Zurn Elkay Water Solutions Corp 8-K, filed May 17, 2024
Zurn Elkay Water Solutions Corp (ZWS)
About this 8-K
Zurn Elkay Water Solutions Corp filed this 8-K on May 17, 2024.
Items reported
- Item 5.02: Director or officer change, or executive pay
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of Registrant as specified in its charter)
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
| |
||
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class |
Trading |
Name of Each Exchange on Which Registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers. |
On May 17, 2024, Zurn Elkay Water Solutions Corporation (the “Company”) entered into a letter agreement with Todd A. Adams, its Chairman and Chief Executive Officer, providing for his continued employment with the Company (the “Letter Agreement”). The Letter Agreement replaces the Letter Agreement, dated December 13, 2018, between Mr. Adams and the Company (the “Former Letter Agreement”).
The Letter Agreement provides for a four-year term through May 17, 2028, after which it will automatically renew for successive one-year terms unless, at least 90 days prior to the expiration of the then-current term, either party provides notice of an intent to terminate the Letter Agreement upon its then-current expiration date. Mr. Adams’ base salary remains $1,005,000. The other terms of the Letter Agreement are substantially similar to those under the Former Letter Agreement.
The foregoing description of the Letter Agreement and related benefits does not purport to be complete and is qualified in its entirety by reference to the full text of the Letter Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
| 10.1 | Letter Agreement, dated May 17, 2024, between Zurn Elkay Water Solutions Corporation and Todd A. Adams | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL Document). | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Zurn Elkay Water Solutions Corporation has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized this 17th day of May, 2024.
| ZURN ELKAY WATER SOLUTIONS CORPORATION | ||
| By: | /s/ Jeffrey J. LaValle | |
| Jeffrey J. LaValle | ||
| Vice President, General Counsel and Secretary | ||
Exhibit 10.1
|
|
Todd A. Adams
May 17, 2024
Dear Todd,
On behalf of the Board of Directors, the Company is pleased to provide you this letter agreement (“Letter Agreement”) to set forth certain terms and conditions relating to your continued employment with Zurn Elkay Water Solutions Corporation (formerly known as Rexnord Corporation) (the “Company” or “Employer”) and your right to participate in certain benefit plans of the Employer.
This Letter Agreement is effective on May 17, 2024 (the “Effective Date”) and the initial term will end on the fourth anniversary of the Effective Date (“Initial Term”). The term of this Letter Agreement shall be automatically extended thereafter for successive one (1) year periods unless, at least ninety (90) days prior to the end of the Initial Term or the then current succeeding one (1)-year extended term of this Letter Agreement, you or the Company has notified the other that the term hereunder shall terminate upon its expiration date.
Position
You will continue to serve as the Chairman and Chief Executive Officer of the Company and shall report exclusively to the Company’s Board of Directors (the “Board”). You are expected to use your best efforts to perform your duties faithfully and efficiently, and to devote substantially all of your business time to the performance of your duties for the Company. However, such requirement will not prevent you from (1) participating in charitable, civic, educational, professional, community or industry affairs, or with prior approval of the Board, serving on the board of directors or advisory boards of other companies, and (2) managing your and your family’s personal investments, so long as such activities do not materially interfere with the performance of your duties for the Company. If the Board notifies you in writing that it has determined, in its good faith judgment, that your service on any board of directors or advisory board conflicts with your fiduciary duty to the Company (or creates any appearance thereof), then you shall resign from such other board as soon as reasonably practicable, considering any fiduciary duty that you owe to such other company. The Board shall nominate you for re-election as a member of the Board as long as you continue to serve as Chief Executive Officer of the Company.
Base Salary
In consideration of your services, your salary will be $1,005,000 per year, subject to periodic review and may be increased from time to time by the Board (or a committee thereof), payable in accordance with the standard payroll practices of the Employer and subject to all applicable withholdings and deductions as required by law. The base salary as it may be increased from time to time shall constitute “Base Salary” for purposes of this Letter Agreement.
Page 1 of 9
|
|
|
Annual Bonus
You will continue to be eligible to participate in the Company’s Management Incentive Compensation Plan (the “MICP”) or such other annual bonus plan that the Employer establishes from time to time, in accordance with the terms of the MICP or such other plan. Your annual target bonus, measured against performance criteria to be determined by the Board (or a committee thereof), will be 125% of Base Salary with a maximum bonus opportunity of 250% of Base Salary, subject to periodic review and may be increased from time to time by the Board (or a committee thereof), The annual target bonus as it may be increased from time to time shall constitute “Annual Target Bonus” for purposes of this Letter Agreement.
Equity Grants
You will continue to be eligible to participate in the Zurn Elkay Water Solutions Corporation Performance Incentive Plan or other such long-term incentive plans established by the Company. Your annual award will be determined in accordance with such plans and is contemplated to be comprised of a potential combination of various types of equity grants, such as options, restricted stock units or performance stock units. Any equity grants that you receive will be governed by the terms of the plan under which they are granted and the applicable grant agreement.
Benefits
You shall continue to be entitled to executive benefits and arrangements, including but not limited to group medical, dental and vision plans, wellness plans, disability benefit plans or programs, life insurance plans, retirement plans, deferred compensation plans, and company-provided automobiles or automobile allowances, subject to the terms and conditions of such plans and programs and on terms and conditions no less favorable than any other senior executive of the Company. You will be entitled to paid vacation in accordance with the Employer’s policies in effect from time to time but in no event less than four (4) weeks per year (as pro-rated for partial years of employment).
Stock Ownership Requirements
You will be subject to the Company’s Executive Officer Stock Ownership Guidelines or any successor stock ownership guidelines applicable to executives that are in place from time to time, as approved by the Board.
Death or Disability Benefits
If your employment is terminated due to death or Disability (as defined under the Company’s then-current long-term disability plan in which you participate), then the Company shall pay or provide you (or the legal representative of your estate in the case of your death), in addition to payment for any accrued but unpaid base salary, unused vacation, and unreimbursed expenses (collectively, “Accrued Obligations”), and any insurance proceeds or benefits you are entitled to under Company benefit plans, with:
(1) any unpaid bonus earned with respect to any fiscal year ending on or preceding the date of termination, payable when bonuses are paid generally to senior executives for such year (“Accrued Bonus”);
Page 2 of 9
|
|
|
(2) a pro-rated annual bonus for the fiscal year in which such termination occurs, the amount of which shall be based on actual performance under the applicable bonus plan (for this purpose determined at fiscal year-end, by treating Company financial performance goals for such fiscal year as the only performance goals applicable to you and without any exercise of negative discretion by the Committee) and a fraction, the numerator of which is the number of days elapsed during the performance year through the date of termination and the denominator of which is 365, which pro-rated bonus shall be paid when bonuses are paid generally to senior executives for such year (“Pro-Rated Bonus”); and
(3) all unvested options and long-term incentive awards granted to you through the date of termination shall vest and any such vested awards granted shall be exercisable, in accordance with the terms of the plan under which they are granted and the applicable award agreement.
Severance and Change in Control Benefits
You are entitled to participate in the Zurn Elkay Water Solutions Corporation Executive Severance Plan, as in effect on the date of this Letter Agreement (the “Severance Plan”), and the Zurn Elkay Water Solutions Corporation Executive Change in Control Plan, as in effect on the date of this Letter Agreement (the “Change in Control Plan”), upon the terms and conditions of such plans as in effect on the date of this Letter Agreement, except as otherwise provided below.
Severance Plan
Upon your Qualifying Termination (as defined in the Severance Plan), you will receive salary continuation and subsidized COBRA benefits in accordance with the terms of such Severance Plan, except that:
| • | Your Severance Pay will equal the product of: (A) the sum of (1) your then current Base Salary plus (2) your Annual Target Bonus, (B) multiplied by two (2), and will be paid over a period of 24 months; |
| • | Your Subsidized COBRA (as defined in the Severance Plan) will continue for a period of 24 months; |
| • | The Restricted Services Obligation in Section 6.2, the Customer Non-Solicitation covenant in Section 6.3, and the Non-Solicitation of Employees covenant in Section 6.4 shall each continue for a period of 24 months after termination of employment; |
| • | Subsection (d) in the definition of Cause in Section 2.3, as it applies to you, shall be revised to read as follows: “An Executive’s breach of any representation, warranty or covenant under this Plan, an award agreement or an employment agreement or other agreement with an Employer.” |
In addition to the benefits provided under the Severance Plan, upon a Qualifying Termination (as defined in the Severance Plan), you will also be eligible to receive payment for (1) any Accrued Obligations, (2) any Accrued Bonus, and (3) your Pro-Rated Bonus for the year of termination. In addition, your vested options shall continue to be exercisable until at least the earlier of (x) one year after the date of termination and (y) the expiration of the original scheduled term of such options.
Page 3 of 9
|
|
|
Change in Control Plan
Upon your Qualifying Termination (as defined in the Change in Control Plan), you will receive the Base Salary continuation benefit and accelerated equity award vesting in accordance with the terms of such Change in Control Plan, except that:
| • | Your CIC Severance Pay will equal the product of: (A) the sum of (1) your then current Base Salary plus (2) your Annual Target Bonus, (B) multiplied by two (2); |
| • | Your Subsidized COBRA (as defined in the Change in Control Plan) will continue for a period of 24 months; |
| • | The Restricted Services Obligation in Section 5.2, the Customer Non-Solicitation covenant in Section 5.3, and the Non-Solicitation of Employees covenant in Section 5.4 shall continue for a period of two (2) years after termination of employment; |
| • | The definition of Good Reason, as it applies to you, shall be revised by inserting the following text after the end of subsection (c): |
“(d) Failure by the Company to elect or re-elect you as a member of the Board.”
| • | Subsection (d) in the definition of Cause in Section 2.4, as it applies to you, shall be revised to read as follows: “An Executive’s breach of any representation, warranty or covenant under this Plan, an award agreement or an employment agreement or other agreement with an Employer.” |
In addition to the benefits provided under the Change in Control Plan, upon a Qualifying Termination (as defined in the Change in Control Plan), you will also be eligible to receive payment for (1) any Accrued Obligations, (2) any Accrued Bonus, and (3) your Pro-Rated Bonus for the year of termination.
Conditions to Receive Termination Benefits
Your right to receive any of the benefits provided hereunder upon termination of employment for any reason (other than the Accrued Obligations), including but not limited to any benefits provided under the Severance Plan and Change in Control Plan, shall be subject to the terms and conditions set forth in the Severance Plan and Change in Control Plan, respectively, except that the General Release shall be substantially in the form of Exhibit A hereto.
No Duplication of Benefits
This Letter Agreement replaces any agreement that you have with the Employer relating to your employment or any agreement or plan providing severance or change in control benefits, including but not limited to any employment agreement, any retention and change in control agreement, the Zurn LLC Severance Pay Plan, the Employment Agreement dated November 9, 2012 (as amended by the Amendment to Employment Agreement dated August 6, 2015) between you and the Company (which has previously been terminated), and the Letter Agreement dated December 13, 2018 between you and the Company (the “2018 Letter Agreement”).
Page 4 of 9
|
|
|
Executive Covenants
You will be subject to the Zurn Elkay Water Solutions Corporation Code of Business Conduct and Ethics (the “Code”) and a Confidentiality Agreement, both of which you signed when your employment began. Among other things, the Code and Confidentiality Agreement require you to safeguard confidential information such as information regarding product design, manufacturing processes, supply sources, customer identification, pricing, sales distribution and marketing and prohibit you from soliciting customers or employees for a period of two years following your departure from the Employer. In addition, if you have received any equity grants, these restrictive obligations, as well as a non-compete covenant, are required by the Equity Award Agreement(s) that you executed in consideration for the equity grants that you received. Finally, you will be subject to the same restrictive obligations by virtue of your participation in the Severance Plan and Change in Control Plan.
Cooperation
Following termination of your employment for any reason, you shall, upon reasonable advance notice, and to the extent it does not interfere with previously scheduled travel plans and does not unreasonably interfere with your other business activities or employment obligations, assist and cooperate with the Company with regard to any matter or project in which you were involved during your employment, including any litigation. The Company shall compensate you for reasonable expenses incurred in connection with such cooperation and assistance.
Clawback
Any amounts payable hereunder, including amounts payable under this letter or the plans referred to herein, are subject to the terms of the Company’s recoupment, clawback or similar policies as may be in effect from time to time, as approved by the Board, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of any cash or other property received under this letter.
Assignment of Letter Agreement
The Company shall assign this Letter Agreement to any successor to all or substantially all of the business or assets of the Company provided that the Company shall require such successor to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place and shall deliver a copy of such assignment to you.
Governing Law
This offer letter shall be governed by the laws of Wisconsin, without regard to conflict of law principles.
Page 5 of 9
|
|
|
Contingencies
This Letter Agreement is contingent upon your acceptance of the below terms. This Letter Agreement will be withdrawn if this condition is not satisfied.
Sincerely,
/s/ Jeffrey J. LaValle
Jeffrey J. LaValle
On behalf of Zurn Elkay Water Solutions Corporation
Acceptance of Terms of this Letter Agreement
I have read, understood and accept all the terms of this Letter Agreement as set forth above and the terms of the Severance Plan and the Change in Control Plan, as attached hereto. I have not relied on any agreements or representations, express or implied, that are not set forth expressly in the foregoing Letter Agreement or the Severance Plan and Change in Control Plan, and this Letter Agreement supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to the subject matter of this Letter Agreement. I hereby consent to the terms of the above Letter Agreement, the Severance Plan and the Change in Control Plan, including but not limited to the confidentiality, nonsolicitation, noncompetition, nondisparagement and other similar terms of such Plans, and to the termination of my participation in any other severance or change in control plans of the Employer or any employment, severance or change in control agreement with the Employer. I also hereby consent to the termination of the 2018 Letter Agreement effective as of the date set forth below.
Todd A. Adams
Signed /s/ Todd A. Adams
Date May 17, 2024
Page 6 of 9
|
|
|
EXHIBIT A
GENERAL RELEASE OF ALL CLAIMS
1. For and in consideration of the promises made in the Letter Agreement between Zurn Elkay Water Solutions Corporation (formerly known as Rexnord Corporation) (“Company”) and the undersigned (“Executive”) dated May 17, 2024 (“Letter Agreement”), the adequacy of which is hereby acknowledged, Executive, for himself, his heirs, administrators, legal representatives, executors, successors, assigns, and all other persons claiming through Executive, if any (collectively, ”Releasers”), does hereby release, waive, and forever discharge the Company, the Company’s subsidiaries, parents, affiliates, related organizations, employees, officers, directors, plans, plan trustees and fiduciaries, attorneys, successors, and assigns (collectively, the ”Releasees”) from, and does fully waive any obligations of Releasees to Releasers for, any and all liability, actions, charges, causes of action, demands, damages, or claims for relief, remuneration, sums of money, accounts or expenses (including attorneys’ fees and costs) of any kind whatsoever, whether known or unknown or contingent or absolute, which heretofore has been or which hereafter may be suffered or sustained, directly or indirectly, by Releasers in consequence of, arising out of, or in any way relating to Executive’s employment with the Company or any of its affiliates or the termination of Executive’s employment. The foregoing release and discharge, waiver and covenant not to sue includes, but is not limited to, all claims and any obligations or causes of action arising from such claims, under common law including wrongful or retaliatory discharge, breach of contract (including but not limited to any claims under the: (i) Employment Agreement between the Company and Executive, dated November 9, 2012, as amended by the Amendment to Employment Agreement dated August 6, 2015 (the “2012 Agreement”) (which has been previously terminated), (ii) the Letter Agreement between the Company and Executive, dated December 13, 2018 (the “2018 Letter Agreement”) (which has been previously terminated), as well as (iii) any claims under the Letter Agreement, and (iv) any claims under any stock option, restricted stock unit, performance stock unit or other equity award agreements between Executive and the Company) and any action arising in tort including libel, slander, defamation or intentional infliction of emotional distress, and claims under any federal, state or local statute including Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866 and 1871 (42 U.S.C. § 1981), the National Labor Relations Act, the Age Discrimination in Employment Act (ADEA), the Employee Retirement Income Security Act of 1974, the Fair Labor Standards Act, the Americans with Disabilities Act of 1990, the Rehabilitation Act of 1973), or the discrimination or employment laws of any state or municipality, or any claims under any express or implied contract which Releasers may claim existed with Releasees. This release and waiver does not apply to any claims or rights that may arise after the date Executive signs this General Release. The foregoing release does not apply to any claims of indemnification under a separate indemnification agreement with the Company or rights of coverage under directors and officers liability insurance.
2. Excluded from this release and waiver are any claims which cannot be waived by law, including but not limited to the right to file a charge or complaint with the Equal Employment Opportunity Commission (“EEOC”) or other federal, state or local agency, or participate in an investigation or proceeding conducted by such agency. To the maximum extent permitted by law, Executive does, however, waive Executive’s right to any personal relief, including but not limited to an award of monetary damages or reinstatement of employment, should any agency pursue any claims on Executive’s behalf. Executive represents and warrants that, as of the date of this General Release, Executive: (i) has not filed any complaint, charge, or lawsuit against the Releasees with any government agency, any court or in arbitration, and (ii) subject to Paragraphs 5 and 6, has reported to the Company any possible violations of law, rule or policy of which Executive is aware and is otherwise not aware of any factual or legal basis for any legitimate claim that the Company is in violation of any whistleblower, corporate compliance or other regulatory obligation of the Company under any law, rule or policy.
Page 7 of 9
|
|
|
3. Executive agrees never to sue Releasees in any forum for any claim covered by the above waiver and release language, except that Executive may bring a claim under the ADEA to challenge this General Release or as otherwise provided in this General Release. If Executive violates this General Release by suing Releasees, other than under the ADEA or as otherwise set forth in Section 1 hereof, Executive shall be liable to the Company for its reasonable attorneys’ fees and other litigation costs incurred in defending against such a suit. Nothing in this General Release is intended to reflect any party’s belief that Executive’s waiver of claims under ADEA is invalid or unenforceable, it being the interest of the parties that such claims are waived.
4. Executive acknowledges, agrees and affirms that he is subject to certain post-employment covenants, which covenants survive the termination of his employment and the execution of this General Release. Executive acknowledges, agrees and affirms that, except as provided in the Letter Agreement, Executive has received all wages, compensation, benefits and other amounts to which Executive is entitled because of Executive’s employment at the Company, and Executive has no additional claims against the Company.
5. Pursuant to the federal Defend Trade Secrets Act of 2017, Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made (i)(1) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and (2) solely for the purpose of reporting or investigating a suspected violation of law; (ii) to Executive’s counsel in relation to a lawsuit for retaliation against Executive for reporting a suspected violation of law; or (iii) in a complaint or other document filed in a lawsuit or other proceeding, if such a filing is made under seal.
6. By Executive’s signature below, Executive acknowledges that nothing in this General Release or in any policy or agreement with the Company shall be construed or applied to prohibit or limit Executive from initiating communications directly with, responding to any inquiry from, volunteering information (including confidential information) to, or providing testimony before, the Securities and Exchange Commission, the Department of Justice, FINRA, any other self-regulatory organization or any other governmental, law enforcement, or regulatory authority, regarding any reporting of, investigation into, or proceeding concerning suspected violations of law. Executive further acknowledges that Executive is not required to advise or seek permission from the Company before engaging in any such activity, but that, in connection with any such activity, Executive must inform such authority that the information provided is confidential. Despite the foregoing, Executive is not permitted to reveal to any third-party, including any governmental, law enforcement, or regulatory authority, information Executive learned during the course of employment with the Company that is protected from disclosure by any applicable privilege, including but not limited to the attorney-client privilege or attorney work product doctrine, as the Company does not waive any applicable privileges or the right to continue to protect its privileged attorney-client information, attorney work product, and other privileged information.
Page 8 of 9
|
|
|
| 7. | Executive acknowledges and recites that: |
| (a) | Executive has executed this General Release knowingly and voluntarily; |
| (b) | Executive has read and understands this General Release in its entirety; |
| (c) | Executive has been advised and directed orally and in writing (and this subparagraph (c) constitutes such written direction) to seek legal counsel and any other advice he wishes with respect to the terms of this General Release before executing it; |
| (d) | Executive’s execution of this General Release has not been coerced by any employee or agent of the Company; and |
| (e) | Executive has been offered twenty-one (21) calendar days after receipt of this General Release to consider its terms before executing it. |
8. This General Release shall be governed by the internal laws (and not the choice of laws) of the State of Wisconsin, except for the application of pre-emptive Federal law.
9. Executive shall have seven (7) days from the date hereof to revoke this General Release by providing written notice of the revocation to the Company, by hand delivering, faxing or mailing notice to the Company to the attention of the General Counsel, upon which revocation this General Release shall be unenforceable and null and void and in the absence of such revocation this General Release shall be binding and irrevocable by Executive.
PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
| Date: _________________, 20__ | EXECUTIVE | |||||
|
| ||||||
| Todd A. Adams | ||||||
Page 9 of 9