Document:

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                                                                    EXHIBIT 10.5

                          [UNITED DOMINION Letterhead]

March 1, 1999

PRIVILEGED AND CONFIDENTIAL

[Participant]

Dear [Participant]:

         United Dominion Industries, Inc. (the "Company") and its ultimate
parent company, United Dominion Industries Limited ("Limited"), for which the
Company provides management services, consider it essential to the best
interests of their shareholders to foster the continuous employment of key
Company management personnel. Further, the boards of directors of the Company
(the "Board") and of Limited (the "Limited Board") recognize that the
possibility of a change in control exists, and that such possibility, and the
uncertainty and questions which may arise among management, may result in the
departure or distraction of management personnel to the detriment of the
Company, Limited and their shareholders.

         The Board and the Limited Board have determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of members of the management of the Company and its subsidiaries,
including yourself, to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from any possible change in control
of the Company or Limited.

     In order to induce you to remain in the employ of the Company, the Company
agrees that you shall receive the severance benefits set forth in this letter
agreement (the "Agreement") in the event your employment with the Company is
terminated subsequent to a Change in Control

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(as defined in Section 2 hereof) under the circumstances described below.

1.       Term of Agreement. The term of this Agreement (the "Term") shall
         commence on the date hereof and shall continue in effect for a period
         of three years from the date hereof; provided, however, the original
         Term of this Agreement shall automatically be extended each year, on
         the anniversary date of this Agreement, for an additional year unless,
         not later than ninety (90) days prior to any such anniversary date, the
         Company shall have given notice that it does not wish to extend the
         Term, in which case this Agreement shall expire at the end of the
         two-year period following such anniversary date. Notwithstanding any
         such notice by the Company not to extend the Term, if a Change in
         Control shall have occurred during the original or extended Term, the
         Term shall continue in effect for a period of thirty-six (36) months
         beyond such Change in Control.

2.       Change in Control. No benefits shall be payable hereunder unless there
         shall have been a Change in Control, as set forth below. For purposes
         of this Agreement, a "Change in Control" shall mean any one or more of
         the events set forth below or a change in control of the Company of a
         nature that would be required to be reported in response to Item 6(e)
         of Schedule 14A of Regulation 14A promulgated under the Securities
         Exchange Act of 1934, as amended (the "Exchange Act"), whether or not
         the Company is then subject to such reporting requirement. Without
         limitation, a Change in Control shall be deemed to have occurred if:

         (A)      The acquisition by any individual, entity or group (within the
                  meaning of Section 13(d)(3) or 14(d)(2) of the Securities
                  Exchange Act of 1934, as amended (the "Exchange Act")) (a
                  "Person") of beneficial ownership (within the meaning of Rule
                  13d-3 promulgated under the Exchange Act) of 20% or more of
                  either (i) the then outstanding shares of common stock of the
                  Company or Limited (in each case, the "Outstanding Company
                  Common Stock") or (ii) the combined voting power of the then
                  outstanding voting securities of the Company or Limited
                  entitled to vote generally in the election of directors (in
                  each case, the "Outstanding Company Voting Securities");
                  provided, however, that for purposes of this subsection (A),
                  the following acquisitions shall

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                  not constitute a Change in Control: (i) any acquisition
                  directly from the Company or Limited, (ii) any acquisition by
                  the Company or Limited, (iii) any acquisition by any employee
                  benefit plan (or related trust) sponsored or maintained by the
                  Company or Limited or any corporation controlled by or under
                  common control with the Company or Limited or (iv) any
                  acquisition by any corporation pursuant to a transaction which
                  complies with clauses (i), (ii) and (iii) of subsection (C);
                  or

         (B)      Individuals who, as of the date hereof, constitute the Limited
                  Board cease for any reason to constitute at least a majority
                  of the Limited Board; provided, however, that any individual
                  becoming a director subsequent to the date hereof whose
                  election, or nomination for election by the Limited's
                  shareholders, was approved by a vote of at least a majority of
                  the directors then comprising the Limited Board shall be
                  considered as though such individual were a member of the
                  Limited Board, but excluding, for this purpose, any such
                  individual whose initial assumption of office occurs as a
                  result of an actual or threatened election contest with
                  respect to the election or removal of directors or other
                  actual or threatened solicitation of proxies or consents by or
                  on behalf of a Person other than the Limited Board; or

         (C)      Consummation of a reorganization, merger or consolidation or
                  sale or other disposition of all or substantially all of the
                  assets of the Company or Limited (a "Business Combination"),
                  in each case, unless, following such Business Combination, (i)
                  all or substantially all of the individuals and entities who
                  were the beneficial owners, respectively, of the Outstanding
                  Company Common Stock and Outstanding Company Voting Securities
                  immediately prior to such Business Combination beneficially
                  own, directly or indirectly, more than 50% of, respectively,
                  the then outstanding shares of common stock and the combined
                  voting power of the then outstanding voting securities
                  entitled to vote generally in the election of directors, as
                  the case may be, of the corporation resulting from such
                  Business Combination (including, without limitation, a
                  corporation which as a result of such

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                  transaction owns the Company or Limited or all or
                  substantially all of the Company's or Limited's assets either
                  directly or through one or more subsidiaries) in substantially
                  the same proportions as their ownership, immediately prior to
                  such Business Combination, of the Outstanding Company Common
                  Stock and Outstanding Company Voting Securities, as the case
                  may be, (ii) no Person (excluding any corporation resulting
                  from such Business Combination or any employee benefit plan
                  (or related trust) of the Company or Limited or such
                  corporation resulting from such Business Combination)
                  beneficially owns, directly or indirectly, 20% or more of,
                  respectively, the then outstanding shares of common stock of
                  the corporation resulting from such Business Combination or
                  the combined voting power of the then outstanding voting
                  securities of such corporation except to the extent that such
                  ownership existed prior to the Business Combination and (iii)
                  at least a majority of the members of the board of directors
                  of any corporation resulting from such Business Combination,
                  or any corporation with direct or indirect control over any
                  such corporation, were members of the Incumbent Board at the
                  time of the execution of the initial agreement, or of the
                  action of the Board or the Limited Board, providing for such
                  Business Combination; or

         (D)      Approval by the shareholders of the Company or Limited of a
                  complete liquidation or dissolution of the Company or Limited;
                  or

         (E)      The Company or Limited executes an agreement, the consummation
                  of which would result in the occurrence of a Change in Control
                  as described above,

         then, with respect to a termination of your employment, other than a
         termination resulting from your death or Retirement, or initiated by
         the Company for Cause or Disability, or otherwise initiated by you
         other than for Good Reason occurring after such event or the execution
         of such agreement and prior to the expiration or termination of such
         agreement, a Change in Control shall be deemed to have occurred as of
         the date of such event or the execution of such agreement.

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3.       Potential Change in Control. You agree, subject to the terms and
         conditions of this Agreement, to remain in the employ of the Company in
         the event of a Potential Change in Control until the earliest of (a) a
         date which is two hundred seventy (270) days from the occurrence of
         such Potential Change in Control, (b) the termination of your
         employment by reason of your death or your Disability or Retirement as
         defined in Subsection 4(A) of this Agreement, respectively, or (c) the
         date on which you first become entitled under this Agreement to receive
         the benefits provided in Subsection 5(D) of this Agreement. For
         purposes of this Agreement, a Potential Change in Control shall be
         deemed to have occurred if:

         (A)      The Company or Limited enters into an agreement or agreements
                  which, if carried out, would result in the occurrence of a
                  Change in Control;

         (B)      Any person publicly announces an intention to take or to
                  consider taking actions which, if carried out, would
                  constitute a Change in Control;

         (C)      Any person, other than a trustee or other fiduciary holding
                  securities under an employee benefit plan of the Company or
                  Limited (or a company owned, directly or indirectly, by the
                  shareholders of the Company or Limited in substantially the
                  same proportions as their ownership of shares of the Company
                  or Limited), who is or becomes the beneficial owner, directly
                  or indirectly, of securities of the Company or Limited
                  representing 10 percent or more of the combined voting power
                  of the Company's or Limited's then outstanding securities,
                  increases his beneficial ownership of such securities by 10
                  percentage points or more over the percentage so owned by such
                  person on the date hereof; or

         (D)      The Board or the Limited Board adopts a resolution to the
                  effect that, for purposes of this Agreement, a Potential
                  Change in Control has occurred.

4.       Termination Following Change in Control. If any of the events described
         in Section 2 hereof constituting a Change in Control shall have
         occurred, you shall be entitled to the benefits provided in Subsection
         5(D) hereof upon subsequent termination of your employment

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         during the Term unless such termination is because of your death or
         Retirement, by the Company for Cause or Disability, or by you other
         than for Good Reason.

         (A)      Disability; Retirement. If, as a result of your incapacity due
                  to physical or mental illness, you shall have been absent from
                  the full-time performance of your duties with the Company for
                  six (6) consecutive months, and within thirty (30) days after
                  written Notice of Termination is given, you shall not have
                  returned to the full-time performance of your duties, the
                  Company may terminate your employment for "Disability". Any
                  question as to the existence of your Disability upon which you
                  and the Company cannot agree shall be determined by a
                  qualified independent physician selected by you (or, if you
                  are unable to make such selection, it shall be made by any
                  adult member of your immediate family), and approved by the
                  Company. The determination of such physician made in writing
                  to the Company and to you shall be final and conclusive for
                  all purposes of this Agreement. Termination of your employment
                  based on "Retirement" shall mean your voluntary termination of
                  employment on an Early or Normal Retirement Date as defined in
                  the United Dominion Industries, Inc. Revised Retirement Plan
                  (the "Pension Plan") as in effect immediately prior to the
                  occurrence of a Change in Control whether or not you are a
                  participant in the Pension Plan, or in accordance with any
                  retirement arrangement established with your consent with
                  respect to you.

         (B)      Cause. Termination by the Company of your employment for
                  "Cause" shall mean termination upon (i) the willful and
                  continued failure by you substantially to perform your duties
                  with the Company (other than any such failure resulting from
                  your incapacity due to physical or mental illness or from your
                  Retirement or any such actual or anticipated failure resulting
                  from termination by you for Good Reason) after a written
                  demand for substantial performance is delivered to you by the
                  Board, which demand specifically identifies the manner in
                  which the Board believes that you have not substantially
                  performed your duties, or, (ii) the willful engaging by you in
                  conduct which is demonstrably and materially injurious to the
                  Company,

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                  monetarily or otherwise. For purposes of this Subsection, no
                  act or failure to act on your part shall be deemed "willful"
                  unless done, or omitted to be done, by you not in good faith
                  and without reasonable belief that your action or omission was
                  in the best interest of the Company. Notwithstanding the
                  foregoing, you shall not be deemed to have been terminated for
                  Cause unless and until there shall be delivered to you a copy
                  of a resolution duly adopted by the affirmative vote of not
                  less than three-quarters (3/4) of the entire membership of the
                  Board at a meeting of the Board called and held for such
                  purpose (after reasonable notice to you and an opportunity for
                  you, together with your counsel, to be heard before the
                  Board), finding that in the good faith opinion of the Board
                  you were guilty of conduct set forth above in clause (i) or
                  (ii) of the first sentence of this Subsection and specifying
                  the particulars thereof in detail.

         (C)      Good Reason. You shall be entitled to terminate your
                  employment for Good Reason. For purposes of this Agreement,
                  "Good Reason" shall mean, without your express written
                  consent, any of the following:

                  (i)        Inconsistent Duties. A meaningful and detrimental
                             alteration (in your reasonable good faith
                             determination) in the nature or status of your
                             responsibilities (including those as a director of
                             the Company, if any) from those in effect
                             immediately prior to the Change in Control;

                  (ii)       Reduced Salary. A reduction by the Company in your
                             annual base salary as in effect on the date hereof
                             or as the same may be increased from time to time;

                  (iii)      Relocation. The relocation of the office of the
                             Company where you are employed at the time of the
                             Change in Control (the "CIC Location") to a
                             location that is more than fifty (50) miles from
                             your current location, or which in your good faith
                             assessment is an area not generally considered
                             conducive to maintaining the executive offices of a
                             company such as

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                           the Company because of hazardous or undesirable
                           conditions, including without limitation a high crime
                           rate or inadequate facilities;

                  (iv)     Incentive Compensation Plans. The failure by the
                           Company to continue in effect any compensation plan
                           in which you participate, including but not limited
                           to the United Dominion Industries Corporate Net Worth
                           Incentive Compensation Plan or any other plans
                           adopted prior to the Change in Control, which failure
                           has a significant adverse effect on your total
                           compensation, unless an equitable arrangement
                           (embodied in an ongoing substitute or alternative
                           plan) has been made with respect to such plan in
                           connection with the Change in Control, or the failure
                           by the Company to continue your participation therein
                           on at least as favorable a basis, in terms of the
                           amount of benefits available to you as existed at the
                           time of the Change in Control;

                  (v)      Benefits and Perquisites. The failure by the Company
                           to continue to provide you with benefits and
                           perquisites substantially similar to those enjoyed by
                           you under the Company's pension, life insurance,
                           medical, health and accident, disability, savings and
                           other qualified and non-qualified executive benefit
                           plans in which you were participating at the time of
                           the Change in Control;

                  (vi)     No Assumption by Successor. The failure of the
                           Company to obtain a satisfactory agreement from any
                           successor to assume and agree to perform this
                           Agreement, as contemplated in Section 6 hereof or, if
                           the business of the Company for which your services
                           are principally performed is sold at any time after a
                           Change in Control, the purchaser of such business
                           shall fail to agree to provide you with the same or a
                           comparable position, duties, compensation and
                           benefits (as described in Clauses 4(C)(iv) and (v)
                           above) as provided to you by the Company

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                           immediately prior to the Change in Control; or

                  (vii)    No Notice. Any purported termination of your
                           employment which is not effected pursuant to a Notice
                           of Termination satisfying the requirements of
                           Subsection (D) below (and, if applicable, the
                           requirements of Subsection (B) above); for purposes
                           of this Agreement, no such purported termination
                           shall be effective.

         (D)      Notice of Termination. Any purported termination of your
                  employment by the Company or by you shall be communicated by
                  written Notice of Termination to the other party hereto in
                  accordance with Section 7 hereof. For purposes of this
                  Agreement, a "Notice of Termination" shall mean a notice which
                  shall indicate the specific termination provision in this
                  Agreement relied upon and shall set forth in reasonable detail
                  the facts and circumstances claimed to provide a basis for
                  termination of your employment under the provision so
                  indicated.

         (E)      Date of Termination, Etc. "Date of Termination" shall mean (i)
                  if your employment is terminated for Disability, thirty (30)
                  days after a Notice of Termination is given (provided that you
                  shall not have returned to the full-time performance of your
                  duties during such thirty (30) day period), and (ii) if your
                  employment is terminated pursuant to Subsection (B) or (C)
                  above or for any other reason (other than Disability), the
                  date specified in the Notice of Termination (which, in the
                  case of a termination pursuant to Subsection (B) above shall
                  not be less than thirty (30) days, and in the case of a
                  termination pursuant to Subsection (C) above shall not be less
                  than thirty (30) nor more than sixty (60) days, respectively,
                  from the date such Notice of Termination is given); provided
                  that if within thirty (30) days after any Notice of
                  Termination is given the party receiving such Notice of
                  Termination notifies the other party that a dispute exists
                  concerning the termination, the Date of Termination shall be
                  the date on which the dispute is finally determined, either by
                  mutual written agreement of the parties, by a binding
                  arbitration award, or by a final judgment, order or decree of
                  a

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                  court of competent jurisdiction (which is not appealable or
                  the time for appeal therefrom having expired and no appeal
                  having been perfected); provided further that the Date of
                  Termination shall be extended by a notice of dispute only if
                  such notice is given in good faith and the party giving such
                  notice pursues the resolution of such dispute with reasonable
                  diligence. Notwithstanding the pendency of any such dispute,
                  the Company will continue to pay you your full compensation in
                  effect when the notice giving rise to the dispute was given
                  and continue you as a participant in all compensation,
                  benefit, and insurance plans and perquisites in which you were
                  participating when the notice giving rise to the dispute was
                  given, until the dispute is finally resolved in accordance
                  with this Subsection. Amounts paid under this Subsection are
                  in addition to all other amounts due under this Agreement and
                  shall not be offset against or reduce any other amounts due
                  under this Agreement.

5.       Compensation Upon Termination or During Disability. Following a Change
         in Control, upon termination of your employment or during Disability
         during the Term, the Company shall cause there to be provided to you
         the following benefits:

         (A)      Disability. During any period that you fail to perform your
                  full-time duties with the Company as a result of your
                  Disability, you shall continue to receive your base salary at
                  the rate in effect at the commencement of any such period,
                  inclusive of all compensation payable to you under the
                  Company's disability insurance coverage or other plan during
                  such period, until your employment is terminated pursuant to
                  Subsection 4(A) hereof. Thereafter, your benefits shall be
                  determined in accordance with the Company's insurance programs
                  and other benefit or pension plans then in effect, including
                  those listed in Clause 4(C)(v) hereof.

         (B)      Termination for Other than Good Reason or for Cause. If your
                  employment shall be terminated by the Company for Cause or by
                  you other than for Good Reason, death or Retirement, the
                  Company shall pay you your full base salary through the Date
                  of Termination at the rate in effect at the time Notice of
                  Termination is given and any

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                  amounts to be paid to you pursuant to the Company's benefit
                  and pension plans then in effect, including those listed in
                  Clause 4(C)(v), and the Company shall have no further
                  obligations to you under this Agreement.

         (C)      Retirement; Death. If your employment shall be terminated for
                  Retirement, or by reason of your death, your benefits shall be
                  determined in accordance with the Company's benefit and
                  pension plans then in effect, including those listed in Clause
                  4(C)(v).

         (D)      Termination Otherwise. If your employment with the Company
                  shall be terminated by the Company for a reason other than
                  Cause, Retirement, Disability, or your death, or if your
                  employment with the Company shall be terminated by you for
                  Good Reason, then you shall be entitled to the benefits
                  provided below:

                  (i)      Base Salary. The Company shall pay you your full base
                           salary through the Date of Termination at the rate in
                           effect at the time the Notice of Termination is
                           given;

                  (ii)     Severance Payment. In lieu of any further salary
                           payments to you for periods subsequent to the Date of
                           Termination, the Company shall pay as severance pay
                           to you, not later than the fifth (5th) day following
                           the Date of Termination (the "Payment Date"), a lump
                           sum severance payment (the "Severance Payment") equal
                           to the amount of base salary you would have earned
                           had you continued to be employed until the earlier of
                           (a) the end of the thirty-six (36) month period
                           following the Date of Termination or (b) the
                           attainment of your Normal Retirement age (the
                           "Severance Period"), assuming that your rate of
                           monthly base salary during the Severance Period would
                           be equal to the highest monthly rate of base salary
                           which was payable to you by the Company (or any
                           company affiliated with the Company) during the
                           thirty-six (36) month period immediately preceding
                           the Date of Termination.

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                  (iii)    Incentive Compensation Plans. The Company shall pay
                           you any amounts required to be paid to you under the
                           terms of the United Dominion Industries Corporate Net
                           Worth Incentive Compensation Plan and the United
                           Dominion Industries Long-Term Performance Incentive
                           Plan, other applicable management incentive
                           compensation programs in effect, or any successor
                           plan(s) in which you participate (each an "MIC
                           Plan"). The Company shall pay you, in cash, in a lump
                           sum, no later than the Payment Date, an amount in
                           lieu of your participation in an MIC Plan during the
                           Severance Period which shall be equal to the sum of:
                           (A) for the year during which the Date of Termination
                           occurs, an amount equal to the greater of (I) your
                           target bonus determined in accordance with your class
                           of participation in such MIC Plan, and (II) the
                           amount that would have been payable to you under such
                           MIC Plan for that year, if the actual performance of
                           the Company from the beginning of that year to the
                           end of the most recently completed fiscal quarter
                           during that year, if any, prior to the Date of
                           Termination, on an annualized basis, were the actual
                           performance of the Company for that year and (B) for
                           each other year or portion thereof remaining in the
                           Severance Period, an amount equal to your target
                           bonus determined in accordance with your class of
                           participation in such MIC Plan prior to your Date of
                           Termination multiplied by the number of full years
                           remaining in the Severance Period following the year
                           during which the Date of Termination occurs, plus a
                           portion of such annual bonus for any partial year
                           remaining during the Severance Period, prorated based
                           upon the number of days completed during such year.

                  (iv)     Benefit and Perquisite Continuation. For a thirty-six
                           (36) month period after such termination (or for such
                           longer period that the Company may have obligated
                           itself by separate agreement

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                           with you), the Company shall arrange to provide you
                           with life, disability, accident, automobile
                           liability, health & dental insurance and such other
                           benefits and perquisites substantially similar to
                           those which you are receiving immediately prior to
                           the Notice of Termination. In addition, the Company
                           shall provide you with reasonable outplacement
                           benefits consistent with the Company's Corporate
                           Office Severance Policy in effect prior to the Change
                           in Control. Benefits otherwise receivable by you
                           pursuant to this Clause 5(D)(iv) shall be reduced to
                           the extent comparable benefits are actually received
                           by you during the thirty-six (36) month period
                           following your termination, and any such benefit
                           actually received by you shall be reported to the
                           Company.

                  (v)      Supplemental Pension. In addition to the pension
                           benefits to which you are entitled under the Pension
                           Plan or any related excess benefit or supplemental
                           retirement programs or any successor plans thereto,
                           including without limitation the United Dominion
                           Industries, Inc. Supplemental Executive Retirement
                           Plan and the Restoration Plan for the Salaried
                           Defined Benefit Plans of United Dominion Industries,
                           Inc. (collectively, the "Defined Benefit Plans"), the
                           Company shall pay you in one sum in cash on the fifth
                           (5th) day following the Date of Termination, a lump
                           sum determined as of the Date of Termination equal to
                           the actuarial equivalent (determined based on your
                           attained age as of the Date of Termination) of the
                           excess of (1) the retirement pension (determined as a
                           joint and 50% survivor annuity if you are married or
                           a 10-year certain and life annuity if you are
                           unmarried, in either case such annuity commencing at
                           age fifty-five (55), or if you have already attained
                           age fifty-five (55) at the Date of Termination,
                           commencing at the Date of Termination) which you
                           would have accrued under the terms of the Defined
                           Benefit

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                           Plans in which you are a participant as of the Date
                           of Termination (without regard to any amendment to
                           the Defined Benefit Plans made subsequent to the
                           Change in Control and on or prior to the Date of
                           Termination, which amendment adversely affects in any
                           manner the computation of pension benefits
                           thereunder) determined as if you had accumulated
                           (after the Date of Termination) thirty-six (36)
                           additional months of both age and service credit
                           under each of the Defined Benefit Plans in which you
                           participate as of the Date of Termination at your
                           highest annual rate of compensation during the twelve
                           (12) months immediately preceding the Date of
                           Termination (but in no event shall you be deemed to
                           have accumulated additional months of age or service
                           credit after your sixty-fifth (65th) birthday for
                           purposes of the Pension Plan), over (2) the
                           retirement pension (stated in the same form of
                           annuity and commencing on the same date as described
                           in subclause (1) above) which you had then accrued
                           pursuant to the provisions of the Defined Benefit
                           Plans in which you are a participant as of the Date
                           of Termination. For purposes of subclause (1), the
                           term "compensation" shall include amounts payable
                           pursuant to Clauses 5(D)(ii) and (iii) hereof, and
                           amounts payable pursuant to Clauses 5(D)(ii) and
                           (iii) hereof shall be deemed to represent thirty-six
                           (36) months of compensation (or for purposes of the
                           Pension Plan such lesser number of months of
                           compensation to your sixty-fifth (65th) birthday) for
                           purposes of determining benefits under the Defined
                           Benefit Plans. For purposes of this Subsection,
                           "actuarial equivalent" shall be determined using the
                           same methods and assumptions utilized under the
                           Pension Plan immediately prior to the Change in
                           Control.

                  (vi)     Employee Benefit Plans. Any unvested rights in any
                           employee benefit plan in which you are eligible to
                           participate

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                           shall immediately vest, such plans including but not
                           limited to those listed on Schedule A to this letter
                           agreement. You shall be entitled to receive all
                           benefits payable to you under the Company's benefit
                           and pension plans, not otherwise specifically
                           provided for in Subsection 4(D), including those
                           listed in Clause 4(C)(v).

                  (vii)    Normal Retirement Date. In the event you become
                           eligible for pension benefits under the Pension Plan
                           on the first day of the month following your
                           attaining age sixty-five (65), your Normal Retirement
                           Date, during the thirty-six (36) month period
                           following the commencement of payments pursuant to
                           Subsection 5(D), then you will only be entitled to
                           the lump sum payment as provided by Clauses 5(D)(ii),
                           (iii) and (v) for that period between the Date of
                           Termination and the last day of the month immediately
                           preceding your Normal Retirement Date. In addition,
                           any entitlement you shall have to benefits provided
                           by Clauses 5(D)(iv) and (vi) shall also cease as of
                           the date you attain your Normal Retirement Date.

         (E)      No Mitigation. You shall not be required to mitigate the
                  amount of any payment provided for in this Section 5 by
                  seeking other employment or otherwise, nor shall the amount of
                  any payment or benefit provided for in this Section 5 be
                  reduced by any compensation earned by you as the result of
                  employment by another employer or by pension benefits after
                  the Date of Termination, or otherwise except as specifically
                  provided in this Section 5.

         (F)      Gross-Up Payment. In the event that any payment received by
                  you or paid by the Company on behalf of you under this
                  Agreement or under any other plan, arrangement or agreement
                  with the Company or any person whose actions result in a
                  Change in Control (collectively, the "Total Payments") will be
                  subject to the excise tax (the "Excise Tax") imposed by
                  section 4999 (or any successor provision) of the Internal
                  Revenue Code of 1986, as amended (the "Code"), the Company
                  shall pay

                                      -15-
<PAGE>   16

                  to you an additional amount (the "Gross-Up Payment") such that
                  the net amount retained by you, after deduction of any Excise
                  Tax on the Total Payments and on any federal, state and local
                  income, excise and/or other taxes upon the Gross-Up Payment
                  provided for by this Section 6, shall be equal to the Total
                  Payments.

                  For purposes of determining whether any of the Total Payments
                  will be subject to the Excise Tax and the amount of such
                  Excise Tax, (i) the Total Payments shall be treated as
                  "parachute payments" within the meaning of Section 280G(b)(2)
                  of the Code, and all "excess parachute payments" within the
                  meaning of Section 280G(b)(1) of the Code shall be treated as
                  subject to the Excise Tax, unless in the written opinion of
                  tax counsel selected by the Company's independent auditors
                  such other payments or benefits (in whole or in part) do not
                  constitute parachute payments, including by reason of Section
                  280G(b)(4)(A) of the Code, or such excess parachute payments
                  (in whole or in part) represent reasonable compensation for
                  services actually rendered, within the meaning of Section
                  280G(b)(4)(B) of the Code, in excess of the Base Amount
                  allocable to such reasonable compensation, or are otherwise
                  not subject to the Excise Tax, and (ii) the value of any
                  non-cash benefits or any deferred payment or benefit shall be
                  determined by the Company's independent auditors in accordance
                  with the principles of Sections 280G(d)(3) and (4) of the
                  Code.

                  For purposes of determining the amount of the Gross-Up
                  Payment, you shall be deemed to pay federal income and other
                  taxes at the highest applicable marginal rate of taxation in
                  the calendar year in which the Gross-Up Payment is to be made
                  and state and local income and other taxes at the highest
                  applicable marginal rate of taxation in the state and locality
                  of your residence on the date the Gross-Up Payment is to be
                  made, net of the maximum reduction in federal income taxes
                  which could be obtained from deduction of such state and local
                  taxes and any other taxes. In the event that the Excise Tax is
                  subsequently determined to be less than the amount taken into
                  account hereunder, you shall repay to the Company, at the time
                  that the amount of such reduction in Excise Tax is

                                      -16-
<PAGE>   17

                  finally determined or upon your receipt of a refund from the
                  taxing authorities of the amount attributable to the reduction
                  in the excise tax, whichever is later, the portion of the
                  Gross-Up Payment attributable to such reduction (plus that
                  portion of the Gross-Up Payment attributable to the Excise Tax
                  and federal, state and local income and other taxes imposed on
                  the Gross-Up Payment being repaid by you to the extent that
                  such repayment results in a reduction in Excise Tax and/or a
                  federal, state or local income tax deduction) plus interest on
                  the amount of such repayment at the rate provided in Section
                  1274(b)(2)(B) of the Code. In the event that the Excise Tax is
                  determined to exceed the amount taken into account hereunder
                  (including by reason of any payment the existence or amount of
                  which cannot be determined at the time of the Gross-Up
                  Payment), the Company shall make an additional Gross-Up
                  Payment in respect of such excess (plus any interest,
                  penalties or additions payable by you with respect to such
                  excess) at the time that the amount of such excess is finally
                  determined. You and the Company shall each reasonably
                  cooperate with the other in connection with any administration
                  or judicial proceedings concerning the existence or amount of
                  liability for Excise Tax with respect to the Total Payments.

                  The Gross-Up Payment payable pursuant to this subsection shall
                  be payable on the earlier of (i) the date the Company is
                  required to withhold the Excise Tax pursuant to Section 4999
                  of the Code, or (ii) the date you are required to pay the
                  Excise Tax.

                  You shall notify the Company of any audit or review by the
                  Internal Revenue Service of your federal income tax return for
                  the year in which a payment under this Agreement is made
                  within ten (10) days of your receipt of such audit or review.
                  In addition, you shall notify the Company of the final
                  resolution of such audit or review within ten (10) days of
                  such resolution.

6.       Successors:  Binding Agreement

         (A) Assumption by Successor. The Company will require any successor
         (whether direct or indirect, by

                                      -17-
<PAGE>   18

         purchase, merger, consolidation or otherwise) to all or substantially
         all of the business and/or assets of the Company to expressly assume
         and agree to perform this Agreement in the same manner and to the same
         extent that the Company would be required to perform if no such
         succession had taken place. Failure of the Company to obtain such
         assumption and agreement prior to the effectiveness of any such
         succession shall be a breach of this Agreement and shall entitle you to
         compensation from the Company in the same amount and on the same terms
         as you would be entitled hereunder if you had terminated your
         employment for Good Reason following a Change in Control, except that
         for purposes of implementing the foregoing, the date on which any
         succession becomes effective shall be deemed the Date of Termination.
         As used in this Agreement, "the Company" shall mean the Company as
         hereinbefore defined and any successor to its business and/or assets as
         aforesaid which assumes and agrees to perform this Agreement by
         operation of law, or otherwise.

         (B) Enforceability by Beneficiaries. This Agreement shall inure to the
         benefit of and be enforceable by your personal or legal
         representatives, executors, administrators, successors, heirs,
         distributees, devisees and legatees. If you should die while any amount
         would still be payable to you hereunder if you had continued to live,
         all such amounts, unless otherwise provided herein, shall be paid in
         accordance with the terms of this Agreement to your devisee, legatee or
         other designee or, if there is no such designee, to your estate.

7.       Notice. For the purpose of this Agreement, notices and all other
         communications provided for in this Agreement shall be in writing and
         shall be deemed to have been duly given when delivered or mailed in the
         United States, registered mail, return receipt requested, postage
         prepaid, addressed to UNITED DOMINION INDUSTRIES, INC., ONE FIRST UNION
         CENTER, SUITE 2300, CHARLOTTE, NC 28202, with a copy to the Senior Vice
         President - Human Resources & Administration (or his successor) of the
         Company, or to you at the address set forth on the first page of this
         Agreement or to such other address as either party may have furnished
         to the other in writing in accordance herewith, except that notice of
         change of address shall be effective only upon receipt.

                                      -18-
<PAGE>   19

8.       Miscellaneous. No provision of this Agreement may be modified, waived
         or discharged unless such waiver, modification or discharge is agreed
         to in writing. No waiver by either party hereto at any time of any
         breach by the other party hereto of, or compliance with, any condition
         or provision of this Agreement to be performed by such other party
         shall be deemed a waiver of similar or dissimilar provisions or
         conditions at the same or at any prior or subsequent time. No agreement
         or representations, oral or otherwise, express or implied, with respect
         to the subject matter hereof have been made by either party which are
         not expressly set forth in this Agreement and this Agreement shall
         supersede all prior agreements, negotiations, correspondence,
         undertakings, and communications of the parties, oral or written, with
         respect to the subject matter hereof. The validity, interpretation,
         construction and performance of this Agreement shall be governed by the
         laws of the State of North Carolina applicable to contracts entered
         into and performed in such State. Notwithstanding the fact this
         Agreement is governed by the laws of the State of North Carolina, any
         action brought by you may be instituted in your state of residence.

9.       Validity. The invalidity or unenforceability of any provision of this
         Agreement shall not affect the validity or enforceability of any other
         provision of this Agreement, which shall remain in full force and
         effect.

10.      Counterparts. This Agreement may be executed in several counterparts,
         each of which shall be deemed to be an original, but all of which
         together will constitute one and the same instrument.

11.      Expenses of Enforcement. In the event of any dispute between the
         Company and you with respect to the subject matter of this Agreement
         and the enforcement of rights hereunder, the Company shall reimburse
         you for all reasonable costs and expenses relating to litigation,
         actions or other proceedings as they are incurred, including reasonable
         attorney's fees and expenses reasonably incurred, regardless of whether
         such litigation, actions or other proceedings result in any settlement
         or judgment or order in favor of any party; provided, however, that
         such costs and expenses will be reimbursable in the event of any claim
         or action initiated by you relating to this Agreement only if such
         claim shall have been made or

                                      -19-
<PAGE>   20

         brought after reasonable inquiry and shall be well-grounded in fact,
         and warranted by existing law or a good faith argument for the
         extension, modification or reversal of existing law, and that is not
         interposed for any improper purpose, such as to harass or to cause
         unnecessary delay or needless increase in the cost of litigation.
         Unless required by applicable Delaware law, in no event shall you be
         required to reimburse the Company for any of the costs and expenses
         relating to such litigation or other proceeding. The obligation of the
         Company under this Section 11 shall survive the termination for any
         reason of this Agreement (whether such termination is by the Company,
         by you, upon the expiration of this Agreement or otherwise).

12.      No Contract of Employment. Nothing in this Agreement shall be construed
         as giving you any right to be retained in the employ of the Company.

13.      Headings. The headings contained in this Agreement are intended solely
         for convenience and shall not affect the rights of the parties to this
         Agreement.

14.      Confidentiality. In consideration for the payments to be made by the
         Company hereunder, you agree to maintain the confidentiality of all
         information relating to the Company, Limited, or any of its or their
         subsidiaries not otherwise available to the public during the term, and
         following the expiration, of this Agreement.

15.      Guarantee by Limited. In consideration of the management services
         provided to it by the Company, and by its signature hereto, Limited
         agrees that it will guarantee the payment and performance of all
         obligations of the Company hereunder.

         If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our agreement on this subject.

Sincerely,

[Signatures]

                                      -20-<PAGE>   1

                                                                    EXHIBIT 10.6

                       UNITED DOMINION INDUSTRIES LIMITED

                  1999 STOCK OPTION AND RESTRICTED STOCK PLAN

                                   ARTICLE I

                                    PURPOSE

     The purpose of the United Dominion Industries Limited 1999 Stock Option and
Restricted Stock Plan (the "Plan") is to stimulate the interest and efforts of,
and to retain in service, employees, officers and directors; to provide a
facility that would make it easier for members of the UDI Group (as hereinafter
defined) to attract employees, officers and directors; and to enable such
employees to participate in the long-term growth and financial success of United
Dominion Industries Limited.

                                   ARTICLE II

                                  DEFINITIONS

     2.1 "Award" shall mean a grant of a Stock Option, Limited Stock
Appreciation Right or Restricted Stock Award under the Plan.

     2.2 "Beneficiary" shall mean a person or persons designated by a
Participant to succeed to, in the event of death, any outstanding Award held by
the Participant. Any Participant may, subject to such limitations as may be
prescribed by the Committee, designate one or more persons primarily or
contingently as beneficiaries in writing by notice delivered to the Corporation,
and may revoke such designations in writing. If a Participant fails effectively
to designate a beneficiary, then the Participant's estate shall be the
Participant's beneficiary.

     2.3  "Board" shall mean the Board of Directors of the Corporation.

     2.4  "Code" shall mean the United States Internal Revenue Code of 1986, as
amended.

     2.5  "Committee" shall mean the Board's Compensation and Human Resources
Committee, as appointed from time to time by the Board, so long as each of the
voting members of the Committee is not an "insider" or a "related" director, as
such terms are defined and interpreted by The Toronto Stock Exchange. Otherwise,
"Committee" shall mean the outside, "unrelated" directors, as such term is
interpreted by The Toronto Stock Exchange, who serve on the Board's Compensation
and Human Resources Committee. The Committee shall be responsible for
administering the Plan in accordance with Article III of the Plan.

     2.6  "Common Shares" shall mean the common shares (without par value) in
the capital of the Corporation.

     2.7  "Corporation" shall mean United Dominion Industries Limited, or any
successor corporation.

     2.8  "Disability" shall mean a condition resulting from an injury or
sickness that renders the Participant unable to perform any occupation for which
the Participant is qualified or may reasonably become qualified by reason of
education, training or experience, whether or not a job involving such
occupation is available within a member of the UDI Group.

     2.9 "Employee" shall mean an individual employed by any member of the UDI
Group who is, in the judgment of the Board, of special value to such member.

     2.10 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, or any successor statute.

     2.11 "Fair Market Value" of a share on a specified date shall mean the
average of the daily high and low board lot trading prices for such share on The
Toronto Stock Exchange on the most recent day prior to the grant date in which
Shares were traded on The Toronto Stock Exchange, or if no trade occurred on any
one of the preceding ten (10) trading days on such exchange, then on the New
York Stock Exchange, or if no trade occurred on any one of the preceding 10 days
on either the Toronto or New York exchanges, then on the Montreal Exchange, or
if no trade occurred on any one of the preceding 10 days

                                       1
<PAGE>   2

on any of the aforesaid exchanges, then on such other securities exchange or
market (including, without limitation, the automated quotation system of the
National Association of Securities Dealers, Inc. or the Canadian Dealing Network
System) on which such shares are listed or admitted for trading as may be
selected for such purpose by the Board with the consent of The Toronto Stock
Exchange. If Fair Market Value is determined in U.S. dollars, such Fair Market
Value shall be restated in Canadian dollars based upon the noon buying rate in
New York City for cable transfers of Canadian dollars payable in U.S. dollars as
certified for custom's purposes by the Federal Reserve Bank of New York on the
date an Award is granted.

     2.12 "Incentive Stock Option" shall mean any Stock Option granted pursuant
to the Plan that is intended to be and is specifically designated as an
"Incentive Stock Option" within the meaning of Section 422 of the Code.

     2.13 "Limited Stock Appreciation Right" or "Limited Right" shall mean an
Award granted in connection with the grant of a Stock Option pursuant to the
provisions of Section 6.1 of the Plan.

     2.14 "Non-Qualified Stock Option" shall mean any Stock Option granted
pursuant to the provisions of the Plan that is not an Incentive Stock Option, or
is specifically identified as not being an Incentive Stock Option.

     2.15 "Optionee" shall mean a Participant who has received the grant of a
Stock Option.

     2.16 "Participant" shall mean an individual who is eligible to participate
and is granted an Award under the Plan.

     2.17 "Plan" shall mean the United Dominion Industries Limited 1999 Stock
Option and Restricted Stock Plan set forth herein, as amended from time to time.

     2.18 "Restricted Stock Award" shall mean an Award granted pursuant to the
provisions of Section 7.1 of the Plan. "Restricted Stock" means Shares granted
pursuant to Section 7.1 of the Plan. "Restricted Stock Agreement" means the
agreement between the Corporation and the recipient of Restricted Stock that
contains the terms, conditions and restrictions pertaining to such Restricted
Stock.

     2.19 "Retirement" shall mean termination of employment because of normal or
early retirement under the UDI Group's Retirement Plan.

     2.20 "Retirement Plan" shall mean the United Dominion Industries, Inc.
Retirement Plan, as amended or replaced from time to time, or such other similar
retirement plan applicable to an Employee as a result of such Employee's
employment with an entity in the UDI Group that does not participate in such
plan.

     2.21 "Shares" shall mean Common Shares.

     2.22 "Stock Option" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option granted pursuant to Article V of the Plan. "Stock Option Agreement"
means the agreement between the Corporation and the Optionee that contains the
terms and conditions pertaining to a Stock Option.

     2.23 "UDI Group" shall mean the Corporation and its subsidiary corporations
(as that term is defined under Code Section 424(f)). The companies comprising
such group are hereinafter sometimes referred to collectively as "members of the
UDI Group" and individually as a "member of the UDI Group."

                                  ARTICLE III

                                 ADMINISTRATION

     3.1 Composition of the Committee.  The Plan shall be administrated by the
Committee. The Board may from time to time remove members from, or add members
to, the Committee. Subject to Section 2.5 of the Plan, the Board shall have the
authority to fill vacancies on the Committee, however caused.

     3.2 Actions by the Committee.  The Committee shall hold meetings at such
times and places as it may determine. Acts approved by a majority of the members
of the Committee present at a meeting at

                                       2
<PAGE>   3

which a quorum is present, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid acts of the
Committee.

     3.3 Powers of the Committee.  The Committee shall have the authority to
administer the Plan in its sole discretion, subject, where applicable, to the
requirements of The Toronto Stock Exchange and, when required, to the approval
of the Corporation's shareholders. To this end, the Committee is authorized to
construe and interpret the Plan, to promulgate, amend and rescind rules relating
to the implementation of the Plan and to make all other determinations necessary
or advisable for the administration of the Plan, including, but not limited to,
the recommendation to the Board of individuals who may be granted Awards, the
number of Shares to be subject to each Award, the Award price, if any, the
vesting or duration of Awards, the designation of Stock Options as Incentive
Stock Options or Non-Qualified Stock Options, and any other terms and conditions
of Awards. The Committee may designate persons other than members of the
Committee to carry out its responsibilities and may prescribe such conditions
and limitations as it may deem appropriate. Any determination, decision or
action of the Committee in connection with the construction, interpretation,
administration or application of the Plan shall be final, conclusive and binding
upon all persons participating in the Plan and any person validly claiming under
or through persons participating in the Plan.

     3.4 Compliance with Laws.  The administration of the Plan by the Committee,
including the provisions of Sections 3.1-3.3 above, shall in all respects be
subject to the provisions of the Corporation's Bylaws, as amended from time to
time, and applicable laws, rules and regulations.

                                   ARTICLE IV

                                  ELIGIBILITY

     4.1 Eligibility.  The individuals eligible to be granted Awards under the
Plan are the officers and directors of the Corporation and Employees.
Participants shall include the officers, directors and such Employees as
determined by the Committee, subject to approval or rejection by the Board.

                                   ARTICLE V

                                 STOCK OPTIONS

     5.1 Awards of Stock Options.  Stock Options may be granted to an officer,
director or Employee, either alone or in addition to other Awards granted under
the Plan. The Committee shall from time to time recommend to the Board those
individuals to whom Stock Options should be granted, specifying the number of
Shares that should be placed under the Stock Option to each such individual.
Each Stock Option granted under this Plan shall be one of two types: (i) an
Incentive Stock Option or (ii) a Non-Qualified Stock Option. Participants may be
awarded one or more Incentive Stock Options, Non-Qualified Stock Options, or
both types of Stock Options.

     The Board may (i) accept all or any part of such a recommendation of the
Committee or (ii) refer all or any part thereof back to the Committee for
further consideration and recommendation.

     The grant of every Stock Option hereunder shall be made by written
agreement between the Corporation and the Optionee, the provisions of which
shall conform to the applicable provisions of the Plan and shall otherwise be
satisfactory to the Committee.

     5.2 Incentive Stock Options.  Anything in this Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under this Plan be so exercised, so as to disqualify this Plan under
Section 422 of the Code, or without the consent of the Participant affected, to
disqualify any Incentive Stock Option under Section 422 of the Code. No
Incentive Stock Options may be awarded after December 31, 2008. No Incentive
Stock Options shall be granted to a Participant who is not an Employee.

                                       3
<PAGE>   4

     5.3 Terms of Stock Options.  Stock Options granted under this Plan shall be
subject to the following terms and conditions and shall be in such form and
contain such additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem desirable:

          (a) Exercise Price.  Each Stock Option shall state the price per
     Share, as determined by the Committee, at which the Stock Option may be
     exercised; provided, however, that the per Share exercise price shall not
     be less than the Fair Market Value of a Share on the date of grant.

          Further provided, in the case of an Incentive Stock Option granted to
     an Employee who owns more than 10% of the total combined voting power of
     all classes of stock of the Corporation, the exercise price per Share shall
     not be less than 110% of the Fair Market Value of a Share on the date of
     grant.

          (b) Option Term.  The term of each Stock Option shall be fixed by the
     Committee, but no Stock Option shall be exercisable more than ten (10)
     years after the date the Stock Option is granted, or no more than five (5)
     years in the case of an Employee who owns more than 10% of the total
     combined voting power of all classes of stock of the Corporation.

          (c) Exercisability and Nontransferability of Stock Options.  Except as
     provided below, no Stock Option may be exercised within one year of grant.
     At the end of one year, one-third of the grant will become exercisable.
     Thereafter, one-third of the grant will become exercisable at the
     conclusion of each of the succeeding two years. Notwithstanding the
     foregoing, an Optionee who is fully vested in the Retirement Plan may
     exercise any of such Optionee's Stock Options upon reaching "retirement
     age" as defined in the Retirement Plan so long as at least six months have
     passed since the date on which such options were granted. Directors of the
     Corporation who are not employees of the Corporation are subject only to
     the six-month vesting requirement set forth below with respect to the
     exercise of Options. The Committee may, in its entire discretion, at the
     time of the granting of Stock Options hereunder, specify another particular
     time period or periods following the date of the grant of the Stock Option
     during which an Optionee may exercise his Stock Options to purchase, may
     designate the number of Shares in respect of which such Optionee may
     exercise his Stock Option to purchase, and may designate the number of
     Shares in respect of which such Optionee may exercise his option during
     each time period; provided, however, in no event may the Committee specify
     a time period or periods following the date of the grant of Stock Options
     that would enable an Optionee to exercise all or part of his Stock Options
     within six months following the date of grant.

          No Stock Option shall be transferable by the Optionee otherwise than
     by will or the laws of descent and distribution. Stock Options shall be
     exercisable during the Optionee's lifetime, only by the Optionee, or his
     guardian, conservator, or other legal representative. An Optionee may elect
     that, upon his death, no right to exercise his option shall be transmitted
     or passed to his executors or other legal representatives. Such election
     must be made by written instrument signed by such Optionee and addressed
     and delivered to the Secretary of the Corporation and may thereafter, in
     like manner, be revoked and again made and revoked at any time and from
     time to time during the lifetime of such Optionee and so long as his Stock
     Option rights have not terminated or been wholly exercised.

          (d) Method of Exercise.  Purchases of Shares by an Optionee shall be
     in lots of not less than 25 Shares, and all Shares must be paid in full at
     the time of their purchase.

          Purchase may be made in cash or, unless prohibited by the Committee at
     the time of the grant, by exchanging Shares owned by the Optionee or by a
     combination of cash and Shares provided that the combined value of cash and
     the Fair Market Value of Shares tendered is equal to the exercise price.

          (e) Death.  If an Optionee's employment is terminated because of his
     death, all Stock Options previously granted will become exercisable and may
     be exercised at any time before their expiration date.

                                       4
<PAGE>   5

          (f) Disability.  If an Optionee's employment is terminated because of
     Disability, all Stock Options previously granted will remain exercisable
     according to their original schedule of exercisability and may be exercised
     until their expiration date. Stock Options exercised more than one year
     after employment is terminated because of Disability shall be considered
     Non-Qualified Stock Options.

          (g) Retirement.  If an Optionee's employment is terminated because of
     Retirement, then in the event of Retirement (as defined in the Retirement
     Plan) all Stock Options previously granted to such retiring Optionee will
     become immediately exercisable and may be exercised at any time before
     their expiration date to the extent the Optionee is entitled to do so under
     clause (c) above. Stock Options exercised by a retired Optionee more than
     three months after Retirement shall be considered Non-Qualified Stock
     Options.

          (h) Other Termination of Employment.  If an Optionee's employment is
     terminated for any reason other than death, Disability or Retirement, all
     Stock Options owned by such Optionee shall terminate on the date ninety
     (90) days after the date of the termination of such Optionee's employment;
     provided, however, the Committee may, in its sole and exclusive discretion,
     at any time either before or after the expiration of such ninety (90) day
     period, extend the right to exercise the Stock Options (including Stock
     Options not otherwise exercisable as of the date of such termination of
     employment) beyond such ninety (90) day period. The foregoing sentence
     notwithstanding, in no instance shall this paragraph operate to extend the
     term of any Stock Option.

          (i) Change in Control.  All Stock Options shall become immediately
     exercisable upon a Change in Control (as defined in Section 6.1(g) hereof).

          (j) Directors.  In the event the Optionee is a director of the
     Corporation and not an Employee of the UDI Group at the time of the grant,
     or at any time during the exercise period, Stock Options granted to such
     Optionee may be exercised, to the extent the Optionee is entitled to do so
     under clause (c) above, at any time until their expiration date. Stock
     Options granted to non-Employee directors shall be Non-Qualified Stock
     Options. The aggregate number of Shares subject to Stock Options granted to
     non-Employee directors of the Corporation as a group during any one year
     period shall not exceed 100,000 Shares.

          (k) Buyout and Settlement Provisions.  The Committee may at any time
     offer to buy out a Stock Option previously granted, based on such terms and
     conditions as the Committee shall establish and communicate to the
     Participant at the time that such offer is made.

          (l) Optionee's Shareholder Rights.  An Optionee shall be entitled to
     the rights appertaining to share ownership, such as to dividends and
     voting, only with respect to Shares that have been fully paid for and
     issued to him.

          (m) Exercise of Options.  Stock Options shall be exercised only in
     accordance with the terms and conditions of the Stock Option Agreements
     under which they are respectively granted and shall be exercisable only in
     writing on forms to be provided by the Committee.

          (n) Limitation on Exercise.  To the extent that the Fair Market Value
     of Shares with respect to which Incentive Stock Options (determined without
     regard to this paragraph) are exercisable for the first time by any
     individual during any calendar year exceeds $100,000, such Stock Option
     shall be designated at the time of grant and otherwise be treated as
     Non-Qualified Stock Options.

     5.4 Replacement Options.  As an incentive to encourage stock ownership in
the Corporation on the part of the Optionees, the Committee may, at its
discretion, subject to regulatory approval, authorize replacement Stock Option
grants ("Replacement Options") to Optionees who exercise all or a portion of a
grant by means of tendering Shares acquired not less than six months earlier. If
an Optionee exercised part or all of a Stock Option grant by tendering Shares,
the Committee may grant a Replacement Option grant equal to the number of
tendered Shares. In addition to the foregoing terms of Section 5.3 above, the
Replacement Option shall be subject to the following terms:

          (a) the Optionee agrees to retain ownership of the exercised Shares
     for a period of at least two years; and

                                       5
<PAGE>   6

          (b) the exercise price of the Replacement Option will be equal to 100%
     of the Fair Market Value at the time of the granting of the Replacement
     Option; and

          (c) the expiration date of the Replacement Option will be the same as
     the expiration date of the original Stock Option that has been exercised.

                                   ARTICLE VI

                       LIMITED STOCK APPRECIATION RIGHTS

     6.1 Limited Stock Appreciation Rights.

          (a) The Committee shall have the authority to grant Limited Stock
     Appreciation Rights (the "Limited Rights") in connection with the grant of
     Stock Options under this Plan to any Optionee, and such rights may be
     granted either at or after the time of the grant of such Stock Option.

          (b) Limited Rights or any applicable portion thereof granted with
     respect to a given Stock Option shall terminate and no longer be
     exercisable upon the termination of the related Stock Option. Upon the
     exercise of a Stock Option, the related Limited Right shall cease to be
     exercisable to the extent of the Shares with respect to which such Stock
     Option is exercised.

          (c) An Optionee, in accordance with this Article VI, may exercise a
     Limited Right related to a Stock Option by surrendering the applicable
     portion of the related Stock Option. Upon such exercise and surrender, the
     Optionee shall be entitled to receive an amount determined in the manner
     prescribed in this Article VI, and the related Stock Option shall cease to
     be exercisable to the extent that the Shares with respect to which such
     Limited Rights are exercised.

          (d) Limited Rights shall only be exercisable following a Change in
     Control as defined in paragraph (g) of this Article VI, at which time all
     optioned Shares and the related Limited Rights shall become exercisable
     notwithstanding the provisions hereof; Limited Rights may only be exercised
     during the 30-day period following a Change in Control, unless the first
     six months of the term of the Limited Rights have not yet elapsed, in which
     case, the 30-day period will commence at the conclusion of the sixth month.
     (This six-month limitation shall not apply in the event of the Optionee's
     death or Disability.)

          (e) Upon the exercise of a Limited Right related to a Stock Option, an
     Optionee shall be entitled to receive an amount in cash equal in value to
     the excess of the higher of (i) the highest price per share paid in
     connection with the Change in Control, or (ii) the average of the daily
     high and low board lot trading prices for any five day continuous period on
     The Toronto Stock Exchange, such excess to be multiplied by the number of
     Shares in respect to which the Limited Right shall have been exercised.

          (f) Limited Rights shall be subject to such other terms and
     conditions, not inconsistent with the provisions of the Plan, as shall be
     determined from time to time by the Committee.

          (g) A "Change in Control" shall be deemed to have occurred if any of
     the following events occur:

             (i) The acquisition by any person, entity or group (within the
        meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), of
        beneficial ownership (within the meaning of Rule 13d-3 promulgated under
        the Exchange Act) of 30% or more of either the then outstanding voting
        securities entitled to vote generally in the election of directors;

             (ii) A change in the persons constituting the Board as it existed
        in the immediately preceding calendar year (the "Incumbent Board") such
        that the directors of the Incumbent Board no longer constitute a
        majority of the Board; provided that any person becoming a director in a
        subsequent year whose election, or nomination for election, by the
        Corporation's shareholders was approved by a vote of at least a majority
        of the directors then comprising the Incumbent Board (other than an
        election or nomination of an individual whose initial assumption of
        office is in connection with an actual or threatened election contest
        relating to the election of

                                       6
<PAGE>   7

        the directors of the Corporation, as such terms are used in Rule 14a-11
        of Regulation 14A promulgated under the Exchange Act) shall be, for
        purposes of the Plan, considered as though such person was a member of
        the Incumbent Board;

             (iii) Approval by the shareholders of the Corporation of a
        reorganization, merger, amalgamation, arrangement or consolidation, in
        each case with respect to which persons who were the shareholders of the
        Corporation immediately prior to such reorganization, merger,
        amalgamation, arrangement or consolidation do not, immediately
        thereafter, own more than 50% of the combined voting power of the
        surviving corporation;

             (iv) Approval by the shareholders of the Corporation of a sale or
        other disposition of all or substantially all of the assets of the
        Corporation to an individual, corporation, firm or other entity which is
        not a wholly-owned subsidiary of the Corporation; or

             (v) Approval by the shareholders of the Corporation of a
        liquidation or dissolution of the Corporation or the sale of all or
        substantially all of the assets of the Corporation.

                                  ARTICLE VII

                                RESTRICTED STOCK

     7.1 Restricted Stock Awards.  In consideration for prior service with the
UDI Group and/or as an incentive for employment with the UDI Group, either as an
Employee or as a director of the Corporation, Shares of Restricted Stock may be
granted to an Employee or director of the Corporation either alone or in
addition to other Awards granted under this Plan. The Committee shall, from time
to time, recommend to the Board those individuals to whom, and the times at
which, grants of Restricted Stock will be made, the number of Shares of
Restricted Stock to be awarded, the time within which such Awards may be subject
to forfeiture or repurchase by the Corporation, and all other terms and
conditions not inconsistent with the express provisions of the Plan. The
aggregate number of Shares of Restricted Stock granted to non-Employee directors
of the Corporation as a group during any one year period shall not exceed 25,000
Shares.

     The terms of each Restricted Stock Award shall be set forth in a Restricted
Stock Agreement between the Corporation and the Participant, which Agreement
shall contain such provisions as the Committee determines to be necessary or
appropriate to carry out the intent of the Plan with respect to such Award. Each
Participant receiving a Restricted Stock Award shall be issued a stock
certificate in respect of such Shares of Restricted Stock. Such certificate
shall be registered in the name of such Participant, and shall bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such Award. The Committee shall require that the Corporation hold
stock certificates evidencing such Shares until the restrictions thereon shall
have lapsed.

     7.2 Restrictions and Conditions.  The Shares of Restricted Stock awarded
pursuant to this Article VII shall be subject to the following terms, conditions
and restrictions:

          (a) The Committee in its sole discretion shall specify the terms,
     conditions and restrictions under which Shares of Restricted Stock shall
     vest or be forfeited or repurchased by the Corporation. These terms,
     conditions and restrictions may include continued employment with the
     Corporation or other member of the UDI Group for a specified period of
     time, termination of the Employee's employment for specified reasons such
     as death, Disability or Retirement (as defined in the Retirement Plan)
     prior to the completion of the specified period, or the attainment of
     certain performance objectives. The period of time commencing with the date
     of such Award and ending on the date on which all Shares of Restricted
     Stock in such Award either vest or are forfeited or repurchased by the
     Corporation shall be known as the "Restriction Period." With respect to the
     Restricted Stock during the Restriction Period the Committee may, in its
     sole and exclusive discretion, at any time either before or after the
     termination of an Employee's employment, provide for the lapse of any such
     term, condition or restriction in installments and may accelerate or waive
     such term, condition or restriction in whole or in part, based on service,
     performance and/or such other factors or criteria as the Committee may
     determine in its sole discretion. During the Restriction

                                       7
<PAGE>   8

     Period the Participant shall not be permitted to sell, transfer, pledge,
     assign or encumber Shares of Restricted Stock awarded under the Plan.

          (b) Except as provided in this paragraph (b) and paragraph (a) above,
     the Participant shall have, with respect to the Shares of Restricted Stock,
     all of the rights of a shareholder of the Corporation, including the right
     to vote the Shares and the right to receive any cash or stock dividends.
     The Committee, in its sole discretion, as determined at the time of an
     Award, may provide that the payment of cash dividends shall or may be
     deferred. Any deferred cash dividends may be reinvested as the Committee
     shall determine in its sole discretion, including reinvestment in
     additional Shares of Restricted Stock. Stock dividends issued with respect
     to Restricted Stock shall be Restricted Stock and will be subject to the
     same terms, conditions and restrictions that apply to the Shares with
     respect to which such dividends are issued. Additional Shares of Restricted
     Stock issued with respect to cash or stock dividends shall not be counted
     against the maximum number of Shares for which Awards may be granted under
     the Plan in each calendar year as set forth in Article VIII of the Plan.

     (c) If and when the Restriction Period applicable to Shares of Restricted
Stock expires without a prior forfeiture or repurchase by the Corporation of the
Restricted Stock, certificates for an appropriate number of unrestricted Shares
shall be delivered promptly to the Participant upon request by the Participant
for exchange and cancellation.

                                  ARTICLE VIII

                           SHARES SUBJECT TO THE PLAN

     8.1 Number of Shares Available for Awards.  The aggregate number of Shares
reserved for issuance under the Plan shall be equal to 1,200,000 Shares plus up
to 2,638,666 Shares as to which Awards under the United Dominion Industries
Limited Stock Option and Restricted Stock Plan dated effective as of February
11, 1994, as amended, may lapse, expire, terminate or be cancelled or
repurchased by the Corporation; provided, however, the aggregate number of such
Shares available for issuance under the Plan shall not exceed 10% of the
outstanding Common Shares of the Corporation as of the effective date of the
Plan determined in accordance with Article X below. The total number of Shares
subject to Awards granted to all persons in any calendar year under this Plan
shall not exceed 2% of the outstanding Common Shares of the Corporation as of
the effective date of the Plan determined in accordance with Article X below. In
addition, in no event shall more than an aggregate of 1,000,000 Shares be
reserved under the Plan for Incentive Stock Options.

     8.2 Limitations on Individual Awards.

          (a) The aggregate number of Shares subject to outstanding Awards
     (determined at time of grant) under the Plan to any one person shall not
     exceed the lesser of (i) 5% of the then outstanding Shares and
     (ii) 1,750,000 Shares in the aggregate.

          (b) No Participant shall be granted Awards under this Plan with
     respect to more than 500,000 Shares in any calendar year.

          (c) Awards to directors who are not Employees in the UDI Group shall
     be limited to the per year aggregate amounts set forth in Sections 5.3(j)
     and 7.1 above.

     8.3 Lapsed or Terminated Awards.  Shares that were subject to Awards that
have lapsed or terminated or shares of Restricted Stock that have been
repurchased at a nominal price and cancelled by the Corporation (and Shares
tendered for payment of withholding taxes) shall thereby become reinstated as
Shares reserved for Awards hereunder and, accordingly, shall again be available
for the grant of an Award under the Plan.

     8.4 Adjustment in Number of Shares for Recapitalizations and Related
Transactions.  If, through or as a result of any merger, amalgamation,
arrangement, consolidation, sale of all or substantially all of the assets of
the Corporation, reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar transaction, (i) the
outstanding Shares are increased, decreased or

                                       8
<PAGE>   9

exchanged for a different number or kind of shares or other securities of the
Corporation, or (ii) additional Shares or new or different shares or other
securities of the Corporation or other non-cash assets are distributed with
respect to such Shares or other securities, an appropriate and proportionate
adjustment may be made in (x) the maximum number and kind of shares reserved for
issuance under the Plan, (y) the number and kind of shares subject to any then
outstanding Awards under the Plan, and (z) the price for each Share subject to
any then outstanding Awards under the Plan (without changing the aggregate
purchase price, if any, of any Stock Options). Any adjustments under this
Section 8.4 shall be made by the Board, whose determination as to what
adjustments, if any, shall be made and the extent thereof shall be final,
binding and conclusive. No fractional Shares shall be issued under the Plan on
account of any such adjustments.

     8.5 Merger, Consolidation, Asset Sale, Liquidation, etc.  In the event of a
consolidation, merger, amalgamation, arrangement or sale of all or substantially
all of the assets of the Corporation in which outstanding Shares are exchanged
for securities, cash or other property of any other corporation or business
entity or in the event of a liquidation of the Corporation, the Board, or the
board of directors of any corporation assuming the obligations of the
Corporation, may, in its discretion, take any one or more of the following
actions as to the outstanding Awards under the Plan: (i) provide that such
Awards shall be assumed, or equivalent Awards shall be substituted, by the
acquiring or succeeding corporation (or an affiliate thereof); provided that any
such Awards substituted for Incentive Stock Options shall meet the requirements
of Section 424(a) of the Code, (ii) upon written notice to the Participant,
provide that all unexercised Awards will terminate within a specified period
immediately prior to the consummation of such transaction unless exercised by
the Participant within a specified period following the date of such notice,
(iii) in the event of a merger, amalgamation or arrangement under the terms of
which holders of Shares of the Corporation will receive upon consummation
thereof a cash payment for each Share surrendered in the merger (the "Merger
Price"), make or provide for a cash payment to the Participants equal to the
difference between (A) the Merger Price times the number of Shares subject to
such outstanding Award and (B) the aggregate exercise price, if any, of all such
outstanding Awards in exchange for the termination of such Awards, and (iv)
provide that all or any outstanding Awards shall become exercisable in full
immediately prior to such event.

                                   ARTICLE IX

                               GENERAL PROVISIONS

     9.1 Shareholder Approval.  The Plan, and any Award granted hereunder, shall
be conditional upon obtaining the approval of the Plan by the shareholders of
the Corporation within 12 months of adoption of the Plan by the Board.
Furthermore, if required by applicable law, the grant of any Award under the
Plan, including the terms thereof, shall be conditional upon obtaining the
approval of the shareholders of the Corporation.

     9.2 Amendment of Plan.  Subject to applicable laws, rules and regulations,
the Board may at any time and from time to time, by resolution, amend or
terminate the Plan. No such amendment or termination shall, except with the
written consent of the Participants concerned, affect the terms and conditions
of Awards previously granted under the Plan.

     9.3 Rights of Participants.  It is not intended that the Plan shall in any
way affect the policies or decision of any member of the UDI Group in relation
to the remuneration of Employees, officers or directors. Moreover, no Employee
shall have any claim or right to be granted an Award and the grant of an Award
shall not be construed as giving the Participant the right to be retained in the
employ of the Corporation or other member of the UDI Group.

     9.4 Securities Law Requirements.  No Shares shall be issued, and no Stock
Options shall become exercisable, pursuant to the Plan unless and until the
Corporation has determined that it and the Participant have taken all actions
required under the securities laws of both the United States and Canada and
including any applicable listing requirement of any stock exchange on which the
Common Shares are listed.

                                       9
<PAGE>   10

     9.5 Unfunded Status of Plan.  This Plan is intended to be unfunded. With
respect to any payments as to which a Participant has a fixed and vested
interest but which are not yet made to a Participant by the Company, nothing
contained herein shall give any such Participant any rights that are greater
than those of a general creditor of the Company.

     9.6 Other Plans.  Awards granted under this Plan shall not be treated as
compensation for purposes of any pension, profit sharing, life insurance,
disability or any other retirement or welfare benefit plan now maintained or
hereafter adopted by the members of the UDI Group, unless otherwise provided in
such plan.

     9.7 Withholding Taxes.

          (a) General.  To the extent required by applicable federal, state,
     provincial, local or foreign law, the recipient of any payment or
     distribution under the Plan shall make arrangements satisfactory to the
     Corporation for the satisfaction of any withholding tax obligations that
     arise by reason of such payment or distribution. The Corporation shall not
     be required to make such payment or distribution until such obligations are
     satisfied.

          (b) Stock Withholding.  Unless otherwise provided by the Committee, a
     Participant may satisfy all or part of his withholding tax obligations
     incident to the exercise of a Non-Qualified Stock Option or the vesting of
     Restricted Stock by having the Corporation withhold a portion of the Shares
     that otherwise would be issued to him. Such Shares will be valued at their
     Fair Market Value on the date when taxes otherwise would be withheld in
     cash. The payment of withholding taxes by surrendering Shares to the UDI
     Group member, if permitted by the Committee, shall be subject to such
     restrictions as the Committee may impose, including any restrictions
     required by rules of the securities laws of Canada or the United States,
     and the Code.

     9.8 No Assignment of Benefits.  No Award or other benefit payable under
this Plan shall, except as otherwise specifically provide by law or Section
5.3(c) hereof, be transferable in any manner, and any attempt to transfer any
such benefit shall be void, and any such benefit shall not in any manner be
subject to the debts, contracts, liabilities, engagements or torts of any person
who shall be entitled to such benefit, nor shall it be subject to attachment or
legal process for or against such person.

     9.9 Governing Law.  This Plan and actions taken in connection herewith
shall be governed by and construed in accordance with the laws of the Province
of Ontario.

     9.10 Construction.  Wherever any words are used in this Plan in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.

     9.11 Liability.  No member of the Board, no member of the Committee and no
Employee shall be liable for any act or failure to act hereunder by any other
member or Employee or by any agent to whom duties in connection with the
administration of this Plan have been delegated or, except in circumstances
involving his bad faith, gross negligence or fraud, for any act or failure to
act by the member or Employee.

     9.12 Awards in Foreign Countries.  The Committee shall have the authority
to adopt such modifications, procedures and subplans as may be necessary or
desirable to comply with provisions of the laws of foreign countries in which
the members of the UDI Group may operate to assure the viability of the benefits
of Awards made to Participants employed in such countries and to meet the intent
of the Plan.

     9.13 Severability.  The provisions of the Plan shall be deemed severable
and the validity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.

                                       10
<PAGE>   11

                                   ARTICLE X

                             EFFECTIVE DATE OF PLAN

     This Plan was adopted by the Board on February 12, 1999. This Plan shall
become effective on the date it is approved by the shareholders of the
Corporation. This Plan shall continue in effect until terminated by the Board
pursuant to Section 9.2.

                                      11

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