EXHIBIT 10.17 - 1996 EMPLOYEE STOCK PLAN
Section 1. Purpose
The purpose of the Plan is to promote the long-term interests of the Company
by: (i) providing incentive compensation to executives and other key Employees
who contribute to the growth and success of the Company and its Subsidiaries;
(ii) attracting and retaining executives and other key Employees of
outstanding ability; and (iii) further aligning the interests of such
individuals with the interests of the Company's shareholders.
Section 2. Definitions
The following terms, as used herein, shall have the meaning specified:
a. "Award" means an award granted pursuant to Section 4.
b. "Award Agreement" means an agreement described in Section 6 entered
into between the Company and a Participant, setting forth the terms and
conditions applicable to the award granted to the Participant.
c. "Board of Directors" means the Board of Directors of the Company as it
may be comprised from time to time.
d. "Cause" means (i) a felony conviction of an Employee; (ii) the
commission by an Employee of an act of fraud or embezzlement against
the Company and/or a Subsidiary; (iii) the Employee's willful
misconduct or gross negligence materially detrimental to the Company
and/or a Subsidiary; (iv) the Employee's failure to perform his duties
and responsibilities in accordance with the standards and criteria
established by the Company therefor and communicated to the Employee;
(v) the Employee's wrongful dissemination or use of confidential or
proprietary information of the Company and/or Subsidiary or of
confidential or proprietary information of a third party in breach of a
contractual or other obligation of the Company and/or Subsidiary; or
(vi) the intentional and habitual neglect by the Employee of his duties
to the Company and/or a Subsidiary.
e. "Change in Control" means Change in Control as defined in Section 10.
f. "Code" means the Internal Revenue Code of 1986, and any successor
statute, as it or they may be amended from time to time.
g. "Committee" means the Committee as defined in Section 8.
h. "Common Stock" means shares of common stock of the Company, $.50 par
value, or any security of the Company issued in substitution, exchange
or in lieu thereof.
i. "Company" means Zurn Industries, Inc., and any successor company.
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j. "Covered Employee" means a covered employee within the meaning of Code
section 162(m)(3).
k. "Disability" means (i) total disability within the meaning of the
Company's long-term disability plan as an in effect from time to time
or (ii) if there is no such plan at the applicable time, physical or
mental incapacity as determined solely by the Committee.
l. "Effective Date" means the Effective Date as defined in Section 11(k).
m. "Employee" means officers, executives and other key employees of the
Company or a Subsidiary.
n. "Exchange Act" means the Securities Exchange Act of 1934, and any
successor statute, as it or they may be amended from time to time.
o. "Fair Market Value" means the closing price of the Common Stock as
reported on the New York Stock Exchange Composite Tape for the relevant
date, or if no sale of such Common Stock is reported for such date, the
next preceding day for which there is a reported sale.
p. "Insider" means any person who is subject to Section 16 of the Exchange
Act, and any successor statutory provision, as it or they may be
amended from time to time.
q. "Participant" means any Employee who has been granted an award.
r. "Plan" means this 1996 Employee Stock Plan.
s. "Retirement" means retirement at or after age 65 or, with the advance
consent of the Committee, before age 65.
t. "Subsidiary" means any company in which the Company, directly or
indirectly, controls fifty percent (50%) or more of the total combined
voting power of all classes of such company's common stock.
u. "Ten-Percent Shareholder" means any person who owns, directly or
indirectly, on the relevant date securities having ten percent (10%) or
more of the combined voting power of all classes of the Company's
securities or the securities of its parent or subsidiaries. For
purposes of determining the foregoing ten percent (10%), the rules of
Code section 425(d) shall apply.
Section 3. Eligibility
Persons eligible for awards shall be Employees who contribute to the growth
and success of the Company and/or its Subsidiaries as the Committee may in its
sole discretion determine.
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Section 4. Employee Awards
The Committee may grant Employees any of the following types of awards,
either singly, in tandem, or in combination with other types of awards, as the
Committee may in its sole discretion determine:
a. Nonqualified Stock Options. A Nonqualified Stock Option is an option
to purchase a specific number of shares of Common Stock exercisable
at such time or times six months after the grant date, and during
such specified time not to exceed ten years, as the Committee may
determine, at a price not less than one hundred percent (100%) of the
fair market value of the Common Stock on the date that the option is
granted. The purchase price of the Common Stock subject to the option
may be paid in cash, by the tender of Common Stock which has been
owned for more than six months (the value of such Common Stock shall
be its Fair Market Value on the date of exercise), or through a
combination of Common Stock and cash, or through such other means as
the Committee determines are consistent with the Plan's purpose and
applicable law. No fractional shares of Common Stock will be issued
or accepted.
b. Incentive Stock Options. An Incentive Stock Option is an award in the
form of an option to purchase a specified number of shares of Common
Stock that complies with the requirements of Code section 422, which
option shall, subject to the following provisions, be exercisable at
such time or times, and during such specified time, as the Committee
may determine. For the purposes of the plan, the term Incentive Stock
Option includes any option to purchase Common Stock that is granted
pursuant to any other plan of the Company or its Subsidiaries that
complies with Code section 422.
i. The aggregate Fair Market Value (determined at the time of the
grant of the award) of the shares of Common Stock subject to
Incentive Stock Options which are exercisable by one person for
the first time during a particular calendar year shall not
exceed $100,000.
ii. No Incentive Stock Option may be granted under the Plan on or
after the third anniversary of the effective date of the Plan.
iii. No Incentive Stock Option may be exercisable more than:
A) in the case of an Employee who is not a Ten-Percent
Shareholder on the date that the option is granted, ten
years after the date the option is granted; and
B) in the case of an Employee who is a Ten-Percent
Shareholder on the date the option is granted, five years
after the date the option is granted.
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iv. The exercise price of any Incentive Stock Option shall not be
less than:
A) in the case of an Employee who is not a Ten-Percent
Shareholder on the date that the option is granted, the
Fair Market Value of the Common Stock subject to the
option on such date; and
B) in the case of an Employee who is a Ten-Percent
Shareholder on the date that the option is granted, one
hundred ten percent of the Fair Market Value of the
Common Stock subject to the option on such date.
v. The Committee may provide that the option price under an
Incentive Stock Option may be paid by one or more of the
methods available for paying the option price of a Nonqualified
Stock Option.
c. Stock Equivalent Units. A Stock Equivalent Unit is an award based on
the Fair Market Value of one share of Common Stock. All or part of
any Stock Equivalent Units award may be subject to conditions and
restrictions established by the Committee, including, but not limited
to, achievement of specific business objectives, and other
measurements of individual, business unit, Company or Subsidiary
performance, including, but not limited to, earnings per share, net
after-tax income, total shareholder return, cash flow, return on
shareholders' equity, and cumulative return on net assets. Without
limiting the generality of the foregoing, it is intended that the
Committee, as and to the extent it deems advisable to ensure that
payments are deductible by the Corporation for federal income tax
purposes by reason of Code section 162(m), shall establish
performance goals applicable to Stock Equivalent Units granted to
Participants who, in the judgment of the Committee, may be Covered
Employees in such manner as shall permit payments with respect
thereto to qualify as "performance-based compensation" as described
in section 162(m)(4)(C) of the Code. The Committee also may provide
for automatic awards of additional Stock Equivalent Units on each
date that dividends are paid on the Common Stock in an amount equal
to (i) the product of the dividend per share on the Common Stock
times the total number of Stock Equivalent Units held by the
Participant as of the record date with respect to such dividend,
divided by (ii) the Fair Market Value of the Common Stock on the
dividend payment date. Stock Equivalent Units may be settled in
Common Stock or cash or both.
d. Performance Units. A Performance Unit is an award denominated in
cash, the amount of which may be based on the achievement of specific
business objectives, and other measures of individual, business unit,
Company or Subsidiary performance over a specified period of time
including, but not limited to, earnings per share, net after-tax
income, total shareholder return, cash flow, return on shareholders'
equity, and cumulative return on net assets. Without
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limiting the generality of the foregoing, it is intended that the
Committee, as and to the extent it deems advisable to ensure that
payments are deductible by the Corporation for federal income tax
purposes by reason of Code section 162(m), shall establish
performance goals applicable to Performance Units granted to
Participants who, in the judgment of the Committee, may be Covered
Employees in such a manner as shall permit payments with respect
thereto to qualify as "performance-based compensation" as described
in section 162(m)(4)(C) of the Code and that the maximum amount of
such compensation that may be paid to any one Participant with
respect to any one year shall be $300,000. Performance Units may be
settled in Common Stock or cash or both.
e. Annual Incentive Stock Awards. The Committee may from time to time
grant Common Stock to Insiders in settlement of awards under the
Company's annual incentive plan.
Section 5. Shares of Common Stock Available Under Plan
a. Subject to the adjustment provisions of Section 9, the number of
shares of Common Stock with respect to which awards may be granted
under the Plan shall not exceed 500,000 shares. No single
Participant shall receive awards (i) in the form of options, whether
Nonqualified Stock Options or Incentive Stock Options, with respect
to more than 125,000 of the shares of Common Stock available under
the Plan in any twelve-month period, (ii) in the form of Stock
Equivalent Units, with respect to more than 15,000 shares of Common
Stock in any twelve-month period, and (iii) pursuant to Section 4(e),
for more than 30,000 shares of Common Stock in any twelve-month
period.
b. Shares of Common Stock with respect to the unexercised or
undistributed portion of any terminated or forfeited award and shares
of Common Stock tendered in payment of the purchase price of the
Common Stock subject to option shall be available for further awards
in addition to the 500,000 shares of Common Stock available under
Section 5(a). Additional rules for determining the number of shares
of Common Stock granted under the Plan may be adopted by the
Committee as it deems necessary and appropriate.
c. The Common Stock that may be issued pursuant to an award under the
Plan may be treasury or authorized but unissued Common Stock, or
Common Stock may be acquired, subsequently or in anticipation of the
transaction, in the open market to satisfy the requirements of the
Plan.
Section 6. Award Agreements
Each award under the Plan shall be evidenced by an Award Agreement. Each
Award Agreement shall set forth the number of shares of Common Stock, Stock
Equivalent Units, and/or Performance Units subject to the award and shall
include the terms set forth below and such other terms and conditions
applicable
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to the award, as determined by the Committee, not inconsistent with the terms
of the Plan, including but not limited to the term of the award, vesting
provisions, any other restrictions or conditions (including performance
requirements) on the award and the method by which restrictions or conditions
lapse, provisions permitting the surrender of outstanding awards or securities
held by the Participant in order to exercise or realize rights under other
awards, or in exchange for the grant of new awards under similar or different
terms, the effect on the award of a Change in Control of the Company, the
price, amount or value of awards, and the terms, if any, pursuant to which a
Participant may elect to defer the receipt of cash or Common Stock under an
award. In the event of any conflict between an Award Agreement and the Plan,
the terms of the Plan shall govern.
a. Nonassignability. Except as and to the extent otherwise determined by
the Committee, a provision that no award shall be assignable or
transferable except by will or by the laws of descent and
distribution and that, during the lifetime of a participant, the
award shall be exercised only by such Participant or by his or her
guardian or legal representative.
b. Termination of Service.
i. A provision describing the treatment of an award in the event
of the Retirement, Disability, death or other termination of a
Participant's service with the Company or a Subsidiary,
including but not limited to terms relating to the vesting,
time for exercise, forfeiture or cancellation of an award in
such circumstances.
ii. A provision that for purposes of the Plan, (A) a transfer of an
Employee from the Company to a Subsidiary or affiliate of the
Company, whether or not incorporated, or visa versa, or from
one Subsidiary or affiliate of the Company to another, and (B)
a leave of absence, duly authorized in writing by the Company,
shall not be deemed a termination of service.
iii. A provision stating that in the event an Participant's service
is terminated for Cause, anything else in the Plan or the Award
Agreement to the contrary notwithstanding, all unvested awards
granted to such Participant and all unexercised options held by
such Participant, whether vested or unvested, shall immediately
terminate and be forfeited.
c. Rights as a Shareholder. A provision stating that a Participant shall
have no rights as a shareholder with respect to any Common Stock
covered by an award until the date the Participant becomes the holder
of record thereof. Except as provided in Section 9, no adjustment
shall be made for dividends or other rights, unless the Award
Agreement specifically requires or permits such adjustment.
d. Withholding. A provision requiring the withholding of applicable
taxes required by law from or with respect to all awards. A
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participant may satisfy the withholding obligation by paying the
amount of any taxes in cash or, with the approval of the Committee,
shares of Common Stock may be deducted from the payment to satisfy
the obligation in full or in part. The amount of the withholding and
the number of shares of Common Stock to be deducted shall be
determined with reference to the Fair Market Value of the Common
Stock when the withholding is required to be made.
e. Execution. A provision stating that no award is enforceable until the
Award Agreement has been signed by the Participant and the Company.
By executing the Award Agreement, a Participant shall be deemed to
have accepted and consented to any action taken under the Plan by the
Committee, the Board of Directors or their delegates.
f. Holding Period. To the extent necessary to satisfy the applicable
requirements of rule 16b-3 under the Exchange Act, in the case of an
award to an Insider of: (i) an equity security, a provision stating
(or the effect of which is to require) that such security must be
held for at least six months (or such longer period as the Committee
it its discretion specifies) from the date of acquisition; or (ii) a
derivative security with a fixed exercise price within the meaning of
Section 16 of the Exchange Act, a provision stating (or the effect of
which is to require) that at least six months (or such longer period
as the Committee in its discretion specifies) must elapse from the
date of acquisition of such derivative security to the date of
disposition of the derivative security (other than upon exercise or
conversion) or its underlying equity security.
g. Treatment of Options. Each award of an option shall state whether it
will or will not be treated as an Incentive Stock Option.
Section 7. Amendment and Termination
The Board of Directors may at any time amend or terminate the Plan, in
whole or in part, or amend any or all Award Agreements under the Plan to the
extent permitted by law, but no such action shall impair the rights of any
holder of an award without the holder's consent, except to preserve the Plan's
qualification as a safe harbor plan under Section 16 of the Exchange Act.
Section 8. Administration
a. The Plan and all awards shall be administered by a Committee of the
Board of Directors, which Committee shall consist of not less than
three (3) members of the Board of Directors and shall be constituted
so as to permit the Plan to comply with the administration
requirements of rule 16b-3(c)(2)(I) of the Exchange Act and Code
section 162(m)(4)(C). The members of the Committee shall be
designated by the Board of Directors. A majority of the members of
the Committee shall constitute a quorum. The vote of a majority of a
quorum shall constitute action by the Committee.
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b. The Committee shall have full and complete authority, in its sole and
absolute discretion, (i) to exercise all of the powers granted to it
under the Plan, (ii) to construe, interpret and implement the Plan
and any related document, (iii) to prescribe, amend and rescind rules
relating to the Plan, (iv) to make all determinations necessary or
advisable in administering the Plan, and (v) to correct any defect,
supply any omission and reconcile any inconsistency in the Plan. The
actions and determinations of the Committee on all matters relating
to the Plan and any awards will be final and conclusive. The
Committee's determinations under the Plan need not be uniform and may
be made by it selectively among Employees who receive, or who are
eligible to receive, awards under the Plan, whether or not such
persons are similarly situated.
c. The Committee may appoint such accountants, counsel, and other
experts as it deems necessary or desirable in connection with the
administration of the Plan. The Committee may delegate to the
officers or employees of the Company and its Subsidiaries the
authority to execute and deliver such instruments and documents, to
do all such acts and things, and to take all such other steps deemed
necessary, advisable or convenient for the effective administration
of the Plan in accordance with its terms and purpose, except that the
Committee may not delegate any discretionary authority with respect
to substantive decisions or functions regarding the Plan or awards
thereunder as these relate to Insiders or Covered Employees,
including but not limited to decisions regarding the timing,
eligibility, pricing, amount or other material terms of such awards.
d. The Committee and others to whom the Committee has delegated such
duties shall keep a record of all their proceedings and actions and
shall maintain all such books of account, records and other data as
shall be necessary for the proper administration of the Plan.
e. The Company shall pay all reasonable expenses of administering the
Plan, including, but not limited to, the payment of professional
fees.
f. It is the intent of the Company that the Plan and awards thereunder
satisfy, and be interpreted in a manner that satisfy, in the case of
Participants who are or may be Insiders, the applicable requirements
of rule 16b-3 of the Exchange Act, so that such persons will be
entitled to the benefits of rule 16b-3, or other exemptive rules
under section 16 of the Exchange Act, and will not be subjected to
avoidable liability thereunder. If any provision of the Plan or of
any award would otherwise frustrate or conflict with the intent
expressed in this Section, that provision to the extent possible
shall be interpreted and deemed amended so as to avoid such conflict.
To the extent of any remaining irreconcilable conflict with such
intent, such provision shall be deemed void as applicable to
Insiders.
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Section 9. Adjustment Provisions
If there shall occur any recapitalization, stock split (including a stock
split in the form of a stock dividend), reverse stock split, merger
combination, consolidation, or other reorganization or any extraordinary
dividend or other extraordinary distribution in respect of the Common Stock
(whether in the form of cash, Common Stock or other property), or any split-
up, spin-off, extraordinary redemption, or exchange of outstanding Common
Stock, or there shall occur any other similar corporate transaction or event
in respect of the Common Stock, or a sale of substantially all the assets of
the Company, then the Committee shall, in the manner and to the extent, if
any, as it deems appropriate and equitable to the Participants and consistent
with the terms of the Plan, and taking into consideration the effect of the
event on the holders of the Common Stock proportionately adjust any or all of:
(a) the number and type of shares of Common Stock and Stock Equivalent Units
which thereafter may be made the subject of awards (including the specific
maximums and numbers of shares of Common Stock or Stock Equivalent Units set
forth elsewhere in the Plan); (b) the number and type of shares of Common
Stock, other property, Stock Equivalent Units or cash subject to any or all
outstanding awards; (c) the grant, purchase or exercise price, or conversion
ratio of any or all outstanding awards, or of the Common Stock, other property
or Stock Equivalent Units underlying the awards; (d) the securities, cash or
other property deliverable upon exercise or conversion of any or all
outstanding awards; (e) subject to Sections 4(c) and (d), the performance
targets or standards applicable to any outstanding performance-based awards;
or (f) any other terms as are affected by the event.
Notwithstanding the foregoing, in the case of an Incentive Stock Option, no
adjustment shall be made which would cause the Plan to violate section 424(a)
of the Code or any successor provisions thereto, without the written consent
of the Participant adversely affected thereby. The Committee may act prior to
an event described in this Section (including at the time of an award by means
of more specific provisions in the Award Agreement) if deemed necessary or
appropriate to permit the Participant to realize the benefits intended to be
conveyed by an award in respect of the Common Stock.
Section 10. Change in Control
a. In the event of a Change in Control, in addition to any action
required or authorized by the terms of an Award Agreement, the
Committee may, in its sole discretion, take any of the following
actions as a result, or in anticipation, of any such event to assure
fair and equitable treatment of Participants:
i. accelerate time periods for purposes of vesting in, or
realizing gain from, any outstanding awards made pursuant to
the Plan;
ii. offer to purchase any outstanding awards made pursuant to the
Plan from the holder for their equivalent cash value, as
determined by the Committee, as of the date of the Change in
Control; or
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iii. make adjustments or modifications to outstanding awards as the
Committee deems appropriate to maintain and protect the rights
and interests of Participants following such Change in Control.
Any such action approved by the Committee shall be conclusive and
binding on the Company and all participants.
b. A Change in Control shall be deemed to occur if (i) any "person" (as
such term is used in sections 13(d) and 14(d) of the Exchange Act )
other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any
Company owned, directly or indirectly, by the shareholders of the
Company in substantially the same proportions as their ownership of
Common Stock of the Company), becomes the "beneficial owner" (as
defined in rule 13d-3 of the Exchange Act), directly or indirectly,
of securities of the Company representing twenty percent (20%) or
more of the combined voting power of the Company's then outstanding
securities; (ii) during any period of two consecutive years (not
including any period prior to the grant of an option or award),
individuals who at the beginning of such period constitute the Board
of Directors, and any new director (other than a director designated
by a person who has entered into an agreement with the Company to
effect a transaction described in clauses (i), (iii) or (iv) of this
paragraph) whose election by the Board of Directors or nomination for
election by the Company's shareholders was approved by a vote at
least two-thirds of the directors then still in office who either
were directors at the beginning of the period or whose election or
nomination for election was previously so approved cease for any
reason to constitute a majority thereof, (iii) the shareholders of
the Company approve (A) a merger or consolidation of the Company with
any other company, other than a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity) more than fifty percent (50%) of the combined
voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in which
no "person" (as herein above defined) acquires more than fifty
percent (50%) of the combined voting power of the Company's then
outstanding securities; or (iv) the shareholders of the Company
approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all of substantially
all of the Company's assets.
Section 11. Miscellaneous
a. Other Payments or Awards. Nothing contained in the Plan shall be
deemed in any way to limit or restrict the Company or a Subsidiary
from making any award or payment to any person under any other plan,
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arrangement or understanding, whether now existing or hereafter in
effect.
b. Payments to Other Persons. If payments are legally required to be
made to any person other than the person to whom any amount is made
available under the Plan, payments shall be made accordingly. Any
such payment shall be a complete discharge of the liability
hereunder.
c. Unfunded Plan. The Plan shall be unfunded. No provision of the Plan
or any Award Agreement shall require the Company or a Subsidiary, for
the purpose of satisfying any obligations under the Plan, to purchase
assets or place any assets in a trust or other entity to which
contributions are made or otherwise to segregate any assets, nor
shall the Company or a Subsidiary maintain separate bank accounts,
books, records or other evidence of the existence of a segregated or
separately maintained or administered fund for such purposes.
Participants shall have no rights under the Plan other than as
unsecured general creditors of the Company or a Subsidiary.
d. Limits of Liability. Any liability of the Company or a Subsidiary to
any Participant with respect to an award shall be based solely upon
contractual obligations created by the Plan and the Award Agreement.
Neither the Company or its Subsidiaries, nor any member of the Board
of Directors or of the Committee, nor any other person participating
in any determination of any question under the Plan, or in the
interpretation, administration or application of the Plan, shall have
any liability to any party for any action taken, or not taken, in
good faith under the Plan.
e. Rights of Employees. Status as an eligible Employee shall not be
construed as a commitment that any award shall be made under the Plan
to such Employee or to Employees generally. Nothing contained in the
Plan or in any Award Agreement shall confer upon any Employee any
right to continue in the service of the Company or a Subsidiary.
f. Section Headings. The section headings contained herein are for the
purpose of convenience only, and in the event of any conflict, the
text of the Plan, rather than the section headings, shall control.
g. Gender, Etc. In interpreting the Plan, the masculine gender shall
include the feminine, the neuter gender shall include the masculine
or feminine, and the singular shall include the plural unless the
context clearly indicates otherwise.
h. Validity. If any term or provision contained herein or in any Award
Agreement shall to any extent be invalid or unenforceable, such term
or provision shall be reformed so that it is valid, and such
invalidity or unenforceability shall not affect any other provision
or part thereof.
i. Applicable Law. The Plan, the Award Agreements and all actions taken
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hereunder or thereunder shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Pennsylvania without
regard to the conflict of law principles thereof.
j. Compliance with Laws. Notwithstanding anything contained herein or in
any Award Agreement to the contrary, the Company shall not be
required to sell or issue shares of Common Stock hereunder or
thereunder if the issuance thereof would constitute a violation by
the Participant or the Company of any provisions of any law or
regulation of any governmental authority or any national securities
exchange; and, as a condition of any sale or issuance, the Company
may require such agreements or undertakings, if any, as the Company
may deem necessary or advisable to assure compliance with any such
law or regulation.
k. Effective Date and Term. The Plan was adopted by the Board of
Directors effective as of August 5, 1996, subject to approval by the
Company's shareholders. The Plan shall remain in effect until all
awards under the Plan have been exercised or terminated under the
terms of the Plan and applicable Award Agreements, provided that
awards under the Plan may only be granted within three years from the
effective date.
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