the Company or any of
its Affiliates (other than any such failure resulting from incapacity
due to physical or mental illness or injury, regardless of whether such
illness or injury is job-related) for an appropriate period, which
shall not be less than 30 days, after the Chief Executive Officer of
the Company (or, if the Executive is then Chief Executive Officer, the
Board) has delivered a written demand for performance to the Executive
that specifically identifies the manner in which the Chief Executive
Officer (or the Board, as the case may be) believes the Executive has
not substantially performed the Executive's duties; (C) the Executive
has willfully engaged in illegal conduct or gross misconduct that is
materially and demonstrably injurious to the Company; (D) the Executive
has willfully and wrongfully disclosed any trade secret or other
confidential information of the Company or any of its Affiliates; or
(E) the Executive has engaged in any Competitive Activity; and in any
such case the act or omission shall have been determined by the Board
to have been materially harmful to the Company and its subsidiaries
taken as a whole.
For purposes of this provision, (1) no act or failure to act
on the part of the Executive shall be considered "willful" unless it is done, or
omitted to be done, by the Executive in bad faith or without reasonable belief
that the Executive's action or omission was in the best interests of the Company
and (2) any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or upon the instructions of the Chief
Executive Officer or a senior officer of the Company or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or omitted to
be done, by the Executive in good faith and in the best interests of the
Company.
(ii) The Company terminates the Executive's
employment by delivering a Notice of Termination to the Executive, (B)
prior to the time the Company has terminated the Executive's employment
pursuant to a Notice of Termination, the Board, by the affirmative vote
of not less than three-quarters (3/4) of the entire membership of the
Board, has adopted a resolution finding that the Executive was guilty
of conduct set forth in this definition of Cause, and specifying the
particulars thereof in detail, at a meeting of the Board called and
held for the purpose of considering such termination (after reasonable
notice to the Executive and an opportunity for the Executive, together
with the Executive's counsel, to be heard before the Board) and (C) the
Company delivers a copy of such resolution to the Executive with the
Notice of Termination at the time the Executive's employment is
terminated.
In the event of a dispute regarding whether the Executive's employment has been
terminated for Cause, no claim by the Company that the Company has terminated
the Executive's employment for Cause in accordance with this Agreement shall be
given effect unless the Company establishes by clear and convincing evidence
that the Company has complied with the requirements of this Agreement to
terminate the Executive's employment for Cause.
(f) Change in Control. A "Change in Control" shall be deemed
to have occurred if the event set forth in any one of the following paragraphs
shall have occurred:
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<PAGE> 30
(i) any Person (other than (A) the Company or any of
its subsidiaries, (B) a trustee or other fiduciary holding securities
under any employee benefit plan of the Company or any of its
subsidiaries, (C) an underwriter temporarily holding securities
pursuant to an offering of such securities or (D) a corporation owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock in the
Company ("Excluded Persons")) is or becomes the "Beneficial Owner" (as
such term is defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company or its Affiliates after July 31, 1999
pursuant to express authorization by the Board that refers to this
exception and not including securities of the Company subject to
proxies held by such Person, but including securities of the Company
subject to exercisable options held by such Person) representing 20% or
more of either the then outstanding shares of common stock of the
Company or the combined voting power of the Company's then outstanding
voting securities; or
(ii) the following individuals cease for any reason
to constitute a majority of the number of directors then serving:
individuals who, on July 31, 1999, constituted the Board and any new
director (other than a director whose initial assumption of office is
in connection with an actual or threatened election contest, including
but not limited to a consent solicitation, relating to the election of
directors of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A under the Act) whose appointment or election by the
Board or nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors on July 31, 1999 or whose
appointment, election or nomination for election was previously so
approved; or
(iii) the shareholders of the Company approve a
merger, consolidation or share exchange of the Company with any other
corporation or approve the issuance of voting securities of the Company
in connection with a merger, consolidation or share exchange of the
Company (or any direct or indirect subsidiary of the Company) pursuant
to applicable stock exchange requirements, other than (A) a merger,
consolidation or share exchange which would result in the voting
securities of the Company outstanding immediately prior to such merger,
consolidation or share exchange continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity or any parent thereof) at least 50% of the
combined voting power of the voting securities of the Company or such
surviving entity or any parent thereof outstanding immediately after
such merger, consolidation or share exchange, or (B) a merger,
consolidation or share exchange effected to implement a
recapitalization of the Company (or similar transaction) in which no
Person (other than an Excluded Person) is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its Affiliates after
July 31, 1999 pursuant to express authorization by the Board that
refers to this exception) representing 20% or more of either the then
outstanding shares of common stock of the Company or the combined
voting power of the Company's then outstanding voting securities; or
(iv) the shareholders of the Company approve a plan
of complete liquidation or dissolution of the Company or an agreement
for the sale or disposition by the Company of all or substantially all
of the Company's assets (in one transaction or a series of related
transactions within any period of 24 consecutive months), other than a
sale or disposition by the Company of all or substantially all of the
Company's assets to an entity at least 75% of the combined voting power
of the voting securities of which are owned by Persons in substantially
the same proportions as their ownership of the Company immediately
prior to such sale.
Notwithstanding the foregoing, no "Change in Control" shall be
deemed to have occurred if there is consummated any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity that owns all or
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<PAGE> 31
substantially all of the assets or voting securities of the Company immediately
following such transaction or series of transactions.
(g) Code. The term "Code" means the Internal Revenue Code of
1986, including any amendments thereto or successor tax codes thereof.
(h) Competitive Activity. The Executive shall engage in a
"Competitive Activity" if the Executive participates in the management of, is
employed by or owns any interest in any business enterprise at a location within
the United States that engages in substantial competition with the Company or
its subsidiaries, where such enterprise's revenues from any competitive
activities amount to 10% or more of such enterprise's consolidated net revenues
and sales for its most recently completed fiscal year; provided, however, that
owning stock or other securities of a competitor amounting to less than five
percent of the outstanding capital stock of such competitor shall not be a
"Competitive Activity".
(i) Covered Termination. The term "Covered Termination" means
any termination of the Executive's employment during the Employment Period where
the Termination Date or the date Notice of Termination is delivered is any date
on or prior to the end of the Employment Period.
(j) Effective Date. The term "Effective Date" shall mean the
first date on which a Change in Control occurs. Anything in this Agreement to
the contrary notwithstanding, if (i) a Change in Control occurs, (ii) the
Executive's employment with the Employer terminates (whether by the Company, the
Executive or otherwise) within 180 days prior to the Change in Control and (iii)
it is reasonably demonstrated by the Executive that (A) any such termination of
employment by the Employer (1) was at the request of a third party who has taken
steps reasonably calculated to effect a Change in Control or (2) otherwise arose
in connection with or in anticipation of a Change in Control, or (B) any such
termination of employment by the Executive took place subsequent to the
occurrence of an event described in clause (ii), (iii), (iv) or (v) of the
definition of "Good Reason" which event (1) occurred at the request of a third
party who has taken steps reasonably calculated to effect a Change in Control or
(2) otherwise arose in connection with or in anticipation of a Change in
Control, then for all purposes of this Agreement the term "Effective Date" shall
mean the day immediately prior to the date of such termination of employment.
(k) Employer. The term "Employer" means the Company and/or any
subsidiary of the Company that employed the Executive immediately prior to the
Effective Date.
(l) Good Reason. The Executive shall have a "Good Reason" for
termination of employment on or after the Effective Date if the Executive
determines in good faith that any of the following events has occurred:
(i) any breach of this Agreement by the Company,
including specifically any breach by the Company of its agreements
contained in Section 4, Section 5 or Section 6, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith that
the Company remedies promptly after receipt of notice thereof given by
the Executive;
(ii) any reduction in the Executive's base salary,
percentage of base salary available as incentive compensation or bonus
opportunity or benefits, in each case relative to those most favorable
to the Executive in effect at any time during the 180-day period prior
to the Effective Date or, to the extent more favorable to the
Executive, those in effect after the Effective Date;
(iii) a material adverse change, without the
Executive's prior written consent, in the Executive's working
conditions or status with the Company or the Employer from such working
conditions or status in effect during the 180-day period prior to the
Effective Date or, to the extent more favorable to the Executive, those
in effect after the Effective Date, including but not limited to (A) a
material change in the nature or scope of the Executive's titles,
authority, powers, functions, duties, reporting requirements or
responsibilities, or (B) a material reduction in the level of support
services, staff, secretarial and other assistance, office space and
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<PAGE> 32
accoutrements, but excluding for this purpose an isolated,
insubstantial and inadvertent event not occurring in bad faith that the
Company remedies promptly after receipt of notice thereof given by the
Executive;
(iv) the relocation of the Executive's principal
place of employment to a location more than 35 miles from the
Executive's principal place of employment on the date 180 days prior to
the Effective Date;
(v) the Employer requires the Executive to travel on
Employer business to a materially greater extent than was required
during the 180-day period prior to the Effective Date;
(vi) failure by the Company to obtain the agreement
referred to in Section 16(a) as provided therein; or
(vii) the Company or the Employer terminates the
Executive's employment after a Change in Control without delivering a
Notice of Termination in accordance with Section 12;
provided that (A) any such event occurs following the Effective Date or (B) in
the case of any event described in clauses (ii), (iii), (iv) or (v) above, such
event occurs on or prior to the Effective Date under circumstances described in
clause (iii)(B)(1) or (iii)(B)(2) of the definition of "Effective Date." In the
event of a dispute regarding whether the Executive terminated the Executive's
employment for "Good Reason" in accordance with this Agreement, no claim by the
Company that such termination does not constitute a Covered Termination shall be
given effect unless the Company establishes by clear and convincing evidence
that such termination does not constitute a Covered Termination. Any election by
the Executive to terminate the Executive's employment for Good Reason shall not
be deemed a voluntary termination of employment by the Executive for purposes of
any other employee benefit or other plan.
(m) Normal Retirement Date. The term "Normal Retirement Date"
means the date the Executive reaches "Normal Retirement Age" as defined in the
Badger Meter Pension Plan as in effect on the date hereof, or the corresponding
date under any successor plan of the Employer as in effect on the Effective
Date.
(n) Notice of Termination. The term "Notice of Termination"
means a written notice as contemplated by Section 12.
(o) Person. The term "Person" shall have the meaning given in
Section 3(a)(9) of the Act, as modified and used in Sections 13(d) and 14(d)
thereof.
(p) Termination Date. Except as otherwise provided in Section
9(b) and Section 16(a), the term "Termination Date" means (i) if the Executive's
employment is terminated by the Executive's death, the date of death; (ii) if
the Executive's employment is terminated by reason of voluntary early
retirement, as agreed in writing by the Company and the Executive, the date of
such early retirement that is set forth in such written agreement; (iii) if the
Executive's employment is terminated for purposes of this Agreement by reason of
disability pursuant to Section 11, thirty days after the Notice of Termination
is given; (iv) if the Executive's employment is terminated by the Executive
voluntarily (other than for Good Reason), the date the Notice of Termination is
given; and (v) if the Executive's employment is terminated by the Company (other
than by reason of disability pursuant to Section 11) or by the Executive for
Good Reason, thirty days after the Notice of Termination is given.
Notwithstanding the foregoing,
(A) If the Executive shall in good faith give a Notice of
Termination for Good Reason and the Company notifies the Executive that a
dispute exists concerning the termination within the fifteen-day period
following receipt thereof, then the Executive may elect to continue the
Executive's employment during such dispute and the Termination Date shall be
determined under this paragraph. If the Executive so elects and it is thereafter
determined that the Executive terminated the Executive's employment for Good
Reason in accordance with this Agreement, then the Termination Date shall be the
earlier of (1) the
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<PAGE> 33
date on which the dispute is finally determined, either (x) by mutual written
agreement of the parties or (y) in accordance with Section 21 or (2) the date of
the Executive's death. If the Executive so elects and it is thereafter
determined that the Executive did not terminate the Executive's employment for
Good Reason in accordance with this Agreement, then the employment of the
Executive hereunder shall continue after such determination as if the Executive
had not delivered the Notice of Termination asserting Good Reason and there
shall be no Termination Date arising out of such Notice. In either case, this
Agreement continues, until the Termination Date, if any, as if the Executive had
not delivered the Notice of Termination except that, if it is finally determined
that the Executive terminated the Executive's employment for Good Reason in
accordance with this Agreement, then the Executive shall in no case be denied
the benefits described in Section 8 (including a Termination Payment) based on
events occurring after the Executive delivered the Executive's Notice of
Termination.
(B) If an opinion is required to be delivered pursuant to
Section 8(a)(ii) and such opinion shall not have been delivered, then the
Termination Date shall be the date on which such opinion is delivered.
(C) Except as provided in paragraph (A) above, if the party
receiving the Notice of Termination notifies the other party that a dispute
exists concerning the termination within the fifteen-day period following
receipt thereof and it is finally determined that termination of the Executive's
employment for the reason asserted in such Notice of Termination was not in
accordance with this Agreement, then (1) if such Notice was delivered by the
Executive, then the Executive will be deemed to have voluntarily terminated the
Executive's employment other than for Good Reason by means of such Notice and
(2) if delivered by the Company, then the Company will be deemed to have
terminated the Executive's employment other than by reason of death, disability
or Cause by means of such Notice.
-47-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information from the Company's
Quarterly report on Form 10-Q and is qualified in its entirety by reference to
such 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 918
<SECURITIES> 0
<RECEIVABLES> 22,713
<ALLOWANCES> 0
<INVENTORY> 20,655
<CURRENT-ASSETS> 45,616
<PP&E> 87,716
<DEPRECIATION> (46,470)
<TOTAL-ASSETS> 101,272
<CURRENT-LIABILITIES> 35,901
<BONDS> 0
0
0
<COMMON> 4,519
<OTHER-SE> 36,819
<TOTAL-LIABILITY-AND-EQUITY> 101,272
<SALES> 114,460
<TOTAL-REVENUES> 114,460
<CGS> 69,325
<TOTAL-COSTS> 101,578
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 842
<INCOME-PRETAX> 12,040
<INCOME-TAX> 4,635
<INCOME-CONTINUING> 7,405
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,405
<EPS-BASIC> 2.08
<EPS-DILUTED> 1.95
</TABLE>
