-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, sing0roelQMUzNiI6B/ooyMfJm53xd4eEYbHRN0GiT+9yEMVEQArPgTUJ+YvB9ES TZ4sO/bZNFLoqXep8bn4lQ== 0000898430-94-000468.txt : 19940705 0000898430-94-000468.hdr.sgml : 19940705 ACCESSION NUMBER: 0000898430-94-000468 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940629 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ZERO CORP CENTRAL INDEX KEY: 0000109284 STANDARD INDUSTRIAL CLASSIFICATION: 3460 IRS NUMBER: 951718077 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05260 FILM NUMBER: 94536948 BUSINESS ADDRESS: STREET 1: 444 S FLOWER ST STE 2100 CITY: LOS ANGELES STATE: CA ZIP: 90071-2922 BUSINESS PHONE: 2136297000 MAIL ADDRESS: STREET 1: 444 S FLOWER ST STREET 2: STE 2100 CITY: LOS ANGELES STATE: CA ZIP: 90071 FORMER COMPANY: FORMER CONFORMED NAME: ZERO MANUFACTURING CO DATE OF NAME CHANGE: 19761105 10-K 1 FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED MARCH 31, 1994 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 1-5260 ZERO CORPORATION - - -------------------------------------------------------------------------------- (Exact name of registrant as set forth in its charter) Delaware 95-1718077 - - -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation or (I.R.S. Employer organization) Identification Number) 444 South Flower Street, Ste. 2100, Los Angeles, CA 90071-2922 - - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 213/629-7000 ---------------------------- Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered ------------------- ----------------------------------------- Common Stock, $.01 Par Value New York Stock Exchange Pacific Stock Exchange Securities registered pursuant to Section 12(g) of the Act: NONE 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the registrant's voting common stock held by non- affiliates was $197,007,000 as of June 17, 1994 (based upon the closing sale price of $12.38 per share of such stock on the New York Stock Exchange on June 17, 1994). Common stock outstanding as of June 17, 1994 -- 15,919,744 shares. DOCUMENTS INCORPORATED BY REFERENCE Only those portions of Registrant's Annual Report for the year ended March 31, 1994 attached hereto as Exhibit 13 (the "1994 Annual Report") and the Proxy Statement for its annual meeting to be held July 27, 1994 (the "1994 Proxy Statement"), which are specifically referred to in Part I - Items 1 and 3, Part II - Items 5, 6, 7, and 8 and Part III - Items 10, 11 and 12, are incorporated herein by reference. PART I Item 1. Business. ZERO Corporation (the "Company", ZERO, or "Registrant") was incorporated in Delaware in 1988 as a successor in interest to a California corporation of the same name that was originally incorporated in 1952. Its executive offices are located at 444 South Flower Street, Suite 2100, Los Angeles, CA 90071-2922, telephone (213) 629-7000. The Company, through nine U.S. companies and one foreign company, considers itself a leader in the engineering, manufacturing and marketing of engineered cases, system packaging, and various products used in the airline/air cargo industry. ZERO's engineered cases include custom and standard deep drawn aluminum ZERO boxes; ZERO Halliburton (Register Mark) luggage, attaches and carrying cases; thermoformed and rotationally molded plastic cases and enclosures; other standard and custom fabricated cases (marketed under the Anvil Cases (Register Mark) brand name); and specialized case hardware. The Company's engineered cases are widely used in commercial, industrial and government/military applications. The Company's system packaging business involves engineering, manufacturing and/or integrating standard and custom electronic enclosures and cabinets, and related components such as card cages, backplanes, and power supplies; and cooling equipment, including motorized impellers, blowers, fan trays, heat exchangers and air conditioners. The Company's airline/air cargo products include specialized aluminum, polycarbonate and fiberglass air cargo containers; patented telescoping baggage/cargo systems; air cargo restraint systems and hardware; and transit cases engineered to meet the Air Transport Association's highest specifications. Over fifty percent of ZERO's net sales in fiscal 1994 were linked to the electronics industry through customers doing business in the telecommunication/instrumentation, and data processing/peripherals markets. ZERO's operations are classified under two business segments: Enclosures and Accessories, and Other. Information about ZERO's business segments is set forth in Note 8 "Segment Information" on page 28 of the 1994 Annual Report, which is incorporated herein by reference. During the three years ended March 31, 1994, the Company did not derive a material portion of its sales or net income from its foreign operations nor has the Company been dependent upon a single customer, or a few customers, the loss of which would have a material adverse effect on its operations. Patents, licenses, franchises and concessions are not an important factor in ZERO's overall production process and are not material to its results of operation. Development of new products is not a significant part of the Company's business. During the year ended March 31, 1994, the Company spent less than 1% of net sales on research and development activities. Marketing In marketing non-consumer oriented products in its two business segments, ZERO employs manufacturers' representatives, direct salespeople and some distributors to market its products worldwide. Technical support for these manufacturers' representatives, salespeople and distributors is provided by engineering personnel from ZERO's various plants. The Company's standard enclosure products and accessories are sold through catalogs, advertisements, trade journals and independent distributors. Nonstandard or specialized enclosure products and accessories are marketed through manufacturers' representatives and direct sales. ZERO's consumer oriented products are marketed worldwide through catalogs, advertisements in selected publications, telemarketing programs, trade journals and are distributed through established independent dealers who specialize in the market to which each of ZERO's products is related. Competition While reliable statistics are not available that would permit the Company to accurately estimate its share of the total market for each of its business segments, the Company believes it has a significant share of the enclosures and accessories market that it serves. ZERO competes with a number of other companies, both larger and smaller. The degree and type of competition that ZERO encounters varies for both of its business segments. The Company believes it effectively competes in both of its business segments by providing engineering expertise, innovative design, superior quality and on-time delivery at a competitive price. ZERO's ability to successfully compete in the Enclosures and Accessories segment is also attributable to its broad range of standard products. Approximately 2,000 dies, capable of producing over 75,000 standard deep drawn aluminum enclosures, provides ZERO with both a cost and service advantage in a large portion of its metal case and enclosure business. In addition, ZERO offers thousands of sizes of fabricated cases and hundreds of standard configurations for system packaging. Competitive strength is also derived by the Company's ability to modify standard products to satisfy a virtually limitless number of applications and customer requirements. Sales and Backlog ZERO's backlog at March 31, 1994 and 1993 was $40,302,000 and $39,415,000, respectively. Backlog is based on contracts which were signed as of the respective dates set forth. Approximately 93% of the backlog at March 31, 1994 is scheduled for delivery during fiscal 1995. Certain contracts, particularly those with the United States Government and its contractors, provide for cancellation for convenience of the customer. If such cancellation occurs, the contractor is paid for costs incurred to date plus the costs of settling and paying claims of terminated subcontractors, other settlement expenses and a reasonable profit on its costs. During the five years ended March 31, 1994, the aggregate amount of orders cancelled for the convenience of the United States Government has not been material. However, no assurance can be given that this pattern will continue in the future. For the year ended March 31, 1994, approximately 12% of Zero's sales were made to the government/military market. A majority of ZERO's sales orders are in amounts of less than $10,000 each. These orders generally are delivered 1 to 6 weeks from the time the order is booked. Larger orders and custom orders may take several weeks to over a year depending on the delivery schedule set by the customer. Because of the large number of customers served (in excess of 19,000), the relatively small size of each order and the relatively short delivery cycles involved, the Company believes the risk of any order being cancelled which would have a significant adverse effect on operations is low. Raw Materials The principal raw materials used by ZERO in manufacturing its products are aluminum and steel and, to a lesser extent, plastics. Such materials are purchased under competitive bids at levels sufficient to meet foreseeable production and delivery schedules. For the year ended March 31, 1994, ZERO purchased aluminum and steel from over ten principal suppliers. Plastics and other raw materials and supplies necessary for the production of ZERO's products are purchased from a variety of suppliers. As of June 17, 1994, the Company was not experiencing shortages in the supply of its raw materials. Based on market and economic conditions at that date, ZERO believes that the supply and availability of these materials will be adequate to support its level of operations projected through March 31, 1995. However, the Company can make no assurances that such materials will be available beyond that period, and any shortage of such materials could have a significant and material adverse impact on the operations of the Company. Environmental Matters ZERO has developed and implemented an environmental program to reduce or eliminate the use of hazardous material and possible contamination. Through changes in production processes, capital expenditures, proper training and the use of state-of-the-art treatment and monitoring equipment, the Company believes its program is controlling the use and discharge of hazardous materials and is in substantial compliance with applicable local, state and Federal regulations. The Company does not expect that any assertions of noncompliance with such laws will materially adversely affect its earnings or competitive position or will require any significant capital expenditures during fiscal year 1995. Information in Note 7 - "Contingent Liabilities" on page 27 of the 1994 Annual Report addressing environmental matters in which ZERO has been named a "potentially responsible party" is incorporated herein by reference. Employees As of May 31, 1994, ZERO employed 1,684 persons. Employee relations are considered good. Certain employees at the Company's Samuel Groves & Co. Limited subsidiary and ZERO Stantron Cabinets division are represented by unions which are not affiliated with any national unions. In the past ten years the Company has not experienced a significant work stoppage from a labor dispute. Item 2. Properties. As of June 17, 1994, ZERO used manufacturing plants and office buildings containing an aggregate of approximately 1,389,000 square feet of floor space. ZERO's plants are located in California (Camarillo, City of Industry, El Monte, Pacoima, Rancho Dominguez and San Diego); Utah (North Salt Lake); Massachusetts (Monson); New Jersey (Princeton Junction); Minnesota (Brooklyn Park); Connecticut (Hartford); Tijuana, Mexico; and Birmingham and Feltham, England. The plants located in Camarillo, City of Industry, El Monte, Pacoima and San Diego, California; in Brooklyn Park, Minnesota; in Princeton Junction, New Jersey; and in North Salt Lake, Utah, are used in the production of enclosures and accessories. The remaining plants are used by both business segments. ZERO owns all its plants and facilities, except for the following leased properties: PLANT SQUARE FOOTAGE LEASE EXPIRES - - -------------------------------------------------------------------------------- Camarillo, CA 36,000 June 30, 1996 Camarillo, CA 22,000 February 28, 1996* City of Industry, CA 63,000 November 30, 1996* El Monte, CA 72,000 May 31, 2006 Hartford, Ct 8,000 January 31, 1996 Pacoima, CA 114,000 August 5, 1999* Rancho Dominguez, CA 33,000 November 30, 1994* Rancho Dominguez, CA 121,000 September 30, 1999* Tijuana, Mexico 35,000 January 31, 1995* Feltham, England 31,000 October 1, 2002 --------- TOTAL 535,000 ========= * Lease contains renewal option. ZERO's plants and facilities used in operations are generally constructed of concrete block, brick, concrete tilt-up, steel or a combination thereof. ZERO's facilities and equipment are well maintained and are believed to be adequate to support a substantial increase in its operations, assuming a comparable product mix. Item 3. Legal Proceedings. Information concerning legal proceedings in Note 7 - "Contingent Liabilities" on page 27 of the 1994 Annual Report is incorporated herein by reference. Item 4. Submission of Matters to a Vote of Security Holders. Registrant submitted no matters to a vote of its security holders during the fiscal quarter ended March 31, 1994. EXECUTIVE OFFICERS OF THE REGISTRANT ------------------------------------ Information regarding the Company's officers as of June 17, 1994 is as follows: EXECUTIVE NAME AGE POSITION OFFICER SINCE - - -------------------------------------------------------------------------------- John B. Gilbert 73 Chairman Emeritus 1952 Wilford D. Godbold Jr. 56 President, Chief Executive Officer and Director 1982 Howard W. Hill 67 Chairman of the Board 1960 George A. Daniels 56 Vice President and Chief Financial Officer 1987 James F. Hermanson 57 Vice President 1984 Bernard B. Heiler 48 Vice President of Marketing and Sales 1992 Anita J. Cutchall 55 Director of Legal Affairs and Corporate Secretary 1992 None of the directors or executive officers are related to one another. All executive officers except Mr. Heiler and Ms. Cutchall have served in their current capacities or in other managerial positions with the Company for a minimum of the past five years. Mr Heiler has held his current position with the Company since October 1992, prior to which he was Vice President of GTE California, a telephone public utility, from 1984 through 1992, and President of GTEL, a telecommunications integrator and a subsidiary of GTE, from January 1986 through October 1992. Ms. Cutchall has held her current position with the Company since August 1992, prior to which she held the same position with Continental Graphics Corporation, a provider of specialty graphics, commercial printing and film services, from July 1990 through August 1992, and was Legal Associate and Corporate Secretary at Triton Group Ltd,. a diversified holding company, from 1986 through 1990. PART II Item 5. Market For Registrant's Common Equity and Related Stockholder Matters. The information under the caption "Market and Dividend Information" on page 30 of the 1994 Annual Report is incorporated herein by reference. On June 17, 1994 the Company had 6,122 stockholders of record. Item 6. Selected Financial Data. The information under the caption "Five Year Consolidated Financial Highlights" on the inside front cover of the 1994 Annual Report is incorporated herein by reference. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. The information under the caption "Management's Discussion and Analysis of Results of Operations and Financial Condition" on page 18 of the 1994 Annual Report is incorporated herein by reference. Item 8. Financial Statements and Supplementary Data. The following consolidated financial statements of the Registrant and its subsidiaries included in the 1994 Annual Report (on the pages therein shown in parentheses) are incorporated herein by reference: Statements of Consolidated Income--Years Ended March 31, 1994, 1993 and 1992. (Page 19) Consolidated Balance Sheets--March 31, 1994 and 1993. (Pages 20 and 21) Statements of Consolidated Stockholders' Equity--Years ended March 31, 1994, 1993 and 1992. (Page 22) Statements of Consolidated Cash Flows--Years Ended March 31, 1994, 1993 and 1992. (Page 23) Notes to Consolidated Financial Statements. (Pages 24 to 28, inclusive) The independent auditors' report and management's report on page 29 of the 1994 Annual Report covering ZERO's consolidated financial statements are also incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. PART III Item 10. Directors and Executive Officers of the Registrant. The information under the caption "Election of Directors" in the 1994 Proxy Statement is incorporated herein by reference. Information concerning the Company's executive officers is included under the caption "Executive Officers of the Registrant" following Part I, Item 4 of this report. Item 11. Executive Compensation. The information under the captions "Meetings of the Board of Directors, Committees of the Board and Directors' Fees" and "Executive Compensation" in the 1994 Proxy Statement is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management. The information under the captions "General Information" and "Voting Securities and Certain Stockholders" in the 1994 Proxy Statement is incorporated herein by reference. Registrant does not know of any arrangement, including any pledge by any person of securities of Registrant, which may at a subsequent date result in a change of control of Registrant. Item 13. Certain Relationships and Related Transactions. Not applicable. PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. (a)(1). Financial Statements. Reference is made to Item 8 in Part II of this report, where these statements are listed. (a)(2). Financial Statement Schedules. The following consolidated financial statement schedules of Registrant are included in Item 14(d) below: Schedule I--Short-Term Investments as of March 31, 1994. Schedule VIII--Valuation and Qualifying Accounts for the years ended March 31, 1994, 1993 and 1992. Schedule IX--Short-Term Bank Borrowings for the years ended March 31, 1994, 1993 and 1992. Schedule X--Supplementary Income Statement Information for the years ended March 31, 1994, 1993 and 1992. All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. (a)(3). Exhibits. The following exhibits are part of this Form 10-K and are either incorporated by reference to the prior filings indicated below or are filed herewith under Item 14(c): 3.1 The Restated Certificate of Incorporation filed as Exhibit 3-(3)(a) of the Company's Form 8-B filed on September 7, 1988. 3.2 Bylaws of ZERO Corporation, as amended on April 22, 1994. 4.2 Specimen form of certificate of common stock $0.01 par value per share filed as Exhibit 3-(4) of the Company's Form 8-B filed on September 7, 1988. 10.1 Deferred Compensation Plan adopted by the Board of Directors on December 17, 1973 as amended by the Board of Directors on December 11, 1974 filed as Exhibit 13.10 to the Company's Form 10-K for the year ended March 31, 1975. 10.2 Deferred Compensation Plan as amended through April 1, 1986 filed as Exhibit 10.13 to the Company's Form 10-K for the year ended March 31, 1986. 10.3 Directors' Deferred Compensation Plan adopted by the Board of Directors on October 20, 1993. 10.4 Executive Deferred Compensation Plan adopted by the Board of Directors on October 20, 1993. 10.5 ZERO Corporation Management Bonus Plan adopted by the Board of Directors on April 22, 1994. 10.6 Articles of Association of the ZERO Corporation Employees Stock Purchase Plan filed as Exhibit 1 to Form S-8 Registration Statement (File No. 2-26009). 10.7 ZERO Corporation 1988 Stock Option Plan, as amended, filed on Form S-8 Registration Statements (File Nos. 33-44143, 33-27929 and 2-54344). 10.8 ZERO Corporation 1994 Stock Option Plan, filed as Appendix A to the Company's 1994 Proxy Statement. 10.9 Description of ZERO Corporation Supplemental Executive Retirement Plan adopted by the Board of Directors on January 19, 1994. 10.10 Description of ZERO Corporation Contract and Joint Supplemental Life Insurance Plan adopted by the Board of Directors on April 22, 1994. 13 Annual Report for the year ended March 31, 1994 (not deemed filed except for those portions specifically incorporated by reference herein). 21 Listing of the Company's subsidiaries as of March 31, 1994. 23 Consent of Independent Auditors dated June 27, 1994 to the incorporation by reference of their reports filed herewith into the Company's Form S-8 Registration Statements (File Nos. 33-53943, 33-44143, 33-27929 and 2- 54344). (b). REPORTS ON FORM 8-K. During the quarter ended March 31, 1994 the Company filed no reports on Form 8-K. (c). EXHIBITS. See listing of exhibits filed herewith on page 16 of this report. (d). FINANCIAL STATEMENT SCHEDULES. The financial statement schedules listed in Item 14(a)(2) above are shown on pages 12 through 15 of this report. The report of the Registrant's independent auditors, Deloitte & Touche, is set forth on page 11 of this report. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Registrant and in the capacities and on the dates indicated. SIGNATURE TITLE DATE - - --------- ----- ---- Vice President and Chief /s/ GEORGE A. DANIELS Financial Officer June 27, 1994 - - ----------------------- George A. Daniels Controller and Chief /s/ ERIC A. SAND Accounting Officer June 27, 1994 - - ----------------------- Eric A. Sand DIRECTORS: /s/ GARY M. CUSUMANO Director June 27, 1994 - - ----------------------- Gary M. Cusumano /s/ BRUCE J. DEBEVER Director June 27, 1994 - - ----------------------- Bruce J. DeBever /s/ CLINTON G. GERLACH Director June 27, 1994 - - ----------------------- Clinton G. Gerlach /s/ JOHN B. GILBERT Director June 27, 1994 - - ----------------------- John B. Gilbert Director and Chief /s/ WILFORD D. GODBOLD JR. Executive Officer June 27, 1994 - - ----------------------- Wilford D. Godbold Jr. /s/ BERNARD B. HEILER Director June 27, 1994 - - ----------------------- Bernard B. Heiler /s/ HOWARD W. HILL Director June 27, 1994 - - ----------------------- Howard W. Hill /s/ WHITNEY A. MCFARLIN Director June 27, 1994 - - ----------------------- Whitney A. McFarlin INDEPENDENT AUDITORS' REPORT ---------------------------- To the Stockholders of ZERO Corporation: We have audited the consolidated financial statements of ZERO Corporation and its subsidiaries (the "Company") as of March 31, 1994 and 1993, and for each of the three years in the period ended March 31, 1994, and have issued our report thereon dated May 12, 1994; such financial statements and report are included in your 1994 Annual Report to Stockholders and are incorporated herein by reference. Our audits also included the financial statement schedules of the Company, listed in Item 14(a)(2). These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. /s/ DELOITTE & TOUCHE Los Angeles, California May 12, 1994 S C H E D U L E I ZERO CORPORATION AND SUBSIDIARIES SHORT-TERM INVESTMENTS AS OF MARCH 31, 1994
Name of Issuer/ Principal Original Market Recorded Type of Issue Amount Cost Value Value - - --------------------------------------------------------------------------------------------------- The United States Government - Treasury Bills and Notes $5,000,000 $5,021,000 $5,033,000 $5,008,000 The State of California- Municipal Bonds $3,500,000 $3,518,000 3,481,000 3,481,000 The State of California, Counties and Agencies thereof - Municipal Bonds $6,000,000 $6,085,000 6,004,000 6,004,000 Various Other States, Counties and Agencies- Municipal Bonds $4,000,000 $4,111,000 4,032,000 4,032,000 ----------- ----------- $18,550,000 $18,525,000 =========== ===========
S C H E D U L E V I I I ZERO CORPORATION AND SUBSIDIARIES --------------------------------- VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED MARCH 31, 1994, 1993 AND 1992
Balance at Provision Doubtful Balance at Beginning Charged to Accounts End of of Year Income Written Off (1) Year - - --------------------------------------------------------------------------------------------------- Allowance for doubtful accounts: April 1, 1993 to March 31, 1994 $886,000 $489,000 ($546,000) $829,000 April 1, 1992 to March 31, 1993 $871,000 $609,000 ($594,000) $886,000 April 1, 1991 to March 31, 1992 $801,000 $564,000 ($494,000) $871,000
(1) Net of recoveries S C H E D U L E IX ZERO CORPORATION AND SUBSIDIARIES --------------------------------- SHORT-TERM BANK BORROWINGS FOR THE YEARS ENDED MARCH 31, 1994, 1993 AND 1992
Interest Rate Maximum Amount Average Amount Weighted Average Balance at at End of Outstanding Outstanding Interest Rate Category End of Year Year During the Year During the Year During the Year - - --------------------------------------------------------------------------------------------------------------------------- Amounts Payable To Bank - 1994 None None None N/A N/A Amounts Payable To Bank - 1993 None None $1,093,000 $468,000 9.54% Amounts Payable To Bank - 1992 $333,000 12.00% $825,000 $502,000 12.47%
S C H E D U L E X ZERO CORPORATION AND SUBSIDIARIES --------------------------------- SUPPLEMENTARY INCOME STATEMENT INFORMATION FOR THE YEARS ENDED MARCH 31, 1994, 1993 AND 1992
Amount Charged to Costs and Expenses ------------------------------------------ 1994 1993 1992 - - --------------------------------------------------------------------------- Maintenance and repairs $2,002,000 $1,980,000 $2,439,000 Advertising $2,572,000 $2,003,000 $2,245,000
ZERO CORPORATION AND SUBSIDIARIES FORM 10K, ITEM 14(c) EXHIBITS FILED HEREWITH 3.2 Bylaws of ZERO Corporation, as amended on April 22, 1994. 10.3 Directors' Deferred Compensation Plan adopted by the Board of Directors on October 20, 1993. 10.4 Executive Deferred Compensation Plan adopted by the Board of Directors on October 20, 1993. 10.5 ZERO Corporation Management Bonus Plan adopted by the Board of Directors on April 22, 1994. 10.9 Description of ZERO Corporation Supplemental Executive Retirement Plan adopted by the Board of Directors on January 19, 1994. 10.10 Description of ZERO Corporation Contract and Joint Life Insurance Plan adopted by the Board of Directors on April 22, 1994. 13 Annual Report for the year ended March 31, 1994 (not deemed filed except for those portions specifically incorporated by reference herein). 21 Subsidiaries of Registrant as of March 31, 1994. 23 Consent of Independent Auditors to incorporation by reference of $599,000 reports filed herewith into the Company's Form S-8 Registration Statements (File Nos. 33-53943, 33-44143, 33-27929 and 2-54344).
EX-3.2 2 BYLAWS ZERO CORPORATION a Delaware Corporation BYLAWS ARTICLE I OFFICES SECTION 1. Registered Office. The registered office of Zero Corporation (the "Corporation") shall be at Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle, State of Delaware, and the name of the registered agent in charge thereof shall be The Corporation Trust Company. SECTION 2. Principal Office. The principal office for the transaction of the business of the Corporation shall be at such place as the Board of Directors of the Corporation (the "Board") may determine. The Board is hereby granted full power and authority to change said principal office from one location to another. SECTION 3. Other Offices. The Corporation may also have an office or offices at such other place or places, either within or without the State of Delaware, as the Board may from time to time determine or as the business of the Corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS SECTION 1. Place of Meetings. All annual meetings of stockholders and all other meetings of stockholders shall be held either at the principal office or at any other place within or without the State of Delaware which may be designated by the Board pursuant to authority hereinafter granted to the Board. SECTION 2. Annual Meetings. Annual meetings of stockholders of the Corporation for the purpose of electing directors and for the transaction of such other proper business as may come before such meetings may be held at such time, date and place as the Board shall determine by resolution. SECTION 3. Special Meetings. Special meetings of stockholders of the Corporation for any purpose or purposes may only be called in accordance with the provisions in the Certificate of Incorporation. Exhibit 3.2 SECTION 4. Notice of Meetings. Except as otherwise required by law, notice of each meeting of stockholders, whether annual or special, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder of record entitled to vote at such meeting by delivering a typewritten or printed notice thereof to such stockholder personally, or by depositing such notice in the United States mail, in a postage prepaid envelope, directed to such stockholder at such stockholder's post office address furnished by such stockholder to the Secretary of the Corporation for such purpose, or, if such stockholder shall not have furnished an address to the Secretary for such purpose, then at such stockholder's post office address last known to the Secretary, or by transmitting a notice thereof to such stockholder at such address by telegraph, cable or wireless. Except as otherwise expressly required by law, no publication of any notice of a meeting of the stockholders shall be required. Every notice of a meeting of stockholders shall state the place, date and hour of the meeting, and, in the case of a special meeting, shall also state the purpose for which the meeting is called. Notice of any meeting of stockholders shall not be required to be given to any stockholder to whom notice may be omitted pursuant to applicable Delaware law or who shall have waived such notice, and such notice shall be deemed waived by any stockholder who shall attend such meeting in person or by proxy, except a stockholder who shall attend such meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Except as otherwise expressly required by law, notice of any adjourned meeting of stockholders need not be given if the time and place thereof are announced at the meeting at which the adjournment is taken. SECTION 5. Quorum. Except as otherwise required by law, the holders of record of a majority in voting interest of the shares of stock of the Corporation entitled to be voted thereat, present in person or by proxy, shall constitute a quorum for the transaction of business at any meeting of stockholders of the Corporation or any adjournment thereof. Subject to the requirement of a larger percentage vote contained in the Certificate of Incorporation, these Bylaws or by statute, the stockholders present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum. In the absence of a quorum at any meeting or any adjournment thereof, a majority in voting interest of the stockholders present in person or by proxy and entitled to vote thereat or, in the absence therefrom of all the stockholders, any officer entitled to preside at, or to act as secretary of, such meeting may adjourn such meeting from time to time. At any such adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called. 2 Exhibit 3.2 SECTION 6. Voting. A. Each stockholder shall, at each meeting of stockholders, be entitled to vote in person or by proxy each share of the stock of the Corporation having voting rights on the matter in question and which shall have been held by such stockholder and registered in such stockholder's name on the books of the Corporation: (i) on the date fixed pursuant to Article VI, Section 5 of these Bylaws as the record date for the determination of stockholders entitled to notice of and to vote at such meeting, or (ii) if no such record date shall have been so fixed, then (a) at the close of business on the day next preceding the day on which notice of the meeting shall be given or (b) if notice of the meeting shall be waived, at the close of business on the day next preceding the day on which the meeting shall be held. B. Shares of its own stock belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors in such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes. Persons holding stock of the Corporation in a fiduciary capacity shall be entitled to vote such stock. Persons whose stock is pledged shall be entitled to vote, unless in the transfer by the pledgor on the books of the Corporation the pledgor shall have expressly empowered the pledgee to vote thereon, in which case only the pledgee, or the pledgee's proxy, may represent such stock and vote thereon. Stock having voting power standing of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety or otherwise, or with respect to which two or more persons have the same fiduciary relationship, shall be voted in accordance with the provisions of the Delaware General Corporation Law. C. Any such voting rights may be exercised by the stockholder entitled thereto in person or by such stockholder's proxy appointed by an instrument in writing, subscribed by such stockholder or by such stockholder's attorney thereunto authorized and delivered to the secretary of the meeting; provided, however, that no proxy shall be voted or acted upon after three years from its date unless said proxy shall provide for a longer period. The attendance at any meeting of a stockholder who may theretofore have given a proxy shall not have the elect of revoking the same unless such stockholder shall in writing so notify the secretary of the meeting prior to the voting of the proxy. At any meeting of stockholders, all matters, except as otherwise provided in the Certificate of Incorporation, in these Bylaws or by law, shall be decided by the vote of a majority in voting interest of the stockholders present in person or by proxy and entitled to vote thereat and thereon, a quorum being present. The vote at any meeting of stockholders on 3 Exhibit 3.2 any question need not be by ballot, unless so directed by the chairman of the meeting. On a vote by ballot each ballot shall be signed by the stockholder voting, or by such stockholder's proxy, if there be such proxy, and it shall state the number of shares voted. SECTION 7. List of Stockholders. The Secretary of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of such stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. SECTION 8. Judges. If at any meeting of stockholders a vote by written ballot shall be taken on any question, the chairman of such meeting may appoint a judge or judges to act with respect to such vote. Each judge so appointed shall first subscribe an oath faithfully to execute the duties of a judge at such meeting with strict impartiality and according to the best of such judge's ability. Such judges shall decide upon the qualification of the voters and shall report the number of shares represented at the meeting and entitled to vote on such question, shall conduct and accept the votes, and, when the voting is completed, shall ascertain and report the number of shares voted respectively for and against the question. Reports of judges shall be in writing and subscribed and delivered by them to the Secretary of the Corporation. The judges need not be stockholders of the Corporation, and any officer of the Corporation may be a judge on any question other than a vote for or against a proposal in which such officer shall have a material interest. ARTICLE III BOARD OF DIRECTORS SECTION 1. General Powers. Subject to any requirements in the Certificate of Incorporation, these Bylaws, and of the Delaware General Corporation Law as to action which must be authorized or approved by the stockholders, any and all corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be under the direction of, the Board of Directors to the fullest extent permitted by law. Without limiting the generality of the foregoing, it is hereby expressly declared that the Board shall have the following powers, to wit: 4 Exhibit 3.2 A. To select and remove all the officers, agents and employees of the Corporation, prescribe such powers and duties for them as may not be inconsistent with law, the Certificate of Incorporation or these Bylaws, fix their compensation, and require from them security for faithful service. B. To conduct, manage and control the affairs and business of the Corporation, and to make such rules and regulations therefor not inconsistent with law, the Certificate of Incorporation or these Bylaws, as it may deem best. C. To change the location of the registered office of the Corporation in Article I, Section 1 hereof; to change the principal office and the principal office for the transaction of the business of the Corporation from one location to another as provided in Article I, Section 2 hereof; to fix and locate from time to time one or more subsidiary offices of the Corporation within or without the State of Delaware as provided in Article I, Section 3 hereof; to designate any place within or without the State of Delaware for the holding of any meeting or meetings of stockholders, and to adopt, make and use a corporate seal, and to prescribe the forms of certificates of stock, and to alter the form of such seal and of such certificates from time to time, and in its judgment as it may deem best, provided such seal and such certificate shall at all times comply with the provisions of law. D. To authorize the issue of shares of stock of the Corporation from time to time, upon such terms and for such considerations as may be lawful. E. To borrow money and incur indebtedness for the purposes of the Corporation, and to cause to be executed and delivered therefor, in the corporate name, promissory notes, bonds, debentures, deeds of trust and securities therefor. F. By resolution adopted by a majority of the authorized number of directors, to designate an executive and other committees, each consisting of one or more directors, to serve at the pleasure of the Board, and to prescribe the manner in which proceedings of such committee or committees shall be conducted. SECTION 2. Number and Term of Office. The authorized number of directors of the Corporation shall be eight (8) until this Section 2 is amended by a resolution duly adopted by the Board or by the stockholders of the Corporation, in either case in accordance with the provisions of Article XIV of the Certificate of Incorporation. Directors need not be stockholders. Each of the directors of the Corporation shall hold office until such director's successor shall have been duly elected and qualified or until such director shall resign or shall have been removed in the manner provided in the Certificate of Incorporation. 5 Exhibit 3.2 SECTION 3. Election of Directors. The directors shall be elected by the stockholders of the Corporation, and at each election, the persons receiving the greatest number of votes, up to the number of directors then to be elected, shall be the persons then elected. The election of directors is subject to any provisions contained in the Certificate of Incorporation relating thereto, including any provisions for a classified Board and for cumulative voting. SECTION 4. Resignations. Any director of the Corporation may resign at any time by giving written notice to the Board or to the Secretary of the Corporation. Any such resignation shall take effect at the time specified therein, or, if the time be not specified, it shall take effect immediately upon receipt; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it elective. SECTION 5. Vacancies. Except as otherwise provided in the Certificate of Incorporation, any vacancy on the Board, whether because of death, resignation, disqualification, an increase in the number of directors, or any other cause, may be filled by vote of the majority of the remaining directors, although less than a quorum. Each director so chosen to fill a vacancy shall hold office until such director's successor shall have been elected and shall qualify or until such director shall resign or shall have been removed. No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director's term of office. SECTION 6. Place of Meeting. The Board or any committee thereof may hold any of its meetings at such place or places within or without the State of Delaware as the Board or such committee may from time to time by resolution designate or as shall be designated by the person or persons calling the meeting or in the notice or a waiver of notice of any such meeting. Directors may participate in any regular or special meeting of the Board or any committee thereof by means of conference telephone or similar communications equipment pursuant to which all persons participating in the meeting of the Board or such committee can hear each other, and such participation shall constitute presence in person at such meeting. SECTION 7. First Meeting. The Board shall meet as soon as practicable after each annual election of directors, and notice of such first meeting shall not be required. SECTION 8. Regular Meetings. Regular meetings of the Board may be held at such times as the Board shall from time to time by resolution determine. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, 6 Exhibit 3.2 then the meeting shall be held at the same hour and place on the next succeeding business day not a legal holiday. Except as provided by law, notice of regular meetings need not be given. SECTION 9. Special Meetings. Special meetings of the Board for any purpose or purposes shall be called at any time by the Chairman of the Board or, if the Chairman of the Board is absent or unable or refuses to act, by the President. Except as otherwise provided by law or by these Bylaws, written notice of the time and place of special meetings shall be delivered personally to each director, or sent to each director by mail or by other form of written communication, including but not limited to facsimile transmission and telex, charges prepaid, addressed to such director at such director's address as it is shown upon the records of the Corporation, or, if it is not so shown on such records and is not readily ascertainable, at the place in which the meetings of the directors are regularly held. In case such notice is mailed, telegraphed, telexed, facsimiled, or sent by overnight courier it shall be deposited in the United States mail, delivered to the telegraph company in the County in which the principal office for the transaction of the business of the Corporation is located or deposited with an overnight courier service at least forty-eight (48) hours prior to the time of the holding of the meeting. In case such notice is delivered personally as above provided, it shall be delivered at least twenty- four (24) hours prior to the time of the holding of the meeting. Such mailing, telegraphing, telexing, facsimiling or overnight delivery as above provided shall be due, legal and personal notice to such director. Except where otherwise required by law or by these Bylaws, notice of the purpose of a special meeting need not be given. Notice of any meeting of the Board shall not be required to be given to any director who is present at such meeting, except a director who shall attend such meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. SECTION 10. Quorum and Manner of Acting. Except as otherwise provided in these Bylaws, the Certificate of Incorporation or by applicable law, the presence of a majority of the authorized number of directors shall be required to constitute a quorum for the transaction of business at any meeting of the Board, and all matters shall be decided at any such meeting, a quorum being present, by the affirmative votes of a majority of the directors present. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, provided any action taken is approved by at least a majority of the required quorum for such meeting. In the absence of a quorum, a majority of directors present at any meeting may adjourn the same from time to time until a quorum shall be present. Notice of any adjourned meeting need not be given. The directors shall act only as a Board, and the individual directors shall have no power as such. 7 Exhibit 3.2 SECTION 11. Action by Consent. Any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting if consent in writing is given thereto by all members of the Board or of such committee, as the case may be, and such consent is filed with the minutes of proceedings of the Board or committee. SECTION 12. Compensation. Directors who are not employees of the Corporation or any of its subsidiaries may receive an annual fee for their services as directors in an amount fixed by resolution of the Board, and, in addition, a fixed fee, with or without expenses of attendance, may be allowed by resolution of the Board for attendance at each meeting, including each meeting of a committee of the Board. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity as an officer, agent, employee, or otherwise, and receiving compensation therefor. SECTION 13. Committees. The Board may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. Any such committee, to the extent provided in the resolution of the Board and subject to any restrictions or limitations on the delegation of power and authority imposed by applicable Delaware law, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Any such committee shall keep written minutes of its meetings and report the same to the Board at the next regular meeting of the Board. Unless the Board or these Bylaws shall otherwise prescribe the manner of proceedings of any such committee, meetings of any such committee may be regularly scheduled in advance and may be called at any time by the chairman of the committee or by any two members thereof; otherwise, the provisions of these Bylaws with respect to notice and conduct of meetings of the Board shall govern. ARTICLE IV OFFICERS SECTION 1. Officers. The officers of the Corporation shall be a Chairman of the Board, a Vice Chairman of the Board, a President, one or more Vice Presidents (the number thereof and their respective titles to be determined by the Board), a Secretary and a Treasurer and such other officers as may be appointed at the discretion of the Board in accordance with the provisions of Section 3 of this Article IV. SECTION 2. Election. The officers of the Corporation, except such officers as may be appointed or elected in accordance with the provisions of Section 3 or Section 5 of this Article IV, shall be 8 Exhibit 3.2 chosen annually by the Board at the first meeting thereof, and each officer shall hold office until such officer shall resign or shall be removed or otherwise disqualified to serve, or until such officer's successor shall be elected and qualified. SECTION 3. Other Officers. In addition to the officers chosen annually by the Board at its first meeting, the Board also may appoint or elect such other officers as the business of the Corporation may require, each of whom shall have such authority and perform such duties as are provided in these Bylaws or as the Board may from time to time specify, and shall hold office until such officer shall resign or shall be removed or otherwise disqualified to serve, or until such officer's successor shall be elected and qualified. SECTION 4. Removal and Resignation. Any officer may be removed, either with or without cause, by resolution of the Board passed by a majority of the directors at the time in office, at any regular or special meeting of the Board, or, except in case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board. SECTION 5. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these Bylaws for regular appointments to such office. SECTION 6. Chairman of the Board. The Chairman of the Board shall preside at all meetings of stockholders and at all meetings of the Board. SECTION 7. President. The President shall be the chief executive officer of the Corporation and shall, subject to the control of the Board, have general supervision, direction and control of the business and affairs of the Corporation. The President shall have the general powers and duties of management usually vested in the chief executive officer of a corporation, and shall have such other powers and duties as may be prescribed by the Board or these Bylaws. SECTION 8. Vice Chairman of the Board. In the absence or disability of the Chairman of the Board, or in the event and during the period of a vacancy in that office, the Vice Chairman of the Board shall perform all the duties of the Chairman of the Board, and when so acting shall have all of the powers of, and be subject to all of the restrictions upon, the Chairman of the Board of the Corporation. SECTION 9. Vice President. Each Vice President shall have such powers and perform such duties with respect to the administration of the business and affairs of the Corporation as may from time to time be assigned to such Vice President by the President or the Board, or as may be prescribed by these Bylaws. In the absence or disability of the President, the Vice Presidents in 9 Exhibit 3.2 order of their rank as fixed by the Board, or if not ranked, the Vice President designated by the Board, shall perform all of the duties of the President, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President. SECTION 10. Secretary. The Secretary shall keep, or cause to be kept, at the principal office of the Corporation, or such other place as the Board may order, a book of minutes of all meetings of directors and stockholders, with the time and place of holding, whether regular or special, and if special, how authorized and the notice thereof given, the names of those present at meetings of directors, the number of shares present or represented at meetings of stockholders, and the proceedings thereof. The Secretary shall keep, or cause to be kept, at the principal office of the Corporation's transfer agent, a share register, or a duplicate share register, showing the name of each stockholder, the number of shares of each class held by such stockholder, the number and date of certificates issued for such shares, and the number and date of cancellation of every certificate surrendered for cancellation. The Secretary shall give, or cause to be given, notice of all meetings of stockholders and of the Board required by these Bylaws or by law to be given, and shall keep the seal of the Corporation in safe custody and shall affix and attest the seal to all documents to be executed on behalf of the Corporation under its seal, and shall have such other powers and perform such other duties as may be prescribed by these Bylaws or assigned by the Board, the President or any officer of the Corporation to whom the Secretary may report. If for any reason the Secretary shall fail to give notice of any special meeting of the Board called by one or more of the persons identified in Article Ill, Section 9 hereof, then any such person or persons may give notice of any such special meeting. SECTION 11. Treasurer. The Treasurer shall supervise, have custody of and be responsible for all funds and securities of the Corporation. The Treasurer shall deposit all moneys and other valuables in the name and to the credit of the Corporation with such depositaries as may be designated by the Board or in accordance with authority delegated by the Board. The Treasurer shall disburse the funds of the Corporation as may be ordered or authorized by the Board, shall render to the President or the Board whenever they request it, an account of all of the Treasurer's transactions, and shall have such other powers and perform such other duties as may be prescribed by these Bylaws or assigned by the Board, the President or any officer of the Corporation to whom the Treasurer may report. The Treasurer shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the Corporation, including accounts of its 10 Exhibit 3.2 assets, liabilities, receipts, disbursements, gains, losses, capital, surplus and shares. Any surplus, including earned surplus, paid-in surplus and surplus arising from a reduction of stated capital, shall be classified according to source and shown in a separate account. The books of account shall at all reasonable times be open to inspection by any director. The Treasurer also shall supervise the maintenance of adequate and correct accounts of the properties and business transactions of all subsidiaries of the Corporation and shall have such other powers and perform such other duties as may from time to time be prescribed by these Bylaws or assigned to the Treasurer by the Board, the President or any officer of the Corporation to whom the Treasurer may report. SECTION 12. Chairman Emeritus. The officers of the Corporation shall include the honorary position of Chairman Emeritus, which position shall be held by John B. Gilbert, founder of the Corporation. The Chairman Emeritus shall perform such duties as may from time to time be assigned by the Board. ARTICLE V CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC. SECTION 1. Execution of Contracts. The Board, except as in these Bylaws otherwise provided, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances; and unless so authorized by the Board or by these Bylaws, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or in any amount. SECTION 2. Checks, Drafts, Etc. All checks, drafts or other orders for payment of money, notes or other evidence of indebtedness, issued in the name of or payable to the Corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the Board. Each such officer, assistant, agent or attorney shall give such bond, if any, as the Board may require. SECTION 3. Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board may select, or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation to whom such power shall have been delegated by the Board. For the purpose of deposit and for the purpose of collection for the account of the Corporation, the Chairman of the Board, the President, any Vice President or the Treasurer (or any other officer or officers, assistant or 11 Exhibit 3.2 assistants, agent or agents, or attorney or attorneys of the Corporation who shall from time to time be determined by the Board) may endorse, assign and deliver checks, drafts and other orders for the payment of money which are payable to the order of the Corporation. SECTION 4. General and Special Bank Accounts. The Board may from time to time authorize the opening and keeping of general and special bank accounts with such banks, trust companies or other depositories as the Board may select or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation to whom such power shall have been delegated by the Board. The Board may make such special rules and regulations with respect to such bank accounts, not inconsistent with the provisions of these Bylaws, as it may deem expedient. ARTICLE VI SHARES AND THEIR TRANSFER SECTION 1. Certificates for Stock. Every owner of stock of the Corporation shall be entitled to have a certificate or certificates, to be in such form as the Board shall prescribe, certifying the number and class of shares of the stock of the Corporation owned by such owner. The certificates representing shares of such stock shall be numbered in the order in which they shall be issued and shall be signed in the name of the Corporation by the Chairman of the Board, the President or any Vice President, and by the Secretary or the Treasurer. Any or all of the signatures on the certificates may be a facsimile. In case any officer, transfer agent or registrar who has signed, or whose facsimile signature has been placed upon, any such certificate, shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may nevertheless be issued by the Corporation with the same effect as though the person who signed such certificate, or whose facsimile signature shall have been placed thereupon, were such officer, transfer agent or registrar at the date of issue. A record shall be kept of the respective names of the persons, firms or corporations owning the stock represented by such certificates, the number and class of shares represented by such certificates, respectively, and the respective dates thereof, and in case of cancellation, the respective dates of cancellation. Every certificate surrendered to the Corporation for exchange or transfer shall be cancelled, and no new certificate or certificates shall be issued in exchange for any existing certificate until such existing certificate shall have been so cancelled, except in cases provided for in Section 4 of this Article VI. 12 Exhibit 3.2 SECTION 2. Transfers of Stock. Transfers of shares of stock of the Corporation shall be made only on the books of the Corporation by the registered holder thereof, or by such holder's attorney thereunto authorized by power of attorney duly executed and filed with the Secretary, or with a transfer clerk or a transfer agent appointed as provided in Section 3 of this Article VI, and upon surrender of the certificate or certificates for such shares properly endorsed and the payment of all taxes thereon. The person in whose name shares of stock stand on the books of the Corporation shall be deemed the owner thereof for all purposes as regards the Corporation. Whenever any transfer of shares shall be made for collateral security, and not absolutely, such fact shall be so expressed in the entry of transfer if, when the certificate or certificates shall be presented to the Corporation for transfer, both the transferor and the transferee request the Corporation to do so. SECTION 3. Regulations. The Board may make such rules and regulations as it may deem expedient, not inconsistent with these Bylaws, concerning the issue, transfer and registration of certificates for shares of the stock of the Corporation. It may appoint, or authorize any officer or officers to appoint, one or more transfer clerks or one or more transfer agents and one or more registrars, and may require all certificates for stock to bear the signature or signatures of any of them. SECTION 4. Lost, Stolen, Destroyed and Mutilated Certificates. In any case of loss, theft, destruction, or mutilation of any certificate of stock, another may be issued in its place upon proof of such loss, theft, destruction, or mutilation and upon the giving of a bond of indemnity to the Corporation in such form and in such sum as the Board may direct; provided, however, that a new certificate may be issued without requiring any bond when, in the judgment of the Board, it is proper so to do. SECTION 5. Fixing Date for Determination of Stockholders of Record. A. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of such meeting; provided, however, that the Board may fix a new record date for the adjourned meeting. 13 Exhibit 3.2 B. In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto. ARTICLE VII LIMITATION ON DIRECTOR LIABILITY AND INDEMNIFICATION SECTION 1. Limitation of Director Liability. To the fullest extent permitted by the Delaware General Corporation Law as the same exists or may hereafter be amended, a director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. SECTION 2. Scope of Indemnification. The Corporation shall indemnify, in the manner and to the fullest extent permitted by law, any person (or the estate of any person) who is or was a party to, or is threatened to be made a party to, any threatened, pending or completed action, suit or proceeding, whether or not by or in the right of the Corporation, and whether civil, criminal, administrative, investigative or otherwise, by reason of the fact that such person is or was a director, officer, employee, agent or fiduciary of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, agent or fiduciary of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other enterprise. The Corporation may, to the fullest extent permitted by law, purchase and maintain insurance on behalf of any such person against any liability which may be asserted against such person. To the fullest extent permitted by law, the indemnification provided herein shall include expenses (including attorneys' fees), judgments, fines and amounts paid in settlement and, in the manner provided by law, any such expenses may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding. The indemnification provided herein shall not be deemed to limit the right of the Corporation to indemnify any other person for any such expenses to the fullest extent permitted by law, nor shall it be deemed exclusive of any 14 Exhibit 3.2 other rights to which any person seeking indemnification from the Corporation may be entitled under any agreement, vote of stockholders or disinterested directors, or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office. ARTICLE VIII MISCELLANEOUS SECTION 1. Seal. The Board shall adopt a corporate seal, which shall be in the form of a circle and shall bear the name of the Corporation and words showing that the Corporation was incorporated in the State of Delaware. SECTION 2. Waiver of Notices. Whenever notice is required to be given by these Bylaws or the Certificate of Incorporation or by law, the person entitled to said notice may waive such notice in writing, either before or after the time stated therein, and such waiver shall be deemed equivalent to notice. SECTION 3. Amendments. Except as otherwise provided herein or in the Certificate of Incorporation, these Bylaws, or any of them, may be altered, amended, repealed or rescinded and new Bylaws may be adopted, (A) by the Board, or (B) by the stockholders, at any annual meeting of stockholders or at any special meeting of stockholders, provided that notice of such proposed alteration, amendment, repeal, recission or adoption is given in the notice of meeting. SECTION 4. Representation of Other Corporations. The Chairman or Vice Chairman of the Board or the President or the Secretary or any Vice President of the Corporation is authorized to vote, represent and exercise on behalf of the Corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of the Corporation. The authority herein granted to said officers to vote or represent on behalf of the Corporation any and all shares held by the Corporation in any other corporation or corporations may be exercised either by such officers in person or by any person authorized so to do by proxy or power of attorney duly executed by such officers. 15 Exhibit 3.2 EX-10.3 3 DIR DEFERRED COMP. PLAN ZERO CORPORATION DIRECTORS' DEFERRED COMPENSATION PLAN AS ADOPTED OCTOBER 20, 1993 PURPOSE The purpose of the Zero Corporation Directors' Deferred Compensation Plan is to provide the opportunity to defer the receipt of compensation payable to the members of the Board of Directors of Zero Corporation upon whose judgment, initiative and efforts the continued success of Zero Corporation and its divisions and subsidiaries is dependent. Exhibit 10.3 ZERO CORPORATION ---------------- DIRECTORS' DEFERRED COMPENSATION PLAN ------------------------------------- AS ADOPTED OCTOBER 20, 1993 --------------------------- TABLE OF CONTENTS
ARTICLE Page - - ------- ---- I Title and Effective Date............................. 3 II Definitions.......................................... 3 III Eligibility.......................................... 5 IV Deferral of Compensation............................. 5 V Deferral Account and Crediting....................... 5 VI Distributions........................................ 6 VII Hardship Distributions............................... 7 VIII Beneficiary.......................................... 7 IX Administration of the Plan........................... 8 X Claims Procedure..................................... 9 XI Amendment and Termination............................ 10 XII Miscellaneous........................................ 11
2 Exhibit 10.3 ARTICLE I TITLE AND EFFECTIVE DATE ------------------------ 1.01 TITLE This Plan shall be known as the Zero Corporation Directors' ----- Deferred Compensation Plan. 1.02 EFFECTIVE DATE The effective date of this Plan shall be -------------- January 1, 1994. ARTICLE II DEFINITIONS ----------- 2.01 BENEFICIARY shall mean the person or persons, trust or the estate of ----------- a Participant entitled to receive any benefits under the Plan, as indicated by the Participant on the Beneficiary Designation Form. 2.02 BOARD shall mean the Board of Directors of Zero Corporation. ----- 2.03 BOOKKEEPING ACCOUNT means the bookkeeping record established for each ------------------- Participant who elects to defer compensation under the Plan. 2.04 CHANGE IN CONTROL shall mean the date upon which the first of the ----------------- following events occurs: (a) Consummation of (i) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company's common stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company's common stock immediately prior to the merger have substantially the same proportionate ownership of common stock of the surviving corporation immediately after the merger, or (ii) any sale, lease, exchange or other transfer (in one transaction or a series of transactions) of all, or more than fifty percent (50%), of the assets of the Company; (b) The stockholders of the Company approve a plan or proposal for the liquidation or dissolution of the Company; or (c) Any "person" (as such term is used in Sections 13 and 14(d)(2) of the Securities Exchange Act of 1934) other than a person owned by or directly or indirectly managed by the Company, shall become the beneficial owner, directly or indirectly, of twenty-five percent (25%) or more of the common stock of the Company. 3 Exhibit 10.3 2.05 COMMITTEE means the Employee Benefits Committee appointed by the --------- Board to administer the Plan pursuant to Article IX hereof. 2.06 COMPANY shall mean Zero Corporation. ------- 2.07 DISABILITY shall be deemed to occur if a Participant cannot engage in ---------- any substantial, gainful activity because of a physical or mental impairment (as verified to the Committee's satisfaction) likely to result in death or to be of a continuous period of not less than twelve (12) months. 2.08 ELECTION DATE is the date established by the Plan as the date before ------------- which an Eligible Director must submit a valid Election Form to the Named Fiduciary. The applicable Election Dates are as follows: (a) January 1 of any Plan Year, or (b) thirty (30) days after a newly Eligible Director is first notified of his or her right to participate in the Plan. 2.09 ELECTION FORM means the written form which is submitted to the ------------- Named Fiduciary before the relevant Election Date which indicates whether the Eligible Director wishes to defer a portion of his or her compensation, and the portion of such compensation to be deferred. No Election Form shall be effective until received, acknowledged, and executed by the Company. Each Election Form is, with respect to the applicable Eligible Director, incorporated herein by reference and made an integral part of the Plan. 2.10 ELIGIBLE DIRECTOR shall mean each member of the Company's Board of ----------------- Directors who is not an employee of the Company. 2.11 MOODY'S SEASONED CORPORATE BOND RATE, sometimes referred to as ------------------------------------ "Moody's", means the Moody's Corporate Bond Yield Average as published by Moody's Investors Service, Inc. (or any successor thereto). 2.12 NAMED FIDUCIARY shall mean the Corporate Secretary of the Company. --------------- 2.13 PARTICIPANT means an Eligible Director (including such Director's ----------- estate and/or Beneficiary(ies)) who has deferred a portion of Plan Compensation pursuant to the terms of the Plan, and whose Bookkeeping Account has not yet been distributed in full. 2.14 PLAN COMPENSATION shall mean all or any portion of compensation ----------------- earned for services as a Director, including retainer payments and meeting and other fees. 2.15 PLAN YEAR is the period from the Effective Date through December 31, --------- 1994 and each successive twelve (12) calendar month period thereafter. 4 Exhibit 10.3 2.16 SEPARATION FROM SERVICE means the retirement from the Company's ----------------------- Board of Directors. ARTICLE III ELIGIBILITY ----------- 3.01 Only Eligible Directors may participate in the Plan. As a condition to becoming a Participant hereunder, however, an Eligible Director must complete and return to the Named Fiduciary a duly executed Election Form prior to the applicable Election Date. Election Forms remain in effect for the Plan Year to which they apply. A Participant must file a new Election Form for any subsequent Plan Year. ARTICLE IV DEFERRAL OF COMPENSATION ------------------------ 4.01 Each Participant in the Plan may irrevocably elect to have all or a portion of his or her Plan Compensation during a Plan Year following the applicable Election Date deferred and credited to the Participant's Bookkeeping Account in accordance with the terms and conditions hereof. The amount of such Plan Compensation to be so deferred under this paragraph 4.01 for a Plan Year shall be any whole number or percentage as the Participant shall select on his or her Election Form; provided, that such amount for any Plan Year shall not be less than Five Thousand ($5,000) Dollars. 4.02 An Eligible Director desiring to participate in the Plan must submit his or her written Election Form to the Named Fiduciary before the applicable Election Date. Valid Election Forms filed by the applicable Election Date shall cause Plan Compensation to be deferred for the Plan Year (or portion thereof in the case of Participants for whom paragraph 2.08(b) of Article II is the applicable Election Date) for which such Election is made. 4.03 A Participant who has not submitted to or does not have on file a valid Election Form with the Named Fiduciary before the applicable Election Date may not defer any Plan Compensation for the applicable Plan Year. ARTICLE V DEFERRAL ACCOUNT AND CREDITING ------------------------------ 5.01 Plan Compensation deferred by a Participant under a written Election Form shall be credited in a dollar amount to a separate Bookkeeping Account for each Participant as of the date on which such Plan Compensation would otherwise be payable to the Participant. 5 Exhibit 10.3 5.02 The deferrals credited to the Participant's Bookkeeping Account shall also be credited earnings on a quarterly basis equal to the Moody's Seasoned Corporate Bond Rate for the last month of each quarter on which earnings are applied plus three percent (3%) until such account value is distributed pursuant to Article VI hereof. Plan Compensation deferred shall be deemed to be invested and accruing earnings starting on the date the amounts deferred are credited to the Bookkeeping Account. 5.03 The Participant shall at all times have a nonforfeitable right to the value of his or her Bookkeeping Account attributable to his or her own deferrals under paragraph 4.01 of Article IV hereof plus interest credited thereon, with no right of offset by the Company. ARTICLE VI DISTRIBUTIONS ------------- 6.01 At the time of electing deferrals for each Plan Year, a Participant shall specify the amount to be deferred, and any other matter required to be specified by the Company on its Election Form. In addition, in his or her initial deferral election, Participant shall specify the payment method and commencement date (relative to the date of Separation from Service) which shall apply to all amounts deferred in the initial year and in all subsequent years. A separate designation of payment commencement time and method of distribution shall be made depending upon whether a Participant's Separation from Service occurs on or after attaining age 60 or before attaining age 60. The period of deferral shall end, and distribution of the value of a Participant's Bookkeeping Account shall begin on the date specified in the Participant's initial deferral election. The Participant may elect to receive distributions in substantially equal installments over a five (5) or ten (10) year period or in a lump sum, or in such other payment form as offered by the Company. In the case of any payment deferred beyond Separation from Service, interest at the rate specified in paragraph 5.02 of Article V shall be credited on all amounts remaining in the Bookkeeping Account of the Participant from which the payments are to be made. Notwithstanding the foregoing, a Participant may, after the initial deferral election, modify any election with respect to either time of payment commencement or the method of distribution without penalty so long as such change is made at least one (1) year before the commencement date previously elected; provided, however, the Named Fiduciary must make a determination that such subsequent modification in election would not have a detrimental effect on the tax consequences of benefits deferred hereunder or such subsequent modification will be disregarded. 6 Exhibit 10.3 6.02 In the event of a Participant's death before the payments have commenced hereunder, the Participant's Bookkeeping Account shall be distributed as soon as practicable after his or her death to his or her Beneficiary(ies) designated in accordance with Article VIII hereof in the manner selected on the Participant's initial Election Form. In the event of a Participant's death after payments have commenced, any remaining amounts in the Participant's Bookkeeping Account shall be distributed to the Participant's Beneficiary(ies) in the same manner of distribution as was being followed at the time of his or her death. 6.03 Notwithstanding paragraphs 6.01 and 6.02 hereof, if the total amount in a Participant's Bookkeeping Account is Fifty Thousand ($50,000) Dollars or less, such Bookkeeping Account shall be distributed to him or her in full within thirty (30) days after Separation from Service or upon the occurrence of a Disability or shall be distributed in full to his or her Beneficiary upon his or her death. In the event that either the Named Fiduciary or the Committee determines, in their sole discretion, that a Change in Control is likely, the Company will, effective automatically and concurrently with the Change in Control, deposit in one or more grantor trusts (within the meaning of Section 671 of the Internal Revenue Code of 1986) funds in an amount sufficient to pay Participant that amount which is the value of his or her Bookkeeping Account. 6.04 All distributions of a Participant's Bookkeeping Account hereunder shall be made in cash payments only and shall commence not later than January 1 of the first year following the Director's Separation from Service. 6.05 The Company shall have the right to deduct from all payments any federal, state, local or foreign taxes or other charges required by law to be withheld or elected by the Participant to be withheld with respect to such payments. 6.06 Notwithstanding any provision hereunder to the contrary, a Participant may take a distribution of all or a portion of his or her Bookkeeping Account in a manner inconsistent with his or her deferral election even though the Participant is not then suffering a financial hardship, as defined in paragraph 7.01 of Article VII hereof, provided that the distribution is reduced by ten percent (10%), to be adjusted upward or downward as required by law. The ten percent (10%) reduction shall be forfeited to the Company. 7 Exhibit 10.3 ARTICLE VII HARDSHIP DISTRIBUTIONS ---------------------- 7.01 At the request of a Participant before complete distribution of his or her Bookkeeping Account, the Committee may, in its sole discretion, accelerate and pay all or part of the value of a Participant's Bookkeeping Account due under the Plan. Accelerated distributions at the request of the Participant or a Participant's Beneficiary may be allowed only in the event of a financial emergency beyond the Participant's or Beneficiary's control due to unforeseeable circumstances and only if disallowance of a distribution would create a severe hardship for the Participant or Beneficiary. An accelerated distribution must be limited to only that amount necessary to relieve the financial emergency. ARTICLE VIII BENEFICIARY ----------- 8.01 A Participant shall, by completing the Beneficiary Designation Form, designate one or more Beneficiaries to receive benefits under the Plan payable in the event of his or her death before complete distribution of his or her Bookkeeping Account. If more than one Beneficiary is named, the share and/or precedence of each Beneficiary shall be indicated. A Participant shall have the right to change the Beneficiary by notifying the Named Fiduciary in the appropriate spaces of a revised Beneficiary Designation Form. However, no designation or change in designation of Beneficiary shall be effective until received, accepted and acknowledged by the Company. 8.02 The Committee shall be entitled to rely on the last Beneficiary Designation Form filed by the Participant and accepted by the Committee prior to his or her death. If the Committee has any doubt as to the proper Beneficiary to receive payments hereunder, the Committee shall have the right to direct the Company to withhold such payments until the matter is finally adjudicated. However, any payment made by the Company, in good faith and in accordance with the Plan and the directions of the Committee, shall fully discharge the Company and the Committee from all further obligations with respect to that payment. 8.03 In making any payments to or for the benefit of any minor or incompetent Beneficiary, the Committee, in its sole and absolute discretion, may direct the Company to make a distribution to a legal or natural guardian or other relative of a minor or court appointed committee of such incompetent. Alternatively, the Committee may direct the Company to make a payment to any adult with whom the minor or incompetent temporarily or permanently resides. The receipt by a guardian, committee, relative or other 8 Exhibit 10.3 person shall be a complete discharge to the Company and the Committee. Neither the Committee nor the Company shall have any responsibility to see to the proper application of any payments so made. ARTICLE IX ADMINISTRATION OF THE PLAN -------------------------- 9.01 The Plan shall be administered by the Employee Benefits Committee as constituted and approved from time to time by the Board. Such persons shall serve at the pleasure of the Board. Participants in this Plan may serve as members of the Committee. All resolutions or other actions taken by the Committee shall be by vote of a majority of those present at a meeting at which a majority of the members are present, or in writing by a majority of all the members at the time in office if they act without a meeting. 9.02 Subject to the terms of the Plan, the Committee shall, from time to time, establish rules, forms and procedures for the administration of the Plan. Except as herein otherwise expressly provided, the Committee shall have the exclusive right to interpret the Plan and to make, amend, interpret and enforce all rules adopted in connection with the Plan and to decide any and all matters arising hereunder or in connection with the administration of the Plan, and it shall endeavor to act, whether by general rules or by particular decisions, so as not to discriminate in favor of or against any person. The decisions, actions and records of the Committee shall be conclusive and binding upon the Company and all persons having or claiming to have any right or interest in or under the Plan. 9.03 In the administration of the Plan, the Committee may, from time to time, employ agents and delegate to them such administrative duties as it deems appropriate and may, from time to time, consult with counsel who may be counsel to the Company. 9.04 The members of the Committee and the officers and Directors of the Company shall be entitled to rely on all certificates and reports made by any duly appointed accountants, and on all opinions given by any duly appointed legal counsel, which legal counsel may be counsel for the Company. 9.05 To enable the Committee to perform its functions, the Company shall supply full and timely information to the Committee on all matters relating to the compensation of Participants and the date and circumstances of the Separation from Service or death or Disability of a Participant and such other pertinent information as the Committee may reasonably require. 9 Exhibit 10.3 9.06 The Company shall indemnify and save harmless each member of the Committee against any and all expenses and liabilities arising out of his or her membership on the Committee. Expenses against which a member of the Committee shall be indemnified hereunder shall include, without limitation, the amount of any settlement or judgment, costs, counsel fees, and related charges reasonably incurred in connection with a claim asserted, or a proceeding brought or settlement thereof. The foregoing right of indemnification shall be in addition to any other rights to which any such member of the Committee may be entitled as a matter of law. ARTICLE X CLAIMS PROCEDURE ---------------- 10.01 Benefits shall be paid in accordance with the provisions of this instrument. The Participant, or a Beneficiary or any other person claiming through the Participant, shall make a written request for benefits under this Plan. This written claim shall be mailed or delivered to the Named Fiduciary who shall review such claim. 10.02 If the claim is denied, in full or in part, the Named Fiduciary shall provide a written notice within forty-five (45) days setting forth the specific reasons for denial, and any additional material or information necessary to perfect the claim, and an explanation of why such material or information is necessary, and appropriate information and explanation of the steps to be taken if a review of the denial is desired. 10.03 If the claim is denied and a review by the full Committee is desired, the Participant (or Beneficiary) shall notify the Named Fiduciary in writing within thirty (30) days (a claim shall be deemed denied if the Named Fiduciary does not take any action within the aforesaid forty-five (45) day period) after receipt of the written notice of denial. In requesting a review, the Participant or his or her Beneficiary may request a review of the Plan document or other pertinent documents, may submit any written issues and comments, and may request that a hearing be held, but the decision to hold a hearing shall be within the sole discretion of the Committee. 10.04 The decision on the review of the denied claim shall be rendered by the Committee within thirty (30) days after the receipt of the request for review (if a hearing is not held) or within sixty (60) days after the hearing if one is held. The decision shall be written and shall state the specific reasons for the decision including reference to specific provisions of the Plan on which the decision is based. 10 Exhibit 10.3 10.05 If, after the review process, a claimant seeks further redress, the subject of the dispute shall be submitted to arbitration in Los Angeles, California, in accordance with the Commercial Rules of the American Arbitration Association then in effect, which arbitration shall be the exclusive remedy of the parties hereto. The resulting arbitration award shall be deemed a final order of a court having jurisdiction over the subject matter and shall not be appealable. All fees and expenses connected with the arbitration proceeding, other than counsel fees incurred by either party, if any, shall be shared equally by both parties. ARTICLE XI AMENDMENT AND TERMINATION ------------------------- 11.01 The Company, by action of the Board, may amend or modify this Plan from time to time or may terminate the Plan if it deems appropriate; provided that no such amendment, modification or termination shall in any way reduce the vested portion of affected Participants' (or Beneficiaries') Bookkeeping Accounts measured as of the date the amendment, modification or termination is made, or, if later, the effective date of such actions; and, provided further, no amendment or modification which would reduce the interest rate below Moody's as set forth in paragraph 5.02 of Article V hereof, or which would assess costs or fees to Participants, may be made without the unanimous consent of all Participants in the Plan. ARTICLE XII MISCELLANEOUS ------------- 12.01 The Company's obligation under the Plan shall in every case be an unfunded and unsecured promise to pay. Participants' rights as to benefits hereunder shall be no greater than that of general, unsecured creditors of the Company. The Company may establish one or more grantor trusts as described in Section 671 of the Internal Revenue Code of 1986, although the Company shall not be obligated under any circumstances to fund its financial obligations under the Plan. Any assets which the Company may acquire or set aside to help cover its financial liabilities are and must remain general assets of the Company and such assets as well as any assets set aside in any grantor trust shall be subject to the claims of its general creditors. Neither the Company nor the Plan gives the Participant any beneficial ownership interest in any asset of the Company. All rights of ownership in any such assets are and remain in the Company. 12.02 Except insofar as permitted by applicable law, no sale, transfer, alienation, assignment, pledge, collateralization or attachment of any benefits under the Plan shall be valid or recognized by the Company. Neither the Participant, his or her 11 Exhibit 10.3 spouse, or designated Beneficiary shall have any power to hypothecate, mortgage, commute, modify or otherwise encumber in advance of any of the benefits payable hereunder, nor shall any of said benefits be subject to seizure for the payment of any debts, judgments, alimony maintenance, owed by the Participant or his Beneficiary, or be transferable by operation of law in the event of bankruptcy, insolvency, or otherwise. Notwithstanding the foregoing, the Company may, if the Committee so determines in its sole discretion, follow the terms of any court order issued in connection with any domestic relations proceeding including but not limited to marital dissolution or child support. 12.03 The Plan shall be binding upon the Company, its assigns, and any successor company which shall succeed to substantially all of its assets and business through merger, acquisition or consolidation, and upon a Director, his or her Beneficiary, assigns, heirs, executors and administrators. 12.04 The terms and conditions of the Plan shall not be deemed to constitute a contract of employment between the Company and a Director. Nothing in this Plan shall of itself be deemed to give a Director the right to be retained in the service of the Company or to interfere with any right of the Company to discipline or discharge the Director at any time. 12.05 A Director will cooperate with the Company by furnishing any and all information reasonably requested by the Company and take such other actions as may be requested in order to facilitate the administration of the Plan and the payment of benefits hereunder. 12.06 In case any provisions of this Plan shall be found illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but the Plan shall be construed and enforced as if such illegal and invalid provision had never been included herein. 12.07 Any notice which shall be or may be given under the Plan or an Election Form shall be in writing and shall be mailed by United States mail, postage prepaid. If notice is to be given to the Company, such notice shall be addressed to the Company at 444 South Flower Street, Suite 2100, Los Angeles, California 90071-2922, marked for the attention of the Corporate Secretary of the Company or, if notice to a Director, addressed to the address shown on such Director's Election Form or the last known address on the Company's personnel records. Any notice or filing required or permitted to be given to a Participant under this Plan shall be sufficient if in writing and sent by facsimile, hand delivered, or sent by mail, to the last known address of the Participant. Any party may, from time to time, change the address to which notices shall be mailed by giving written notice of such new address. 12 Exhibit 10.3 12.08 The interest in the benefits hereunder of a spouse of a Participant who has predeceased the Participant shall automatically pass to the Participant and shall not be transferable by such spouse in any manner, including but not limited to such spouse's will, nor shall such interest pass under the laws of intestate succession. 12.09 If, for any reason, all or any portion of a Participant's benefit under this Plan becomes taxable to the Participant prior to receipt, a Participant may petition the Committee for a distribution of funds sufficient to meet the Participant's tax liability (including additions to tax, penalties and interest). Upon the grant of such a petition, which grant shall not be unreasonably withheld, the Company shall distribute to the Participant immediately available funds in an amount equal to that Participant's federal, state and local tax liability associated with such taxation, which liability shall be measured by using that Participant's then current highest federal, state and local marginal tax rate, plus the rates or amounts for the applicable additions to tax, penalties and interest. This distribution shall include an additional amount to "gross up" the tax liability distribution to include all applicable taxes on the tax liability distribution and the grossed up amount. If the petition is granted, the tax liability distribution (including gross-up) shall be made within ninety (90) days of the date when the Participant's petition is granted. Such a distribution shall affect and reduce the benefits to be paid under Articles VI or VII hereof. 12.10 The benefits provided for a Participant and Participant's Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program for employees of the Company. The Plan shall supplement and shall not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided. 12.11 The payment of benefits under the Plan to a Participant or Beneficiary shall fully and completely discharge the Company and the Committee from all further obligations under this Plan with respect to a Participant, and that Participant's Election Form shall terminate upon such full payment of benefits. 12.12 Without limiting the provisions of paragraph 9.06 of Article IX above, if any action at law or in equity is necessary by a Participant or Beneficiary to enforce the terms of the Plan, the Participant or Beneficiary shall be entitled to recover reasonable attorneys' fees, costs and necessary disbursements in addition to any other relief to which that party may be entitled. 13 Exhibit 10.3 12.13 Titles and headings of the Articles of the Plan are included for ease of reference only and are not to be used for the purpose of construing any portion or provision of the Plan document. 12.14 To the extent not preempted by Federal law, this Plan shall be governed by and construed pursuant to the laws of the State of California. 12.15 Any Election Form may be executed in one or more counterparts, each of which is legally binding and enforceable. AS ADOPTED BY THE BOARD OF DIRECTORS OF ZERO CORPORATION OCTOBER 20, 1993 14 Exhibit 10.3
EX-10.4 4 EXEC DIR DEFER COMP. PLAN ZERO CORPORATION EXECUTIVE DEFERRED COMPENSATION PLAN AS ADOPTED OCTOBER 20, 1993 PURPOSE The purpose of the Zero Corporation Executive Deferred Compensation Plan is to provide the opportunity to defer the receipt of compensation to a select group of management employees upon whose judgment, initiative and efforts the continued success of Zero Corporation and its divisions and subsidiaries is dependent. Exhibit 10.4 ZERO CORPORATION ---------------- EXECUTIVE DEFERRED COMPENSATION PLAN ------------------------------------ AS ADOPTED OCTOBER 20, 1993 --------------------------- TABLE OF CONTENTS
ARTICLE Page - - ------- ----- I Title and Effective Date......................... 3 II Definitions...................................... 3 III Eligibility...................................... 5 IV Deferral of Compensation......................... 5 V Deferral Account and Crediting................... 5 VI Distributions.................................... 6 VII Hardship Distributions........................... 8 VIII Beneficiary...................................... 8 IX Administration of the Plan....................... 9 X Claims Procedure................................. 10 XI Amendment and Termination........................ 11 XII Miscellaneous.................................... 11
2 Exhibit 10.4 ARTICLE I TITLE AND EFFECTIVE DATE ------------------------ 1.01 TITLE This Plan shall be known as the Zero Corporation Executive ----- Deferred Compensation Plan. 1.02 EFFECTIVE DATE The effective date of this Plan shall be -------------- January 1, 1994. ARTICLE II DEFINITIONS ----------- 2.01 BENEFICIARY shall mean the person or persons, trust or the estate of ----------- a Participant entitled to receive any benefits under the Plan, as indicated by the Participant on the Beneficiary Designation Form. 2.02 BOARD shall mean the Board of Directors of Zero Corporation. ----- 2.03 BOOKKEEPING ACCOUNT means the bookkeeping record established for ------------------- each Participant who elects to defer compensation under the Plan. 2.04 CHANGE IN CONTROL shall mean the date upon which the first of the ----------------- following events occurs: (a) Consummation of (i) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company's common stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company's common stock immediately prior to the merger have substantially the same proportionate ownership of common stock of the surviving corporation immediately after the merger, or (ii) any sale, lease, exchange or other transfer (in one transaction or a series of transactions) of all, or more than fifty percent (50%), of the assets of the Company; (b) The stockholders of the Company approve a plan or proposal for the liquidation or dissolution of the Company; or (c) Any "person" (as such term is used in Sections 13 and 14(d)(2) of the Securities Exchange Act of 1934) other than a person owned by or directly or indirectly managed by the Company, shall become the beneficial owner, directly or indirectly, of twenty-five percent (25%) or more of the common stock of the Company. 3 Exhibit 10.4 2.05 COMMITTEE means the Employee Benefits Committee appointed by the --------- Board to administer the Plan pursuant to Article IX hereof. 2.06 COMPANY shall mean Zero Corporation. ------- 2.07 DISABILITY shall be deemed to occur if a Participant cannot engage in ---------- any substantial, gainful activity because of a physical or mental impairment (as verified to the Committee's satisfaction) likely to result in death or to be of a continuous period of not less than twelve (12) months. 2.08 ELECTION DATE is the date established by the Plan as the date before ------------- which an Executive must submit a valid Election Form to the Named Fiduciary. The applicable Election Dates are as follows: (a) January 1 of any Plan Year, or (b) thirty (30) days after a newly eligible Executive is first notified of his or her right to participate in the Plan. 2.09 ELECTION FORM means the written form which is submitted to the ------------- Named Fiduciary before the relevant Election Date which indicates whether the Executive wishes to defer a portion of his or her compensation, and the portion of such compensation to be deferred. No Election Form shall be effective until received, acknowledged, and executed by the Company. Each Election Form is, with respect to the applicable Executive, incorporated herein by reference and made an integral part of the Plan. 2.10 EXECUTIVE shall mean each of the key employees designated by the --------- Board to include generally corporate officers, division and subsidiary presidents and general managers and any other person designated by the Board to participate in the Plan. 2.11 MOODY'S SEASONED CORPORATE BOND RATE, sometimes referred to as ------------------------------------ "Moody's", means the Moody's Corporate Bond Yield Average as published by Moody's Investors Service, Inc. (or any successor thereto). 2.12 NAMED FIDUCIARY shall mean the Corporate Secretary of the Company. --------------- 2.13 PARTICIPANT means an Executive (including such Executive's estate ----------- and/or Beneficiary(ies)) who has deferred a portion of Plan Compensation pursuant to the terms of the Plan, and whose Bookkeeping Account has not yet been distributed in full. 2.14 PLAN COMPENSATION shall mean the Participant's annual salary and/or ----------------- bonus. 2.15 PLAN YEAR is the period from the Effective Date through December 31, --------- 1994 and each successive twelve (12) calendar month period thereafter. 4 Exhibit 10.4 2.16 SEPARATION FROM SERVICE means the termination of the Participant's ----------------------- employment as a regular employee of the Company. ARTICLE III ELIGIBILITY ----------- 3.01 Only Executives may participate in the Plan. As a condition to becoming a Participant hereunder, however, an Executive must complete and return to the Named Fiduciary a duly executed Election Form prior to the applicable Election Date. Election Forms remain in effect for the Plan Year to which they apply. A Participant must file a new Election Form for any subsequent Plan Year. ARTICLE IV DEFERRAL OF COMPENSATION ------------------------ 4.01 Each Participant in the Plan may irrevocably elect to have all or a portion of his or her Plan Compensation during a Plan Year following the applicable Election Date deferred and credited to the Participant's Bookkeeping Account in accordance with the terms and conditions hereof. The amount of such Plan Compensation to be so deferred under this paragraph 4.01 for a Plan Year shall be any whole number or percentage as the Participant shall select on his or her Election Form; provided, that such amount for any Plan Year shall not be less than Five Thousand ($5,000) Dollars. 4.02 An Executive desiring to participate in the Plan must submit his or her written Election Form to the Named Fiduciary before the applicable Election Date. Valid Election Forms filed by the applicable Election Date shall cause Plan Compensation to be deferred for the Plan Year (or portion thereof in the case of Participants for whom paragraph 2.08(b) of Article II is the applicable Election Date) for which such Election is made. 4.03 A Participant who has not submitted to or does not have on file a valid Election Form with the Named Fiduciary before the applicable Election Date may not defer any Plan Compensation for the applicable Plan Year. ARTICLE V DEFERRAL ACCOUNT AND CREDITING ------------------------------ 5.01 Plan Compensation deferred by a Participant under a written Election Form shall be credited in a dollar amount to a separate Bookkeeping Account for each Participant as of the date on which such Plan Compensation would otherwise be payable to the Participant. 5.02 The deferrals credited to the Participant's Bookkeeping Account shall also be credited earnings on a quarterly basis equal to the Moody's Seasoned Corporate Bond Rate for the last month of 5 Exhibit 10.4 each quarter on which earnings are applied plus three percent (3%) until such account value is distributed pursuant to Article VI hereof. Plan Compensation deferred shall be deemed to be invested and accruing earnings starting on the date the amounts deferred are credited to the Bookkeeping Account. 5.03 The Participant shall at all times have a nonforfeitable right to the value of his or her Bookkeeping Account attributable to his or her own deferrals under paragraph 4.01 of Article IV hereof plus interest credited thereon, with no right of offset by the Company. ARTICLE VI DISTRIBUTIONS ------------- 6.01 At the time of electing deferrals for each Plan Year, a Participant shall specify the amount to be deferred, and any other matter required to be specified by the Company on its Election Form. In addition, in his or her initial deferral election, Participant shall specify the payment method and commencement date (relative to the date of Separation from Service) which shall apply to all amounts deferred in the initial year and in all subsequent years. A separate designation of payment commencement time and method of distribution shall be made depending upon whether a Participant's Separation from Service occurs on or after attaining age 60 or before attaining age 60. The period of deferral shall end, and distribution of the value of a Participant's Bookkeeping Account shall begin on the date specified in the Participant's initial deferral election. The Participant may elect to receive distributions in substantially equal installments over a five (5) or ten (10) year period or in a lump sum, or in such other payment form as offered by the Company. In the case of any payment deferred beyond Separation from Service, interest at the rate specified in paragraph 5.02 of Article V shall be credited on all amounts remaining in the Bookkeeping Account of the Participant from which the payments are to be made. Notwithstanding the foregoing, a Participant may, after the initial deferral election, modify any election with respect to either time of payment commencement or the method of distribution without penalty so long as such change is made at least one (1) year before the payment commencement date previously elected; provided, however, the Named Fiduciary must make a determination that such subsequent modification in election would not have a detrimental effect on the tax consequences of benefits deferred hereunder or such subsequent modification will be disregarded. 6.02 In the event of a Participant's death before the payments have commenced hereunder, the Participant's Bookkeeping Account shall be distributed as soon as practicable after his or her death to his or her Beneficiary(ies) designated in accordance with Article VIII hereof in the manner selected on the Participant's Election Form. In the event of a 6 Exhibit 10.4 Participant's death after payments have commenced, any remaining amounts in the Participant's Bookkeeping Account shall be distributed to the Participant's Beneficiary(ies) in the same manner of distribution as was being followed at the time of his or her death. 6.03 Notwithstanding paragraphs 6.01 and 6.02 hereof, if the total amount in a Participant's Bookkeeping Account is Fifty Thousand ($50,000) Dollars or less, such Bookkeeping Account shall be distributed to him or her in full within thirty (30) days after Separation from Service or upon the occurrence of a Disability or shall be distributed in full to his or her Beneficiary upon his or her death. In the event that either the Named Fiduciary or the Committee determines, in their full discretion, that a Change in Control is likely, the Company will, effective automatically and concurrently with the Change in Control, deposit in one or more grantor trusts (within the meaning of Section 671 of the Internal Revenue Code of 1986) funds in an amount sufficient to pay Participant that amount which is the value of his or her Bookkeeping Account. 6.04 All distributions of a Participant's Bookkeeping Account hereunder shall be made in cash payments only and shall commence not later than January 1 of the first year following the Executive's attainment of age 65; provided, -------- however, notwithstanding the foregoing, any Participant who as of January 1, - - ------- 1994 had more than twenty (20) years of service with the Company must commence distribution not later than the January 1 following the year in which he or she attains age 65 or has a Separation from Service, whichever is later. 6.05 The Company shall have the right to deduct from all payments any federal, state, local or foreign taxes or other charges required by law to be withheld or elected by the Participant to be withheld with respect to such payments. 6.06 Notwithstanding any provision hereunder to the contrary, a Participant may take a distribution of all or a portion of his or her Bookkeeping Account in a manner inconsistent with his or her deferral election even though the Participant is not then suffering a financial hardship, as defined in paragraph 7.01 of Article VII hereof, provided that the distribution is reduced by ten percent (10%), to be adjusted upward or downward as required by law. The ten percent (10%) reduction shall be forfeited to the Company. ARTICLE VII HARDSHIP DISTRIBUTIONS ---------------------- 7.01 At the request of a Participant before complete distribution of his or her Bookkeeping Account, the Committee may, in its sole discretion, accelerate and pay all or part of the value of a Participant's Bookkeeping Account due under the Plan. Accelerated distributions at the request of the Participant or a Participant's Beneficiary may be allowed only in the event of a financial emergency beyond the Participant's or Beneficiary's 7 Exhibit 10.4 control due to unforeseeable circumstances and only if disallowance of a distribution would create a severe hardship for the Participant or Beneficiary. An accelerated distribution must be limited to only that amount necessary to relieve the financial emergency. ARTICLE VIII BENEFICIARY ----------- 8.01 A Participant shall, by completing the Beneficiary Designation Form, designate one or more Beneficiaries to receive benefits under the Plan payable in the event of his or her death before complete distribution of his or her Bookkeeping Account. If more than one Beneficiary is named, the share and/or precedence of each Beneficiary shall be indicated. A Participant shall have the right to change the Beneficiary by notifying the Named Fiduciary in the appropriate spaces of a revised Beneficiary Designation Form. However, no designation or change in designation of Beneficiary shall be effective until received, accepted and acknowledged by the Company. 8.02 The Committee shall be entitled to rely on the last Beneficiary Designation Form filed by the Participant and accepted by the Committee prior to his or her death. If the Committee has any doubt as to the proper Beneficiary to receive payments hereunder, the Committee shall have the right to direct the Company to withhold such payments until the matter is finally adjudicated. However, any payment made by the Company, in good faith and in accordance with the Plan and the directions of the Committee, shall fully discharge the Company and the Committee from all further obligations with respect to that payment. 8.03 In making any payments to or for the benefit of any minor or incompetent Beneficiary, the Committee, in its sole and absolute discretion, may direct the Company to make a distribution to a legal or natural guardian or other relative of a minor or court appointed committee of such incompetent. Alternatively, the Committee may direct the Company to make a payment to any adult with whom the minor or incompetent temporarily or permanently resides. The receipt by a guardian, committee, relative or other person shall be a complete discharge to the Company and the Committee. Neither the Committee nor the Company shall have any responsibility to see to the proper application of any payments so made. ARTICLE IX ADMINISTRATION OF THE PLAN -------------------------- 9.01 The Plan shall be administered by the Employee Benefits Committee as constituted and approved from time to time by the Board. Such persons shall serve at the pleasure of the Board. Participants in this Plan may serve as members of the Committee. 8 Exhibit 10.4 All resolutions or other actions taken by the Committee shall be by vote of a majority of those present at a meeting at which a majority of the members are present, or in writing by a majority of all the members at the time in office if they act without a meeting. 9.02 Subject to the terms of the Plan, the Committee shall, from time to time, establish rules, forms and procedures for the administration of the Plan. Except as herein otherwise expressly provided, the Committee shall have the exclusive right to interpret the Plan and to make, amend, interpret and enforce all rules adopted in connection with the Plan and to decide any and all matters arising hereunder or in connection with the administration of the Plan, and it shall endeavor to act, whether by general rules or by particular decisions, so as not to discriminate in favor of or against any person. The decisions, actions and records of the Committee shall be conclusive and binding upon the Company and all persons having or claiming to have any right or interest in or under the Plan. 9.03 In the administration of the Plan, the Committee may, from time to time, employ agents and delegate to them such administrative duties as it deems appropriate and may, from time to time, consult with counsel who may be counsel to the Company. 9.04 The members of the Committee and the officers and directors of the Company shall be entitled to rely on all certificates and reports made by any duly appointed accountants, and on all opinions given by any duly appointed legal counsel, which legal counsel may be counsel for the Company. 9.05 To enable the Committee to perform its functions, the Company shall supply full and timely information to the Committee on all matters relating to the compensation of Participants and the date and circumstances of the Separation from Service or death or Disability of a Participant and such other pertinent information as the Committee may reasonably require. 9.06 The Company shall indemnify and save harmless each member of the Committee against any and all expenses and liabilities arising out of his or her membership on the Committee. Expenses against which a member of the Committee shall be indemnified hereunder shall include, without limitation, the amount of any settlement or judgment, costs, counsel fees, and related charges reasonably incurred in connection with a claim asserted, or a proceeding brought or settlement thereof. The foregoing right of indemnification shall be in addition to any other rights to which any such member of the Committee may be entitled as a matter of law. 9 Exhibit 10.4 ARTICLE X CLAIMS PROCEDURE ---------------- 10.01 Benefits shall be paid in accordance with the provisions of this instrument. The Participant, or a Beneficiary or any other person claiming through the Participant, shall make a written request for benefits under this Plan. This written claim shall be mailed or delivered to the Named Fiduciary who shall review such claim. 10.02 If the claim is denied, in full or in part, the Named Fiduciary shall provide a written notice within forty-five (45) days setting forth the specific reasons for denial, and any additional material or information necessary to perfect the claim, and an explanation of why such material or information is necessary, and appropriate information and explanation of the steps to be taken if a review of the denial is desired. 10.03 If the claim is denied and a review by the full Committee is desired, the Participant (or Beneficiary) shall notify the Named Fiduciary in writing within thirty (30) days (a claim shall be deemed denied if the Named Fiduciary does not take any action within the aforesaid forty-five (45) day period) after receipt of the written notice of denial. In requesting a review, the Participant or his or her Beneficiary may request a review of the Plan document or other pertinent documents, may submit any written issues and comments, and may request that a hearing be held, but the decision to hold a hearing shall be within the sole discretion of the Committee. 10.04 The decision on the review of the denied claim shall be rendered by the Committee within thirty (30) days after the receipt of the request for review (if a hearing is not held) or within sixty (60) days after the hearing if one is held. The decision shall be written and shall state the specific reasons for the decision including reference to specific provisions of the Plan on which the decision is based. 10.05 If, after the review process, a claimant seeks further redress, the subject of the dispute shall be submitted to arbitration in Los Angeles, California, in accordance with the Commercial Rules of the American Arbitration Association then in effect, which arbitration shall be the exclusive remedy of the parties hereto. The resulting arbitration award shall be deemed a final order of a court having jurisdiction over the subject matter and shall not be appealable. All fees and expenses connected with the arbitration proceeding, other than counsel fees incurred by either party, if any, shall be shared equally by both parties. 10 Exhibit 10.4 ARTICLE XI AMENDMENT AND TERMINATION ------------------------- 11.01 The Company, by action of the Board, may amend or modify this Plan from time to time or may terminate the Plan if it deems appropriate; provided that no such amendment, modification or termination shall in any way reduce the vested portion of affected Participants' (or Beneficiaries') Bookkeeping Accounts measured as of the date the amendment, modification or termination is made, or, if later, the effective date of such actions; and, provided further, no amendment or modification which would reduce the interest rate below Moody's as set forth in paragraph 5.02 of Article V hereof, or which would assess costs or fees to Participants, may be made without the unanimous consent of all Participants in the Plan. ARTICLE XII MISCELLANEOUS ------------- 12.01 The Company's obligation under the Plan shall in every case be an unfunded and unsecured promise to pay. Participants' rights as to benefits hereunder shall be no greater than that of general, unsecured creditors of the Company. The Company may establish one or more grantor trusts as described in Section 671 of the Internal Revenue Code of 1986, although the Company shall not be obligated under any circumstances to fund its financial obligations under the Plan. Any assets which the Company may acquire or set aside to cover its financial liabilities are and must remain general assets of the Company and such assets as well as any assets set aside in any grantor trust shall be subject to the claims of its general creditors. Neither the Company nor the Plan gives the Participant any beneficial ownership interest in any asset of the Company. All rights of ownership in any such assets are and remain in the Company. 12.02 Except insofar as permitted by applicable law, no sale, transfer, alienation, assignment, pledge, collateralization or attachment of any benefits under the Plan shall be valid or recognized by the Company. Neither the Participant, his or her spouse, or designated Beneficiary shall have any power to hypothecate, mortgage, commute, modify or otherwise encumber in advance of any of the benefits payable hereunder, nor shall any of said benefits be subject to seizure for the payment of any debts, judgments, alimony maintenance, owed by the Participant or his Beneficiary, or be transferable by operation of law in the event of bankruptcy, insolvency, or otherwise. Notwithstanding the foregoing, the Company may, if the Committee so determines in its sole discretion, follow the terms of any court order issued in connection with any domestic relations proceeding including but not limited to marital dissolution or child support. 11 Exhibit 10.4 12.03 The Plan shall be binding upon the Company, its assigns, and any successor company which shall succeed to substantially all of its assets and business through merger, acquisition or consolidation, and upon an Executive, his or her Beneficiary, assigns, heirs, executors and administrators. 12.04 The terms and conditions of the Plan shall not be deemed to constitute a contract of employment between the Company and an Executive. Nothing in this Plan shall of itself be deemed to give an Executive the right to be retained in the service of the Company or to interfere with any right of the Company to discipline or discharge the Executive at any time. 12.05 An Executive will cooperate with the Company by furnishing any and all information reasonably requested by the Company and take such other actions as may be requested in order to facilitate the administration of the Plan and the payment of benefits hereunder. 12.06 In case any provisions of this Plan shall be found illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but the Plan shall be construed and enforced as if such illegal and invalid provision had never been included herein. 12.07 Any notice which shall be or may be given under the Plan or an Election Form shall be in writing and shall be mailed by United States mail, postage prepaid. If notice is to be given to the Company, such notice shall be addressed to the Company at 444 South Flower Street, Suite 2100, Los Angeles, California 90071-2922, marked for the attention of the Corporate Secretary of the Company or, if notice to an Executive, addressed to the address shown on such Executive's Election Form or the last known address on the Company's personnel records. Any notice or filing required or permitted to be given to a Participant under this Plan shall be sufficient if in writing and sent by facsimile, hand delivered, or sent by mail, to the last known address of the Participant. Any party may, from time to time, change the address to which notices shall be mailed by giving written notice of such new address. 12.08 The interest in the benefits hereunder of a spouse of a Participant who has predeceased the Participant shall automatically pass to the Participant and shall not be transferable by such spouse in any manner, including but not limited to such spouse's will, nor shall such interest pass under the laws of intestate succession. 12.09 If, for any reason, all or any portion of a Participant's benefit under this Plan becomes taxable to the Participant prior to receipt, a Participant may petition the Committee for a distribution of funds sufficient to meet the Participant's tax liability (including additions to tax, penalties 12 Exhibit 10.4 and interest). Upon the grant of such a petition, which grant shall not be unreasonably withheld, the Company shall distribute to the Participant immediately available funds in an amount equal to that Participant's federal, state and local tax liability associated with such taxation, which liability shall be measured by using that Participant's then current highest federal, state and local marginal tax rate, plus the rates or amounts for the applicable additions to tax, penalties and interest. This distribution shall include an additional amount to "gross up" the tax liability distribution to include all applicable taxes on the tax liability distribution and the grossed up amount. If the petition is granted, the tax liability distribution (including gross-up) shall be made within ninety (90) days of the date when the Participant's petition is granted. Such a distribution shall affect and reduce the benefits to be paid under Articles VI or VII hereof. 12.10 The benefits provided for a Participant and Participant's Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program for employees of the Company. The Plan shall supplement and shall not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided. 12.11 The payment of benefits under the Plan to a Participant or Beneficiary shall fully and completely discharge the Company and the Committee from all further obligations under this Plan with respect to a Participant, and that Participant's Election Form shall terminate upon such full payment of benefits. 12.12 Without limiting the provisions of Section 9.06 above, if any action at law or in equity is necessary by a Participant or Beneficiary to enforce the terms of the Plan, the Participant or Beneficiary shall be entitled to recover reasonable attorneys' fees, costs and necessary disbursements in addition to any other relief to which that party may be entitled. 12.13 Titles and headings of the Articles of the Plan are included for ease of reference only and are not to be used for the purpose of construing any portion or provision of the Plan document. 12.14 To the extent not preempted by Federal law, this Plan shall be governed by and construed pursuant to the laws of the State of California. 12.15 Any Election Form may be executed in one or more counterparts, each of which is legally binding and enforceable. AS ADOPTED BY THE BOARD OF DIRECTORS OF ZERO CORPORATION OCTOBER 20, 1993 13 Exhibit 10.4
EX-10.5 5 MANAGEMENT BONUS PLAN ZERO CORPORATION MANAGEMENT BONUS PLAN I. Purpose The purpose of the ZERO Corporation Management Bonus Plan is to encourage management of ZERO Corporation ("ZERO") to strongly perform for the benefit of ZERO stockholders and to fairly compensate management for performance. II. Target Performance Each management employee who is a participant in the ZERO Management Bonus Plan at the beginning of each fiscal year, will be assigned a "Target Bonus" by the President of ZERO which shall be a percentage of the participant's salary. The Target Bonus of the President shall be assigned by the Compensation Committee and approved by the Board Directors. III. Factors to Determine Award of Bonus The award of Bonus shall be determined by three factors measured during a fiscal year of ZERO: a. Net Income - Actual Net Income for the plan fiscal year calculated as a percentage of the Plan I forecast as presented by management to the Board of Directors and approved by the Board of Directors at its April meeting, in each case calculated pre-bonus (the "% of Plan I"). b. Stockholder Value - The percentage increase in stockholder value during the plan fiscal year measured by the Common Stock price of ZERO on the New York Stock Exchange on the last day of January, February and March of the preceding fiscal year and the plan fiscal year, plus cash dividends paid during the fiscal year, and adjusted for stock splits and stock dividends (the "Increase in Stockholder Value"). c. Tangible Stockholders' Equity - The percentage increase in tangible Stockholders' Equity during the plan fiscal year measured by Stockholders' Equity, less goodwill, reflected on the books of ZERO on the last day of the preceding fiscal year and on the last day of the plan fiscal year (the "Increase in Stockholders' Equity"). For purposes of these calculations, the public issuance or repurchase of Common Stock (except normal purchases or sales pursuant to ZERO's employee stock purchase or stock option plans as approved by stockholders) and goodwill resulting from an acquisition shall be excluded only from the first year that they are reflected on the financial statements. Exhibit 10.5 IV. Weight of Factors to Determine Bonus In connection with the award of a Bonus, the factors set forth in III above shall have the following weights: a. % of Plan I = 60 points b. Increase in Stockholder Value = 15 points c. Increase in Stockholders' Equity = 25 points If, after calculation of the factors, 100 points are earned, then 100% of the Target Bonus will be paid. (Likewise, if 75 points are earned, 75% of the Target Bonus will be paid; if 125 points are earned, 125% of the Target Bonus will be paid.) V. Calculations a. % of Plan I - An award of 60 points will be made if 95% of Plan I is achieved. For each 1 percentage point achieved above or below 95% of Plan I, there will be added or subtracted 5 points. No points will be awarded unless at least 55% of Plan I is achieved. b. Stockholder Value - An award of 15 points will be made if an increase of 7.5% of Stockholder Value is achieved. For each 1 percentage point achieved above or below 7.5%, there will be added or subtracted 2.5 points. In no event will the number of points awarded be less than zero. c. Stockholders' Equity - An award of 25 points will be made if an increase of 5% in Stockholders' Equity is achieved. For each 1 percentage point achieved above or below 5%, there will be added or subtracted 5 points. In no event will the number of points awarded be less than zero. VI. Unusual Circumstances In the event of unusual circumstances during the plan fiscal year, such as extraordinary income or expense or dramatic market downturns, the Compensation Committee of the Board of Directors shall reserve to itself the power to modify the factors described above to achieve fairness, which modification shall be subject to approval of the Board of Directors. Exhibit 10.5 EX-10.9 6 DESCRIPTION OF SERP DESCRIPTION OF ZERO CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN ADOPTED JANUARY 19, 1994 The purpose of the Supplemental Executive Retirement Plan adopted January 19, 1994 (the "Plan") is to restore benefits to certain executive employees of the Corporation under the ZERO Corporation Pension Plan (the "Pension Plan") where benefits are lost to such executive employees as a result of the enactment by the Internal Revenue Service of Section 401(a)(17) of the Internal Revenue Code (the "Code"). The Plan is administered and interpreted by the Employee Benefits Committee of the Board of Directors (the "Committee"), which Committee establishes rules, forms and procedures for the administration of the Plan, has the exclusive right to interpret the Plan and to make, amend, and enforce all provisions of the Plan. Eligible employees include executive employees of the Company, its divisions and subsidiaries. Each participant under the Plan is entitled to contribution from the Company in an amount equal to the reduction in the contributions to the account of the participant under the Pension Plan as a result of contribution limitations established by Sections 415 and/or 401(a)(17) of the Code. Company contributions are made on the date which is the earlier of the date of separation of employment from the Company or on December 31 of each year. Exhibit 10.9 EX-10.10 7 DESCRIPTION OF SERP AND LIF DESCRIPTION OF ZERO CORPORATION CONTRACT AND JOINT SUPPLEMENTAL LIFE INSURANCE PLAN ADOPTED APRIL 22, 1994 The Company and certain of its executive officers and other key employees of the Company, its divisions and subsidiaries, have entered into Contracts under the Joint Supplemental Life Insurance Plan (the "Plan") under which the executive receives an insurance benefit and the cash value of the life insurance policy on the life of the executive. The Company pays a portion of the premium and the executive also pays a portion of the premium equal to the economic benefit of the insurance the executive receives as established by the Internal Revenue Service. The executive owns the policy under the Plan but must repay any amounts advanced by the Company. The obligation of the executive is secured by a collateral assignment of the cash value and death proceeds under the policy of insurance. Exhibit 10.10 EX-13 8 ANNUAL REPORT FIVE-YEAR CONSOLIDATED FINANCIAL HIGHLIGHTS (In $000s except per share data)
Year Ended March 31, 1994 1993 1992 1991 1990 Net Sales $171,821 $160,466 $160,279 $189,479 $196,928 Net Income 12,851 11,635 9,695 10,761 16,114 Working Capital 66,980 59,576 56,223 56,544 57,434 Total Assets 158,734 153,871 150,479 156,680 147,526 Stockholders' Equity 136,477 128,671 123,065 119,286 115,609 Long-term Obligations -- -- 1,172 2,429 3,259 Return on Average Stockholders' Equity 9.8% 9.3% 8.1% 9.0% 14.6% Current Ratio 5.0:1 3.9:1 3.8:1 3.0:1 3.6:1 Per Share Data: Earnings $0.81 $0.74 $0.62 $0.68 $1.02 Dividends Paid 0.40 0.40 0.40 0.40 0.39 Stockholders' Equity 8.57 8.15 7.83 7.61 7.32
Exhibit 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Management's Discussion and Analysis of Results of Operations and Financial Condition includes the Five-Year Consolidated Financial Highlights on the inside front cover and the following additional information. RESULTS OF OPERATIONS For the years ended March 31, 1994, 1993 and 1992, Net Income was $12,851,000, $11,635,000 and $9,695,000 and Earnings Per Share were $.81, $.74 and $.62, respectively. Net Sales in fiscal 1994 grew 7.1% over the amount reported in fiscal 1993. This compares to a minor sales growth in 1993 when compared to 1992. The increase in 1994 was primarily attributable to higher sales applicable to the communication/instrumentation, data processing/peripherals and the airline/air cargo markets, as well as the acquisition of a case hardware business in August 1993. In fiscal 1993, similar growth in the communication/ instrumentation and data processing/peripherals markets was offset by weakness in the airline/air cargo, consumer and government/military markets. Cost of sales, as a percentage of Net Sales, was 65.2% in 1994 versus 64.8% in 1993 and 66.5% in 1992. Over the past several years, the Company has benefited from cost-containment efforts, including the relocation and restructuring of several facilities, and stable material costs, partially offset by changes in product mix and pricing strategies. Selling and administrative expenses, as a percentage of Net Sales, decreased to 20.9% in 1994 from 21.6% in 1993 and 22.1% in 1992 primarily as a result of net sales fluctuations and cost-containment efforts. EFFECT OF INFLATION - Price increases have not contributed significantly to increases in the Company's Net Sales. The impact of rising costs of labor, material and supplies, and equipment has been mitigated by changes in product design, overall manufacturing and purchasing efficiencies and effective management and control of operating expenses. LIQUIDITY AND CAPITAL RESOURCES - At March 31, 1994, the Company's primary source of liquidity was $33,368,000 of cash and short-term investments. Working capital increased to $66,980,000 from $59,576,000 at March 31, 1993 as a result of higher earnings and operating efficiencies. During 1994, the Company repaid the remaining portion of its outstanding long-term debt. Cash provided by operating activities was $14,817,000 in 1994, $19,299,000 in 1993 and $17,311,000 in 1992, while property additions during those years were $4,160,000, $5,236,000 and $7,176,000, respectively. The higher property additions during 1992 were the result of plant relocations. Management believes cash from operations, together with the Company's short-term investments and ability to obtain financing, will provide sufficient funds to finance current and forecasted operations, including potential acquisitions. The Company will continue to invest its cash reserves in liquid, lower-risk investments. CONTINGENCIES - The Company has been notified by governmental agencies that it may be potentially responsible for costs associated with the investigation and remediation of eight sites where soil and/or groundwater contamination is alleged. The Company has responded to these notices and is working with the governmental agencies and other parties involved to resolve these matters. The Company has provided reserves to cover those costs which can be reasonably estimated. Refer to Note 7 of Notes to Consolidated Financial Statements for further discussion of environmental and other contingencies. Exhibit 13 STATEMENTS OF CONSOLIDATED INCOME
Year Ended March 31, 1994 1993 1992 Net Sales $171,821,000 $160,466,000 $160,279,000 Interest Income 984,000 902,000 1,180,000 Other Income 1,078,000 1,204,000 1,839,000 ------------ ------------ ------------ Total Revenue 173,883,000 162,572,000 163,298,000 ------------ ------------ ------------ Costs and Expenses Cost of sales (exclusive of depreciation) 111,985,000 104,044,000 106,512,000 Selling and administrative expenses 35,984,000 34,635,000 35,345,000 Depreciation 4,470,000 4,372,000 4,625,000 Interest expense 481,000 519,000 756,000 ------------ ------------ ------------ Total Costs and Expenses 152,920,000 143,570,000 147,238,000 ------------ ------------ ------------ Income Before Income Taxes 20,963,000 19,002,000 16,060,000 Income Taxes 8,112,000 7,367,000 6,365,000 ------------ ----------- ----------- Net Income $12,851,000 $11,635,000 $9,695,000 ============ =========== =========== Earnings Per Common Share $0.81 $0.74 $0.62 ============ =========== ===========
The notes to consolidated financial statements are an integral part of these statements. Exhibit 13 CONSOLIDATED BALANCE SHEETS
MARCH 31, 1994 1993 ASSETS Current Assets Cash and cash equivalents $14,843,000 $9,546,000 Short-term investments 18,525,000 20,865,000 Receivables (less allowances for doubtful accounts of $829,000 in 1994 and $886,000 in 1993) 24,487,000 23,164,000 Inventories Raw materials and supplies 12,000,000 11,657,000 Work in process 6,589,000 6,530,000 Finished goods 3,253,000 3,481,000 Other (including deferred tax benefit of $2,979,000 in 1994 and $3,919,000 in 1993) 4,216,000 4,829,000 ------------ ------------ Total Current Assets 83,913,000 80,072,000 ------------ ------------ Net Property, Plant and Equipment 29,863,000 29,005,000 Goodwill (less accumulated amortization of $8,533,000 in 1994 and $7,537,000 in 1993) 30,649,000 31,647,000 Other Assets 14,309,000 13,147,000 ------------ ------------ Total Assets $158,734,000 $153,871,000 ============ ============
The notes to consolidated financial statements are an integral part of these statements. Exhibit 13 CONSOLIDATED BALANCE SHEETS
MARCH 31, 1994 1993 LIABILITIES Current Liabilities Current portion of long-term debt $ -- $197,000 Accounts payable 6,039,000 5,054,000 Income taxes payable 384,000 2,260,000 Accrued liabilities Other taxes 468,000 506,000 Wages and commissions 5,375,000 6,542,000 Workers' compensation 980,000 1,269,000 Other 3,687,000 4,668,000 ------------ ------------ Total Current Liabilities 16,933,000 20,496,000 ------------ ------------ Non-Current Liabilities (including deferred compensation of $4,846,000 in 1994 and $4,332,000 in 1993) 5,324,000 4,704,000 STOCKHOLDERS' EQUITY Preferred stock - authorized 1,000,000 shares of $.01 par value; none issued Common stock - authorized 30,000,000 shares of $.01 par value; outstanding shares, 16,079,500 in 1994 and 15,953,203 in 1993 161,000 160,000 Additional paid-in capital 30,605,000 28,273,000 Retained earnings 107,509,000 102,020,000 ------------ ------------ 138,275,000 130,453,000 Foreign currency translation adjustments (124,000) (105,000) Treasury stock (162,390 shares in 1994 and 162,700 shares in 1993), at cost (1,674,000) (1,677,000) ------------ ------------ Total Stockholders' Equity 136,477,000 128,671,000 ------------ ------------ Total Liabilities and Stockholders' Equity $158,734,000 $153,871,000 ============ ============
The notes to consolidated financial statements are an integral part of these statements. Exhibit 13 STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
Foreign Additional Currency Oustanding Common Paid-in Retained Translation Treasury Shares Stock Capital Earnings Adjustments Stock Balance at March 31, 1991 15,843,004 $158,000 $26,632,000 $93,629,000 $544,000 ($1,677,000) Net income for the year -- -- -- 9,695,000 -- -- Cash dividends declared - $.40 per share -- -- -- (6,281,000) -- -- Exercise of stock options 32,283 1,000 604,000 (249,000) -- -- Foreign currency translation adjustments -- -- -- -- 9,000 -- ---------- -------- ----------- ------------ --------- ----------- Balance at March 31, 1992 15,875,287 159,000 27,236,000 96,794,000 553,000 (1,677,000) Net income for the year -- -- -- 11,635,000 -- -- Cash dividends declared - $.40 per share -- -- -- (6,289,000) -- -- Exercise of stock options 77,916 1,000 1,037,000 (120,000) -- -- Foreign currency translation adjustments -- -- -- -- (658,000) -- ---------- -------- ----------- ------------ --------- ----------- Balance at March 31, 1993 15,953,203 160,000 28,273,000 102,020,000 (105,000) (1,677,000) Net income for the year -- -- -- 12,851,000 -- -- Cash dividends declared - $.40 per share -- -- -- (6,340,000) -- -- Exercise of stock options and issuance of treasury stock 126,297 1,000 2,332,000 (1,005,000) -- 3,000 Foreign currency translation adjustments and other -- -- -- (17,000) (19,000) -- ---------- -------- ----------- ------------ --------- ----------- Balance at March 31, 1994 16,079,500 $161,000 $30,605,000 $107,509,000 ($124,000) ($1,674,000) ========== ======== =========== ============ ========= ===========
The notes to consolidated financial statements are an integral part of these statements. Exhibit 13 STATEMENTS OF CONSOLIDATED CASH FLOWS
Year Ended March 31, 1994 1993 1992 CASH FLOW FROM OPERATING ACTIVITIES: Net income $12,851,000 $11,635,000 $9,695,000 Adjustments to reconcile net income to net cash provided by operating activities : Depreciation and amortization 5,466,000 5,366,000 5,666,000 Changes in operating assets and liabilities net of effect of business acquisitions: Decrease (increase) in accounts receivable (873,000) 394,000 5,708,000 Decrease in inventories 226,000 1,801,000 5,028,000 Increase in other non-current assets (1,162,000) (794,000) (828,000) Increase (decrease) in accounts payable 985,000 1,035,000 (926,000) Increase (decrease) in accrued liabilities (4,021,000) 500,000 (7,619,000) Increase (decrease) in other non-current liabilities 711,000 (1,248,000) 112,000 Other 634,000 610,000 475,000 ----------- ----------- ----------- Net cash provided by operating activities 14,817,000 19,299,000 17,311,000 ----------- ----------- ----------- CASH FLOW FROM INVESTING ACTIVITIES: (Purchases) sales of short-term investments, net 2,010,000 (10,476,000) 277,000 Purchase of non-cash assets of acquired business (2,100,000) --- --- Expenditures for property, plant and equipment (4,160,000) (5,236,000) (7,176,000) Other 280,000 631,000 893,000 ----------- ----------- ----------- Net cash required by investing activities (3,970,000) (15,081,000) (6,006,000) ----------- ----------- ----------- CASH FLOW FROM FINANCING ACTIVITIES: Cash dividends paid (6,340,000) (6,289,000) (6,281,000) Payments of long-term debt (197,000) (2,149,000) (1,522,000) Exercise of stock options 1,331,000 918,000 356,000 Other (including effect of exchange rate changes) (344,000) (462,000) (17,000) ----------- ---------- ----------- Net cash required by financing activities (5,550,000) (7,982,000) (7,464,000) ----------- ---------- ----------- Net increase (decrease) in cash and cash equivalents 5,297,000 (3,764,000) 3,841,000 Cash and cash equivalents at beginning of period 9,546,000 13,310,000 9,469,000 ----------- ---------- ----------- Cash and cash equivalents at end of period $14,843,000 $9,546,000 $13,310,000 =========== ========== ===========
The notes to consolidated financial statements are an integral part of these statements. Exhibit 13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 Significant Accounting Policies: Principles of Consolidation - The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated. Cash Equivalents - Cash equivalents include mutual funds and other highly liquid investments purchased with maturities of three months or less. As of March 31, 1994 and 1993, the carrying values of cash equivalents approximated fair market values. Short-Term Investments - Short-term investments at March 31, 1994 and 1993 consisted primarily of treasury notes and municipal bonds. Municipal bonds are carried at the lower of aggregate cost (computed on a first-in, first-out basis) or market. Based on quoted market prices, the aggregate fair value of short-term investments as of March 31, 1994 and 1993 was $18,550,000 and $20,944,000, respectively. Inventories - Substantially all of the Company's inventories are stated at the lower of cost (first-in, first-out or average) or market. Property, Plant and Equipment - Property, plant and equipment is recorded at cost. Depreciation is computed principally using the straight-line method over the estimated useful lives of the assets. Capital leases and leasehold improvements are amortized over the life of the related assets or the life of the lease, whichever is shorter. Goodwill - Costs in excess of the value of net assets acquired in purchase transactions are being amortized over periods of up to 40 years. Earnings per Common Share - Earnings per common share are computed using the weighted average number of shares of common stock and common stock equivalents (stock options) outstanding, which for 1994, 1993 and 1992 was 15,958,366, 15,791,972 and 15,733,093, respectively. Foreign Currency Translation - Assets and liabilities of foreign subsidiaries are translated into U.S. dollars at the year-end exchange rate. Gains and losses from this translation are being accumulated in stockholders' equity. The related income statement is translated at the average exchange rate for the year. Supplemental Cash Flow Information - For the years ended March 31, 1994, 1993 and 1992 cash paid for interest was $20,000, $157,000 and $299,000 and cash paid for income taxes was $8,588,000, $6,152,000 and $5,809,000, respectively. NOTE 2 Property, Plant and Equipment: Property, plant and equipment and accumulated depreciation at March 31, 1994 and 1993 consisted of:
Estimated Useful Lives 1994 1993 Land $ 2,780,000 $ 2,780,000 Buildings/land improvements 10-40 years 16,465,000 15,809,000 Machinery/equipment 3-15 years 50,696,000 48,781,000 Leasehold improvements 5-9 years 3,725,000 3,351,000 ----------- ----------- Total 73,666,000 70,721,000 Less accumulated depreciation 43,803,000 41,716,000 ----------- ----------- Net property, plant and equipment $29,863,000 $29,005,000 =========== ===========
NOTE 3 Employee Benefits: The Company has a defined contribution pension plan which, except for employees covered by collective bargaining agreements, covers all employees of U.S. divisions which have elected to participate and who have completed at least one year of service. The pension plan cost, which is fully funded on a current basis, is based upon percentages of eligible employees' compensation. The Company's contributions to the plan aggregated $1,460,000, $1,253,000 and $1,331,000 in 1994, 1993 and 1992, respectively. The Company has nonqualified deferred compensation plans covering key employees who can elect to have a portion of their compensation deferred. The amounts set aside earn interest at rates generally higher than the average prime interest rate compounded semi-annually. Interest expense accrued on the participants' accounts totalled $463,000, $356,000 and $437,000 in 1994, 1993 and 1992, respectively. Generally, payment of a participant's account balance will be deferred until death, disability or retirement. NOTE 4 Common Stock : The Company has a nonqualified and incentive stock option plan which provides for the granting to directors, officers and other key employees of options to purchase shares of the Company's stock at a price not less than the fair market value on the date of grant. Options are granted for terms of five years and are exercisable in annual installments (generally one-third of the total grant) commencing one year from date of grant, on a cumulative basis. The Company's stock option plan also provides for the granting of stock appreciation rights (SARs) in tandem with options. The SARs entitle a holder to receive an amount equal to the excess of the fair market value of the Company's common stock on the date of exercise over the option price. The exercise of SARs automatically cancels an equal number of related options. Compensation expense recognized in connection with SARs during the years ended March 31, 1994, 1993 and 1992 was not material. Exhibit 13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Changes in the number of shares subject to options during the three years ended March 31, 1994, are summarized as follows:
1994 1993 1992 Outstanding at beginning of year 793,593 689,388 592,310 Options granted (1994, $13.56 to $13.75 per share; 1993, $11.31 to $11.81 per share; 1992, $11.56 to $14.38 per share) 219,800 245,700 208,550 Options exercised (1994, $10.38 to $15.25 per share; 1993 and 1992, $10.38 to $12.24 per share) (195,626) (86,280) (48,933) Options cancelled as a result of SARs exercised (1994, $12.24 per share; 1993, none; 1992, $12.04 per share) (1,142) --- (11,875) Options cancelled or expired (1994, $10.38 to $17.50 per share; 1993 and 1992, $10.38 to $15.25 per share) (44,625) (55,215) (50,664) ------- ------- ------- Outstanding at end of year ($10.38 to $17.50 per share) 772,000 793,593 689,388 ======= ======= =======
Of the total outstanding options at March 31, 1994 and 1993, options for 320,750 and 330,029 shares, respectively, were exercisable; and options for 223,751, 154,233 and 73,266 shares will become exercisable during the fiscal years ending March 31, 1995 through 1997, respectively. At March 31, 1994, options for 38,329 shares remained available for future grants. NOTE 5 Income Taxes: Effective April 1, 1993, the Company adopted SFAS No. 109, "Accounting for Income Taxes." The adoption of SFAS 109 changed the Company's method of accounting for income taxes from the deferred approach (APB 11) to an asset and liability approach. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting basis and tax basis of assets and liabilities. Financial statements for prior years have not been restated and the cumulative effect of the accounting change was not material. The provision for income taxes is summarized as follows:
1994 1993 1992 Current: Federal $6,451,000 $5,744,000 $3,979,000 State 1,332,000 1,552,000 887,000 Other (48,000) (105,000) 98,000 Deferred: Federal - Plant relocation --- 209,000 1,651,000 - Other reserves and accruals 54,000 (210,000) (601,000) - Other 221,000 53,000 263,000 ---------- ---------- ---------- 275,000 52,000 1,313,000 ---------- ---------- ---------- State 102,000 19,000 368,000 Other --- 105,000 (280,000) ---------- ---------- ---------- Total $8,112,000 $7,367,000 $6,365,000 ========== ========== ==========
Deferred tax assets and liabilities were comprised of the following as of March 31, 1994:
Deferred Tax Deferred Tax Assets Liabilities Depreciation/amortization $2,300,000 Provision for estimated expenses $1,597,000 Employee benefit plans 3,210,000 State and foreign taxes 391,000 Other 1,065,000 ---------- ---------- Total $5,198,000 $3,365,000 ========== ==========
A reconciliation between the income taxes computed at the Federal statutory rate and the provision for income taxes is as follows:
1994 1993 1992 Income taxes computed at the Federal statutory rate $7,337,000 $6,461,000 $5,460,000 State income taxes net of Federal income tax benefit 932,000 1,037,000 828,000 Tax exempt income (244,000) (154,000) (210,000) Other 87,000 23,000 287,000 ---------- ---------- ---------- Total provision $8,112,000 $7,367,000 $6,365,000 ========== ========== ========== Effective income tax rate 38.7% 38.8% 39.6% ==== ==== ====
Note 6 Commitments: Future minimum lease payments under operating leases at March 31, 1994 are summarized as follows: Year Ending March 31: 1995 $2,181,000 1996 1,885,000 1997 1,474,000 1998 1,174,000 1999 1,174,000 thereafter 3,935,000 ----------- Total $11,823,000
=========== Rental expense under operating leases was $2,141,000, $2,390,000 and $2,525,000 for 1994, 1993 and 1992, respectively. Obligations under capital leases at March 31, 1994 were not material. NOTE 7 Contingent Liabilities: Environmental Matters - The Company has been identified as a potentially responsible party (PRP) by various Federal and State authorities for cleanup at eight sites, the most significant being in Burbank, California referred to as the Glendale North Operable Unit of the San Fernando Valley Superfund Site (the Site). In March 1994, the Company, along with twenty-three other PRPs, entered into a consent decree with the U.S. Environmental Protection Agency relating to the remedial design work necessary for implementing a groundwater extraction and treatment system for the Site. The current estimate for such remedial design work is approximately $3.6 million of which the Company's current share is approximately $330,000. The Company has provided reserves for its share of the remedial design costs for the Site and other cleanup costs associated with the other sites to the extent they could be reasonably estimated. However, the Company's ultimate liability related to these environmental matters mentioned above will be dependent upon a variety of factors including changes in the designs and costs of remediation systems, and the addition or elimination of participating PRPs, and therefore cannot be reasonably estimated at this time. The Company has also filed claims and commenced litigation against certain of its insurance carriers for recovery of expenditures. Other Matters - The Company has responded to an administrative subpoena received from the U.S. Government General Services Administration (GSA), Office of Inspector General, seeking documents related to certain GSA contracts of a division of the Company. The matter is in a preliminary stage and the Company is unable to accurately assess the situation further at this time; however, the Company believes that the subpoena was directed to an examination of freight charges under the contracts. The Company is subject to other legal proceedings that arise in the ordinary course of its business activities. In the opinion of management, any liability that may result from the resolution of these matters will not have a material adverse effect on its financial statements. Exhibit 13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 8 Segment Information: Business segment information as of and for the years ended March 31, 1994, 1993 and 1992 is as follows:
1994 1993 1992 Encl. and Encl. and Encl. and (In $000s) Accessories Other Total Accessories Other Total Accessories Other Total Sales $141,754 $30,067 $171,821 $135,208 $25,258 $160,466 $132,031 $28,248 $160,279 ======== ======= ======== ======== ======= ======== ======== ======= ======== Operating profit 21,380 2,001 23,381 19,181 2,018 21,199 15,461 2,983 18,444 ======== ======= ======= ======= ======== ======= General corporate income (expenses), net (1,937) (1,678) (1,628) Interest expense (481) (519) (756) -------- ------ ------- Income before taxes $20,963 $19,002 $16,060 ======== ======= ======= Identifiable assets $ 93,907 $16,715 $110,622 $ 94,809 $16,772 $111,581 $ 96,557 $18,553 $115,110 ======== ======= ======== ======= ======== ======= Corporate assets 48,112 42,290 35,369 -------- -------- -------- Total assets $158,734 $153,871 $150,479 ======== ======== ======== Depreciation $ 3,563 $ 907 $ 4,470 $ 3,479 $ 893 $ 4,372 $ 3,786 $ 839 $4,625 ======== ======= ======== ======== ====== ======== ======== ====== ======== Capital expenditures $ 3,811 $ 349 $ 4,160 $ 4,762 $ 474 $ 5,236 $ 6,435 $ 741 $ 7,176 ======== ======= ======== ======== ====== ======== ======== ====== ========
The Company's business primarily consists of enclosures and accessories including the design, manufacture and sale of metal and plastic enclosures, cabinets, instrument cases, aluminum luggage, camera cases, industrial carrying cases, cargo enclosures, card cages for printed circuit boards, as well as precision slides, blowers, fans, cooling systems and wire wrap services and other similar products. The Company also manufactures and sells thermoformed plastic parts, metal stampings, case hardware, aircraft cargo hardware, food service containers and other custom metal products. Sales under United States Government contracts and subcontracts accounted for approximately 12%, 15% and 18% of total sales in 1994, 1993 and 1992, respectively. NOTE 9 Quarterly Results of Operations (unaudited): The following is a summary of the unaudited quarterly results of operations for the two years ended March 31, 1994:
Total Gross Income Before Net Earnings Per Quarter Ended: Revenues Profit Income Taxes Income Common Share 1994 March 31, 1994 $44,984,000 $15,285,000 $5,517,000 $3,514,000 $0.22 December 31, 1993 42,611,000 13,855,000 4,774,000 2,885,000 0.18 September 30, 1993 45,009,000 15,059,000 5,780,000 3,446,000 0.22 June 30, 1993 41,279,000 14,044,000 4,892,000 3,006,000 0.19 1993 March 31, 1993 $41,642,000 $14,346,000 $5,430,000 $3,395,000 $0.22 December 31, 1992 41,152,000 13,272,000 4,491,000 2,704,000 0.17 September 30, 1992 39,578,000 13,345,000 4,349,000 2,672,000 0.17 June 30, 1992 40,200,000 13,909,000 4,732,000 2,864,000 0.18
Exhibit 13 INDEPENDENT AUDITORS' REPORT To the Stockholders of ZERO Corporation: We have audited the accompanying consolidated balance sheets of ZERO Corporation and its subsidiaries as of March 31, 1994 and 1993, and the related statements of consolidated income, stockholders' equity, and cash flows for each of the three years in the period ended March 31, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express and opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of ZERO Corporation and its subsidiaries at March 31, 1994 and 1993, and the results of their operations and cash flows for each of the three years in the period ended March 31, 1994 in conformity with generally accepted accounting principles. /s/ DELOITTE & TOUCHE Los Angeles, California May 12, 1994 Exhibit 13 MANAGEMENT'S REPORT The accompanying consolidated financial statements have been prepared by management in accordance with generally accepted accounting principles and, where appropriate, include amounts based on management's judgement and estimates. The integrity of the financial statements and the other financial information in the Annual Report is the responsibility of management. The financial statements have been audited by Deloitte & Touche, independent auditors, appointed by the Board of Directors. The Company maintains internal accounting control systems that are adequate to provide reasonable, but not absolute, assurance that the assets are safeguarded from loss or unauthorized use. These systems produce records adequate for preparation of financial information. In establishing and maintaining internal controls, the Company exercises judgement in determining that the costs of such controls do not exceed the benefits to be derived. The Board of Directors has an Audit Committee composed solely of directors who are not officers or employees. The Committee meets regularly with management, with the Company's internal audit staff, and with the independent auditors. The independent auditors and the internal audit staff periodically meet alone with the Audit Committee and have free access to the Audit Committee at any time. In management's opinion, the consolidated financial statements present fairly, in all material respects, the financial position of ZERO Corporation and its subsidiaries at March 31, 1994 and 1993, and the results of operations and cash flows for each of the three years in the period ended March 31, 1994 in conformity with generally accepted accounting principles. /s/ WILFORD D. GODBOLD, JR. - - --------------------------------------- Wilford D. Godbold, Jr. President and Chief Executive Officer /s/ GEORGE A. DANIELS - - --------------------------------------- George A. Daniels Vice President and Chief Financial Officer /s/ ERIC A. SAND - - --------------------------------------- Eric A. Sand Controller and Chief Accounting Officer Exhibit 13 Market and Dividend Information The Company's common stock is traded on the New York Stock Exchange and the Pacific Stock Exchange under the ticker symbol ZRO. The trading range and dividends paid by quarter for the two fiscal years ended March 31, 1994 are as follows:
Trading Range Dividends ------------------- --------- Quarter Ended High Low Paid - - ------------- ------ ------ --------- 1994 March 31, 1994 $16.13 $12.63 $.10 December 31, 1993 16.63 12.75 .10 September 30, 1993 14.75 12.75 .10 June 30, 1993 15.13 13.00 .10 1993 March 31, 1993 $15.00 $12.50 $.10 December 31, 1992 14.13 10.50 .10 September 30, 1992 12.50 10.50 .10 June 30, 1992 12.75 10.00 .10
Exhibit 13
EX-21 9 SUBSIDIARIES AND REGISTR ZERO CORPORATION Subsidiaries of Registrant* As of March 31, 1994 1. Air Cargo Equipment Corporation, a Delaware corporation 2. Air Cargo Equipment (UK) Limited, a U.K. corporation 3. Air Cooling Technology, Inc., a California corporation 4. Anvil Cases, Inc., a California corporation 5. Composite Research Inc., a California corporation 6. Contempo Engineering Co., a California corporation 7. Electronic Solutions, a Nevada corporation 8. McLean Midwest Corporation, a Minnesota corporation 9. Nielsen Hardware Corporation, a Connecticut corporation 10. Productos Aeros, S.A., a Mexican corporation 11. Samuel Groves & Co. Limited, a U.K. corporation 12. ZERO FSC Corporation, a Virgin Islands corporation 13. ZERO East Division, ZERO Corporation, a Massachusetts corporation 14. ZERO International, Inc., a California corporation 15. ZERO Manufacturing Corporation, a California corporation 16. ZERO McLean Europe Ltd., a U.K. corporation * All are 100% owned EXHIBIT 21 EX-23 10 CONSENT OF IND. AUDITORS CONSENT OF INDEPENDENT AUDITORS ------------------------------- We consent to the incorporation by reference in Registration Statement No. 33-53943 on Form S-8, Registration Statement No. 33-27929 on Form S-8, Post-Effective Amendment No. 9 to Registration Statement No. 2-54344 on Form S-8, and Registration Statement No. 33-44143 on Form S-8 of ZERO Corporation of our report dated May 12, 1994, appearing in and incorporated by reference in this Annual Report on Form 10-K of ZERO Corporation for the year ended March 31, 1994. /s/ DELOITTE & TOUCHE Los Angeles, California June 27, 1994 EXHIBIT 23
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