Zurn Elkay Water Solutions Corp 10-K

ITEM 9A. CONTROLS AND PROCEDURES. Evaluation of Disclosure Controls and Procedures We maintain a set of disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. We carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Exchange Act. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of such date, the Company’s disclosure controls and procedures are adequate and effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and that such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, in a manner allowing timely decisions regarding required disclosure. As such, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the period covered by this report. Management’s Report on Internal Control Over Financial Reporting We are responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based upon that evaluation, management has concluded that our internal control over financial reporting was effective as of December 31, 2021. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of the changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. The effectiveness of the Company's internal control over financial reporting as of December 31, 2021, has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report, which appears herein. Changes in Internal Control Over Financial Reporting There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION. None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. Not applicable. 90 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. The information required by this Item is incorporated by reference from the sections entitled "Proposal 1: Election of Directors" and "Corporate Governance" in the definitive proxy statement for the Company’s annual meeting, to be held on or about May 5, 2022 (the Proxy Statement"), and from the information under the caption "Information about our Executive Officers" in Part I hereof. Code of Ethics We have adopted a written code of ethics, referred to as the Zurn Code of Business Conduct and Ethics, applicable to all directors, officers and employees, which includes provisions relating to accounting and financial matters applicable to the principal executive officer, principal financial officer and principal accounting officer and controller. We have posted a copy of the Code of Business Conduct and Ethics on our website at www.zurnwatersolutionscorporation.com. To obtain a copy, free of charge, please submit a written request to Zurn Investor Relations, 511 West Freshwater Way, Milwaukee, Wisconsin, 53204. If we make any substantive amendments to, or grant any waivers from, the code of ethics for any director or officer, we will disclose the nature of such amendment or waiver on our corporate website at www.zurnwatersolutionscorporation.com or in a Current Report on Form 8-K. ITEM 11. EXECUTIVE COMPENSATION. The information required by this Item is incorporated by reference from the sections entitled "Proposal 1: Election of Directors", "Corporate Governance", "Compensation Discussion and Analysis", "Compensation Committee Report", "Executive Compensation," and "Corporate Governance - Directors' Compensation" in the Proxy Statement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. The information required by this Item is incorporated by reference from the sections entitled "Security Ownership of Certain Beneficial Owners and Management" in the Proxy Statement. Equity Compensation Plan Information The following chart gives aggregate information regarding grants under all equity compensation plans of the Company through December 31, 2021. Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights (2) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column) Equity compensation plans approved by security holders (1) 4,122,767 $13.44 2,228,576 Equity compensation plans not approved by security holders None None None Total 4,122,767 $13.44 2,228,576 ______________________ (1) Represents options, PSUs and RSUs granted under the Incentive Plan or options granted under the 2006 Stock Option Plan. No further options may be granted under the 2006 Stock Option Plan. (2) The average exercise price excludes PSUs and RSUs. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. The information required by this Item is incorporated by reference from the sections entitled "Corporate Governance" and "Certain Relationships and Related Party Transactions" in the Proxy Statement. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. The information required by this Item is incorporated by reference from the section entitled "Report of the Audit Committee" and "Auditors" in the Proxy Statement. 91 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a) (1) Financial Statements The Company’s consolidated financial statements included in Item 8 hereof are for the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020, and consist of the following: Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Comprehensive Income Consolidated Statements of Stockholders’ Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements (a) (2) Financial Statement Schedules. The Financial Statement Schedule of the Company appended hereto for the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020 consists of the following: Schedule II – Valuation and Qualifying Accounts (in Millions) Additions Description Balance at Beginning of Year Charged to Costs and Expenses Acquired Obligations Charged to Other Accounts Deductions (1) Balance at End of Year Fiscal Year Ended March 31, 2020 Valuation allowance for trade and notes receivable $ 0.4 $ 0.5 $ 0.1 $ — $ ( 0.1 ) $ 0.9 Valuation allowance for income taxes 31.2 1.3 — 6.8 ( 0.9 ) 38.4 Nine Month Transition Period Ended December 31, 2020 Valuation allowance for trade and notes receivable 0.9 0.3 — — ( 0.4 ) 0.8 Valuation allowance for income taxes 38.4 0.1 — 0.3 ( 2.0 ) 36.8 Year Ended December 31, 2021 Valuation allowance for trade and notes receivable 0.8 0.8 — — ( 0.4 ) 1.2 Valuation allowance for income taxes 36.8 1.8 — 0.8 ( 4.3 ) 35.1 ______________________ (1) Uncollectible amounts, dispositions charged against the accrual and utilization of net operating losses. All other schedules have been omitted because they are not applicable or because the information required is included in the notes to the consolidated financial statements. (a) (3) Exhibits. See Exhibit Index included after the signature page to this report, which Exhibit Index is incorporated by reference herein. ITEM 16. FORM 10-K SUMMARY Not applicable. 92 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ZURN WATER SOLUTIONS CORPORATION By: /s/ Todd A. Adams Name: Todd A. Adams Title: Chair of the Board and Chief Executive Officer Date: February 9, 2022 93 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Todd A. Adams, Mark W. Peterson and Jeffery J. LaValle, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this report, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and any other regulatory authority, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/ Todd A. Adams Chair of the Board and Chief Executive Officer February 9, 2022 Todd A. Adams (Principal Executive Officer) /s/ Mark W. Peterson Senior Vice President and Chief Financial Officer February 9, 2022 Mark W. Peterson (Principal Financial and Accounting Officer) /s/ Mark S. Bartlett Director February 9, 2022 Mark S. Bartlett /s/ Jacques D. Butler Director February 9, 2022 Jacques D. Butler /s/ Thomas D. Christopoul Director February 9, 2022 Thomas D. Christopoul /s/ David C. Longren Director February 9, 2022 David C. Longren /s/ George C. Moore Director February 9, 2022 George C. Moore /s/ Rosemary M. Schooler Director February 9, 2022 Rosemary M. Schooler /s/ John S. Stroup Director February 9, 2022 John S. Stroup /s/ Peggy N. Troy Director February 9, 2022 Peggy N. Troy 94 EXHIBIT INDEX Exhibit Description Incorporated Herein by Reference to Filed Herewith 2.1 Stock Purchase Agreement dated as of April 5, 2005, by and among Rexnord LLC, Hamilton Sundstrand Corporation and The Falk Corporation+ Exhibit 99.2 to the Form 8-K filed by RBS Global, Inc./Rexnord LLC on May 19, 2005 2.2 Agreement and Plan of Merger, dated as of February 15, 2021, by and among Regal Beloit Corporation Phoenix 2021, Inc., Rexnord Corporation and Land Newco, Inc.+ Exhibit 2.1 to the Company's Form 8-K filed February 19, 2021 2.3 Separation and Distribution Agreement, dated as of February 15, 2021, by and among Rexnord Corporation, Land Newco, Inc. and Regal Beloit Corporation+ Exhibit 2.2 to the Company's Form 8-K filed February 19, 2021 3.1(a) Amended and Restated Certificate of Incorporation as amended through October 4, 2021 Exhibit 3.1 to the Company's Form 8-K filed October 5, 2021 3.1(b) Certificate of Designations of the 5.75% Series A Mandatory Convertible Preferred Stock of Rexnord Corporation, filed with the Secretary of State of the State of Delaware and effective December 7, 2016 (expired by its terms) Exhibit 3.1 to the Company's Form 8-K dated December 1, 2016 3.2 Amended and Restated By-Laws, as amended through October 4, 2021 Exhibit 3.1 to the Company's Form 8-K filed October 5, 2021 4.1 Indenture, dated as of December 7, 2017, by and among RBS Global, Inc., Rexnord LLC, the guarantors named therein and Wells Fargo Bank, National Association, as trustee Exhibit 4.1 to the Company’s Form 8-K dated December 7, 2017 4.2 Form of RBS Global, Inc. and Rexnord LLC 4.875% Senior Notes due 2025 (included in Exhibit 4.1 hereto) Exhibit 4.2 to the Company’s Form 8-K dated December 7, 2017 4.3 Parent Guarantee, dated as of December 7, 2017, by and between Rexnord Corporation and Wells Fargo Bank, National Association, as trustee Exhibit 4.3 to the Company’s Form 8-K dated December 7, 2017 4.4 Description of Securities Exhibit 4.4 to the Company's Form 10-K for the fiscal year ended March 31, 2020 10.1(a) The Company's 2006 Stock Option Plan, as amended ("2006 Option Plan")* (superseded) Exhibit 10.6 to the Form 10-K filed by RBS Global, Inc./Rexnord LLC for the fiscal year ended March 31, 2010 10.1(b) Form of Executive Non-Qualified Stock Option Agreement under the 2006 Option Plan* Exhibit 10.10 to the Form 8-K/A filed by RBS Global, Inc./Rexnord LLC on July 27, 2006 10.2 Rexnord Management Incentive Compensation Plan for Executive Officers* Exhibit 10.3 to the Company’s Form 10-Q for the quarter ended June 30, 2020 10.3(a) Rexnord Corporation Performance Incentive Plan, as amended and restated as of July 25, 2019 * Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A, filed on June 7, 2019 10.3(b) Rexnord Corporation Performance Incentive Plan, as amended and restated effective May 18, 2016 * (superseded except with respect to certain outstanding awards) Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A, filed on June 10, 2016 10.3(c) Rexnord Corporation 2012 Performance Incentive Plan (now known as the Performance Incentive Plan)* (superseded version) Exhibit 10.32 to the Company's Registration Statement on Form S-1, SEC File No. 333-174504 10.3(d) Form of Option Agreement under the Performance Incentive Plan* (current) Exhibit 10.3(c) to the Company's Form 10-K for the fiscal year ended March 31, 2018 10.3(e) Form of Performance Stock Unit Agreement under the Performance Incentive Plan* (current) Exhibit 10.2 to the Company's Form 10-Q for the quarter ended June 30, 2020 10.3(f) Form of Performance Stock Unit Agreement under the Performance Incentive Plan* (superseded except with respect to outstanding awards) Exhibit 10.3(d) to the Company's Form 10-K for the fiscal year ended March 31, 2018 10.3(g) Form of Restricted Stock Unit Agreement under the Performance Incentive Plan* (current) Exhibit 10.3(e) to the Company's Form 10-K for the fiscal year ended March 31, 2018 10.3(h) Form of Option Agreement under the Performance Incentive Plan* (used for prior grants; superseded) Exhibit 10.4 to the Company's Form 10-Q for the quarter ended June 30, 2012 10.3(i) Form of Option and Restricted Stock Unit Agreement under the Performance Incentive Plan* (used for prior grants; superseded) Exhibit 10.2 to the Company's Form 10-Q for the quarter ended September 30, 2014 95 10.3(j) Form of Non-Qualified Stock Option and Performance Stock Unit Agreement under the Performance Incentive Plan* (used for prior grants; superseded) Exhibit 10.6 to the Company’s 10-Q for the quarter ended June 30, 2016 10.3(k) Form of Non-Qualified Stock Option and Performance Stock Unit Agreement under the Performance Incentive Plan* (used for prior grants; superseded) Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended June 30, 2015 10.3(l) Form of Restricted Stock Unit Agreement (Deferred RSUs) for Directors under the Performance Incentive Plan (current)* Exhibit 10.3(f) to the Company’s Form 10-K for the fiscal year ended March 31, 2016 10.4 Letter Agreement dated December 13, 2018, between Rexnord Corporation and Todd A. Adams* Exhibit 10.1 to the Company's Form 8-K dated December 13, 2018 10.5 Form of Letter Agreement with Executive Officers* Exhibit 10.3 to the Company’s Form 8-K dated May 18, 2016 (filed on May 24, 2016) 10.6 Rexnord Corporation Deferred Compensation Plan, effective as of January 1, 2016 (as amended July 26, 2017)* Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended September 30, 2017 10.7 Rexnord Corporation Executive Severance Plan, Effective May 18, 2016 (as amended effective April 1, 2018)* Exhibit 10.8 to the Company’s Form 10-K for the fiscal year ended March 31, 2018 10.8 Rexnord Corporation Executive Change in Control Plan, as amended through December 13, 2018* Exhibit 10.2 to the Company’s Form 8-K dated December 13, 2018 10.9(a) Schedule of Compensation and Stock Ownership Guidelines for outside members of the board, effective as of July 23, 2020* Exhibit 10.1 to the Company's Form 10-Q for the quarter ended June 30, 2020 10.9(b) Schedule of Compensation and Stock Ownership Guidelines for outside members of the board, revised as of May 2019* (superseded) Exhibit 10.10(a) to the Company’s Form 10-K for the fiscal year ended March 31, 2019 10.10 Form of Indemnification Agreement* Exhibit 10.3 to the Company's Form 10-Q for the quarter ended December 31, 2017 10.11(a) Third Amended and Restated First Lien Credit Agreement dated as of August 21, 2013, as adopted pursuant, and filed as Exhibit B, to the Incremental Assumption Agreement dated as of August 21, 2013 relating to the Second Amended and Restated Credit Agreement dated as of March 15, 2012, among Chase Acquisition I, Inc., RBS Global, Inc., Rexnord LLC, certain subsidiaries of Rexnord LLC, the lenders party thereto and Credit Suisse AG, as administrative agent Exhibit 10.1 to the Company’s Form 8-K dated August 21, 2013 10.11(b) Incremental Assumption Agreement, dated as of November 2, 2016, among Chase Acquisition I, Inc., RBS Global, Inc., Rexnord LLC, certain domestic subsidiaries of Rexnord LLC, the lenders party thereto, and Credit Suisse AG, as administrative agent, related to the Third Amended and Restated First Lien Credit Agreement (revolving facility) Exhibit 10.1 to the Company’s Form 8-K dated November 2, 2016 10.11(c) Incremental Assumption Agreement, dated as of December 16, 2016, among Chase Acquisition I, Inc., RBS Global, Inc., Rexnord LLC, certain domestic subsidiaries of Rexnord LLC, Credit Suisse AG, Cayman Islands Branch and Credit Suisse AG, as administrative agent, related to the Third Amended and Restated First Lien Credit Agreement (term loan facility) Exhibit 10.1 to the Company’s Form 8-K dated December 16, 2016 10.11(d) Incremental Assumption Agreement, dated as of December 7, 2017, among Chase Acquisition I, Inc., RBS Global, Inc., Rexnord LLC, certain domestic subsidiaries of Rexnord Corporation, Credit Suisse AG, Cayman Islands Branch, as administrative agent, Credit Suisse AG, Cayman Islands Branch, as refinancing term lender, and the other lenders party thereto (term loan and revolving facilities) Exhibit 10.1 to the Company’s Form 8-K dated December 7, 2017 10.11(e) Incremental Assumption Agreement, dated as of November 21, 2019, among Chase Acquisition I, Inc., RBS Global, Inc., Rexnord LLC, certain domestic subsidiaries of Rexnord LLC, Credit Suisse AG, Cayman Islands Branch as the refinancing term lender and Credit Suisse AG, Cayman Islands Branch as administrative agent (term loan and revolving facilities). Exhibit 10.1 to the Company’s Form 8-K dated November 21, 2019 96 10.11(f) Fourth Amended and Restated First Lien Credit Agreement, dated as of October 4, 2021, by and among Zurn Holdings, Inc., Zurn LLC, ZBS Global, Inc., the lenders party thereto, and Credit Suisse AG, as administrative agent+ Exhibit 10.2 to the Company's Form 8-K filed on October 5, 2021 10.12(a) Second Amended and Restated Guarantee and Collateral Agreement, dated and effective as of March 15, 2012, among Chase Acquisition I, Inc., RBS Global, Inc., Rexnord LLC, each subsidiary of the borrowers identified therein and Credit Suisse AG, as Administrative Agent for the Credit Agreement Secured Parties Exhibit 10.2 to the Form 8-K filed by RBS Global, Inc./Rexnord LLC on March 16, 2012 10.12(b) Third Amended and Restated Guarantee and Collateral Agreement, dated as of October 4, 2021, among ZBS Global, Inc., Zurn Holdings, Inc., Zurn LLC, the subsidiaries party thereto, and Credit Suisse AG, as administrative agent+ Exhibit 10.3 to the Company's Form 8-K filed on October 5, 2021 10.13 Amended and Restated Receivables Sale and Servicing Agreement, entered into as of September 25, 2020, by and among each of the originators signatory thereto from time to time, Rexnord Industries, LLC in its capacity as servicer thereunder and Rexnord Funding LLC, as buyer Exhibit 10.1 to the Company's Form 8-K dated September 25, 2020 10.14 Receivables Funding and Administration Agreement, entered into as of September 25, 2020, by and among Rexnord Funding LLC as the borrower, the financial institutions signatory thereto from time to time as lenders, and Mizuho Bank, Ltd., as a lender and as administrative agent for the lenders thereunder Exhibit 10.2 to the Company's Form 8-K dated September 25, 2020 10.15(a) Tax Matters Agreement, dated as of February 15, 2021, by and among Rexnord Corporation, Land Newco, Inc. and Regal Beloit Corporation+ Exhibit 10.1 to the Company's Form 8-K filed February 19, 2021 10.15(b) Employee Matters Agreement, dated as of February 15, 2021, by and among Rexnord Corporation , Land Newco, Inc. and Regal Beloit Corporation + Exhibit 10.2 to the Company's Form 8-K filed February 19, 2021 10.15(c) Real Estate Matters Agreement, dated as of February 15, 2021, by and among Rexnord Corporation , Land Newco, Inc. and Regal Beloit Corporation + Exhibit 10.3 to the Company's Form 8-K filed February 19, 2021 10.15(d) Intellectual Property Matters Agreement, dated as of February 15, 2021, by and among Rexnord Corporation , Land Newco, Inc. and Regal Beloit Corporation + Exhibit 10.4 to the Company's Form 8-K filed February 19, 2021 10.15(e) Commitment Letter, dated as of February 14, 2021, by and between Rexnord, Credit Suisse AG, Cayman Islands Branch and Credit Suisse Loan Funding LLC+ Exhibit 10.5 to the Company's Form 8-K filed February 19, 2021 10.15(f) Bridge Facility Commitment Letter, dated as of February 15, 2021, by and between Land and Barclays Bank PLC+ Exhibit 10.6 to the Company's Form 8-K filed February 19, 2021 10.15(g) Transition Services Agreement, dated as of October 4, 2021, by and among Rexnord Corporation and Land Newco, Inc.+ Exhibit 10.1 to the Company's Form 8-K filed October 5, 2021 10.16 Agreement and General Release, last signed on December 31, 2021, by George J. Powers and Zurn Water Solutions Corporation* Exhibit 10.1 to the Company's Form 8-K filed January 5, 2022 21.1 List of Subsidiaries of the Company X 23.1 Consent of Independent Registered Public Accounting Firm X 24 Power of Attorney Signatures page hereto 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended. X 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended. X 97 32.1 Certification of Chief Executive Officer and Chief Financial Officer X 101.INS Inline XBRL Instance Document (The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.) X 101.SCH Inline XBRL Taxonomy Extension Schema Document X 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X 104 Cover Page Inline XBRL data (contained in Exhibit 101) X * Denotes management plan or compensatory plan or arrangement. + The Company agrees to furnish supplementally a copy of the schedules omitted from this exhibit to the Commission upon request. 98