Document:

exv10w1

 Exhibit 10.1

EIGHTH AMENDMENT TO CREDIT AGREEMENT

     THIS EIGHTH AMENDMENT TO CREDIT AGREEMENT (this “Eighth Amendment”), dated as of May
3, 2011, is by and among CARRIAGE SERVICES, INC., a Delaware corporation (the “Borrower”),
the banks listed on the signature pages hereof (the “Lenders”), WELLS FARGO BANK, N.A., as
Syndication Agent (in said capacity, the “Syndication Agent”), and BANK OF AMERICA, N.A.,
as Administrative Agent, Swing Line Lender and L/C Issuer (in said capacity as Administrative
Agent, the “Administrative Agent”).

BACKGROUND

     A. The Borrower, the Lenders, the Syndication Agent, and the Administrative Agent are parties
to that certain Credit Agreement, dated as of April 27, 2005, as amended by that certain First
Amendment to Credit Agreement, dated as of August 31, 2005, as modified by that certain Waiver and
Consent, dated as of September 1, 2006, as amended by that certain Second Amendment to Credit
Agreement, dated as of May 4, 2007, as amended by that certain Third Amendment to Credit Agreement,
dated as of December 1, 2007, as amended by that certain Fourth Amendment to Credit Agreement,
dated as of November 14, 2008, as amended by that certain Fifth Amendment to Credit Agreement,
dated as of December 31, 2008, as modified by that certain Waiver to Credit Agreement, dated as of
March 19, 2009, as amended by that certain Sixth Amendment to Credit Agreement, dated as of May 4,
2009, and as amended by that certain Seventh Amendment to Credit Agreement, dated as of November 4,
2009 (said Credit Agreement, as amended and modified, the “Credit Agreement”; the terms
defined in the Credit Agreement and not otherwise defined herein shall be used herein as defined in
the Credit Agreement).

     B. The Borrower has requested that the Lenders amend the Credit Agreement, as more fully set
forth herein.

     C. The Lenders parties to this Eighth Amendment (which Lenders constitute each of the Lenders
as required under the Credit Agreement) are willing to agree to such amendment, subject to the
performance and observance in full of each of the covenants, terms and conditions, and in reliance
upon all of the representations and warranties of the Borrower, set forth herein.

     NOW, THEREFORE, in consideration of the covenants, conditions and agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy of which are all
hereby acknowledged, the parties hereto covenant and agree as follows:

     1. AMENDMENTS.

     (a) Section 1.01 of the Credit Agreement is hereby amended by adding the defined terms
thereto in proper alphabetical order to read as follows:

     “Eighth Amendment” means that Eighth Amendment to Credit Agreement dated as of
May 3, 2011, among the Borrower, the Lenders party thereto, the Syndication Agent and the
Administrative Agent.

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     “Eighth Amendment Effective Date” means the date that all conditions to
effectiveness set forth in Section 3 of the Eighth Amendment are satisfied.

(b) Section 7.06(a)(iii) of the Credit Agreement is hereby amended to read as follows:

     (iii) so long as there exists no Default both before and after giving effect to any
such transaction (which shall include calculation of the financial covenants set forth in
Section 7.11 on a pro forma basis as of the fiscal quarter-end immediately preceding
any proposed Restricted Payment), (x) the Borrower may make (A) payments of Dividends on and
redemptions of Existing Preferred Stock, (B) payments of Dividends on Qualified Preferred
Stock, (C) distribution of the Trust Notes to the holders of the Trust Preferred Stock in
connection with the dissolution of the Trust Subsidiary, (D) provided that the Total
Outstandings (excluding L/C Obligations other than Unreimbursed Amounts and L/C Borrowings)
are zero at the time of payment of any Dividend under this subclause (D) and immediately
after giving effect thereto, other payments of Dividends not to exceed $5,000,000 in
aggregate amount during the period from and including November 14, 2008 up to but not
including the Eighth Amendment Effective Date, and (E) other payments of Dividends not to
exceed $2,500,000 in aggregate amount from and including the Eighth Amendment Effective Date
through the Maturity Date, (y) a Subsidiary may make Restricted Payments under the Carriage
Business Development Program, and (z) the Borrower may pay interest on the Trust Notes to
the Trust Subsidiary and may cause or permit the Trust Subsidiary to declare, make or pay
Dividends in respect of the Trust Preferred Stock; and

     2. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By its execution and
delivery hereof, the Borrower represents and warrants that, as of the date hereof, and immediately
after giving effect to this Eighth Amendment:

     (a) the representations and warranties contained in the Credit Agreement and the other Loan
Documents are true and correct on and as of the date hereof as made on and as of such date, except
to the extent that such representations and warranties specifically refer to an earlier date, in
which case they shall be true and correct as of such earlier date, and except that the
representations and warranties contained in subsection (a) of Section 5.05 of the Credit
Agreement shall be deemed to refer to the most recent statements furnished pursuant to clauses (a)
and (b), respectively, of Section 6.01 of the Credit Agreement, except that to the extent
that such representations and warranties refer to statements furnished pursuant to clause (b) of
Section 6.01 of the Credit Agreement, the representations and warranties in subclauses (i)
and (ii) of clause (a) of Section 5.05 of the Credit Agreement shall be qualified by
reference to the absence of footnotes and shall be subject to normal year-end audit adjustments;

     (b) no event has occurred and is continuing which constitutes a Default or Event of Default;

     (c) (i) the Borrower has full power and authority to execute and deliver this Eighth
Amendment, (ii) this Eighth Amendment has been duly executed and delivered by the Borrower, and
(iii) this Eighth Amendment constitutes the legal, valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance its terms, except as enforceability

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may be limited by applicable Debtor Relief Laws and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at law) and except as
rights to indemnity may be limited by federal or state securities laws;

     (d) neither the execution, delivery and performance of this Eighth Amendment nor the
consummation of any transactions contemplated herein, will conflict with (i) the certificate or
articles of incorporation or the applicable constituent documents or bylaws of the Borrower or its
Subsidiaries, (ii) to Borrower’s knowledge, any provision or law, statute, rule or regulation
applicable to the Borrower or its Subsidiaries or (iii) any indenture, agreement or other
instrument to which the Borrower, the Subsidiaries or any of their properties are subject; and

     (e) no authorization, approval, consent, or other action by, notice to, or filing with, any
Governmental Authority or other Person not previously obtained is required to be obtained or made
by the Borrower pursuant to statutory law applicable to the Borrower as a condition to (i) the
execution, delivery or performance by the Borrower of this Eighth Amendment, or (ii) the
acknowledgement by each Guarantor of this Eighth Amendment.

     3. CONDITIONS OF EFFECTIVENESS. This Eighth Amendment shall be effective on and as of
the date hereof, subject to the following:

     (a) the representations and warranties set forth in Section 2 of this Eighth Amendment shall
be true and correct;

     (b) the Administrative Agent shall have received counterparts of this Eighth Amendment
executed by each of the Lenders; and

     (c) the Administrative Agent shall have received counterparts of this Eighth Amendment
executed by the Borrower and acknowledged by each Guarantor.

     4. GUARANTOR’S ACKNOWLEDGMENT. By signing below, each Guarantor (a) acknowledges,
consents and agrees to the execution, delivery and performance by the Borrower of this Eighth
Amendment, (b) acknowledges and agrees that its obligations in respect of its Guaranty are not
released, diminished, waived, modified, impaired or affected in any manner by this Eighth
Amendment, or any of the provisions contemplated herein, (c) ratifies and confirms its obligations
under its Guaranty and (d) acknowledges and agrees that it has no claim or offsets against, or
defenses or counterclaims to, its Guaranty.

     5. REFERENCE TO THE CREDIT AGREEMENT.

     (a) Upon and during the effectiveness of this Eighth Amendment, each reference in the Credit
Agreement to “this Agreement”, “hereunder”, or words of like import shall mean and be a reference
to the Credit Agreement, as affected and amended by this Eighth Amendment.

     (b) Except as expressly set forth herein, this Eighth Amendment shall not by implication or
otherwise limit, impair, constitute a waiver of, or otherwise affect the rights or remedies of the
Administrative Agent or the Lenders under the Credit Agreement or any of the other Loan Documents,
and shall not alter, modify, amend, or in any way affect the terms, conditions, obligations,
covenants, or agreements contained in the Credit Agreement or the other

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Loan Documents, all of which are hereby ratified and affirmed in all respects and shall
continue in full force and effect.

     6. COSTS AND EXPENSES. The Borrower shall be obligated to pay the reasonable costs
and expenses of the Administrative Agent in connection with the preparation, reproduction,
execution and delivery of this Eighth Amendment and the other instruments and documents to be
delivered hereunder.

     7. EXECUTION IN COUNTERPARTS. This Eighth Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which when taken together shall
constitute but one and the same instrument. For purposes of this Eighth Amendment, a counterpart
hereof (or signature page thereto) signed and transmitted by any Person party hereto to the
Administrative Agent (or its counsel) by facsimile machine, telecopier or electronic mail is to be
treated as an original. The signature of such Person thereon, for purposes hereof, is to be
considered as an original signature, and the counterpart (or signature page thereto) so transmitted
is to be considered to have the same binding effect as an original signature on an original
document.

     8. GOVERNING LAW; BINDING EFFECT. This Eighth Amendment shall be governed by and
construed in accordance with the laws of the State of Texas applicable to agreements made and to be
performed entirely within such state; provided that the Administrative Agent and each
Lender shall retain all rights arising under federal law. This Eighth Amendment shall be binding
upon the Borrower and each Lender and their respective successors and permitted assigns.

     9. HEADINGS. Section headings in this Eighth Amendment are included herein for
convenience of reference only and shall not constitute a part of this Eighth Amendment for any
other purpose.

     10. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS EIGHTH AMENDMENT, AND
THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AS TO THE SUBJECT MATTER
THEREIN AND HEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS BETWEEN THE PARTIES.

REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

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     IN WITNESS WHEREOF, the parties hereto have executed this Eighth Amendment as of the date
above written.

	 	 	 	 	 
	 	CARRIAGE SERVICES, INC.

 	 
	 	By:  	/s/ Terry E. Sanford
 	 
	 	 	Terry E. Sanford 	 
	 	 	Chief Financial Officer 	 

5

 

	 	 	 	 	 

	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as

Administrative Agent

 	 
	 	By:  	/s/ Anthony W. Kell
 	 
	 	 	Name:  	Anthony W. Kell 	 
	 	 	Title:  	Assistant Vice President 	 

6

 

	 	 	 	 	 

	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as a Lender, L/C Issuer 
and
Swing Line Lender

 	 
	 	By:  	/s/ Gary L. Mingle
 	 
	 	 	Gary L. Mingle 	 
	 	 	Senior Vice President 	 

7

 

	 	 	 	 	 

	 	 	 	 	 
	 	WELLS FARGO BANK, NATIONAL ASSOCIATION, 
as
Syndication Agent and as a Lender

 	 
	 	By:  	/s/ Warren R. Ross
 	 
	 	 	Name:  	Warren R. Ross 	 
	 	 	Title:  	Vice President 	 

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	 	GUARANTORS:

CARRIAGE FUNERAL HOLDINGS, INC.

CFS FUNERAL SERVICES, INC.

CARRIAGE HOLDING COMPANY, INC.

CARRIAGE FUNERAL SERVICES OF MICHIGAN, INC.

CARRIAGE FUNERAL SERVICES OF KENTUCKY, INC.

CARRIAGE FUNERAL SERVICES OF CALIFORNIA, INC.

CARRIAGE CEMETERY SERVICES OF IDAHO, INC.

WILSON & KRATZER MORTUARIES

ROLLING HILLS MEMORIAL PARK

CARRIAGE SERVICES OF CONNECTICUT, INC.

CSI FUNERAL SERVICES OF MASSACHUSETTS, INC.

CHC INSURANCE AGENCY OF OHIO, INC.

BARNETT, DEMROW & ERNST, INC.

CARRIAGE SERVICES OF NEW MEXICO, INC.

FORASTIERE FAMILY FUNERAL SERVICES, INC.

CARRIAGE CEMETERY SERVICES, INC.

CARRIAGE SERVICES OF OKLAHOMA, L.L.C.

CARRIAGE SERVICES OF NEVADA, INC.

HUBBARD FUNERAL HOME, INC.

CARRIAGE TEAM CALIFORNIA (CEMETERY), LLC

CARRIAGE TEAM CALIFORNIA (FUNERAL), LLC

CARRIAGE TEAM FLORIDA (CEMETERY), LLC

CARRIAGE TEAM FLORIDA (FUNERAL), LLC

CARRIAGE SERVICES OF OHIO, LLC

CARRIAGE TEAM KANSAS, LLC

CARRIAGE MUNICIPAL CEMETERY SERVICES OF NEVADA, INC.

CARRIAGE CEMETERY SERVICES OF CALIFORNIA, INC.

CARRIAGE INSURANCE AGENCY OF MASSACHUSETTS, INC.

CARRIAGE INTERNET STRATEGIES, INC.

CARRIAGE INVESTMENTS, INC. (for itself and as General Partner of Carriage Management, L.P.)

CARRIAGE MANAGEMENT, L.P.

COCHRANE’S CHAPEL OF THE ROSES, INC.

HORIZON CREMATION SOCIETY, INC.

CARRIAGE LIFE EVENTS, INC.

CARRIAGE MERGER I, INC.

CARRIAGE MERGER II, INC.

CARRIAGE FLORIDA HOLDINGS, INC.

ARIA CREMATION SERVICES, LLC

CLOVERDALE PARK, INC.

CATAUDELLA FUNERAL HOME, INC.

 	 
	 	By:  	/s/ Terry E. Sanford
 	 
	 	 	Terry E. Sanford 	 
	 	 	Chief Financial Officer 	 
	 

9exv10w1

Exhibit 10.1

BADGER METER, INC.

2011 OMNIBUS INCENTIVE PLAN

	 	1.	 	Purposes, History and Effective Date.

	 	a.	 	Purpose. The Badger Meter, Inc. 2011 Omnibus Incentive Plan has
two complementary purposes: (i) to attract and retain outstanding individuals
to serve as officers, directors, employees and consultants, and (ii) to
increase shareholder value. The Plan will provide participants incentives to
increase shareholder value by offering the opportunity to acquire shares of the
Company’s common stock, receive monetary payments based on the value of such
common stock, or receive other incentive compensation, on the potentially
favorable terms that this Plan provides.
	 
	 	b.	 	History. Prior to the effective date of this Plan, the Company
had in effect the Badger Meter, Inc. 1993 Stock Option Plan, the Badger Meter,
Inc. 1995 Stock Option Plan, the Badger Meter, Inc. 1997 Stock Option Plan, the
Badger Meter, Inc. 1999 Stock Option Plan, the Badger Meter, Inc. 2003 Stock
Option Plan, the Badger Meter, Inc. 2005 Restricted Stock Plan, the Badger
Meter, Inc. 2008 Restricted Stock Plan and the Badger Meter, Inc. 2007 Director
Stock Grant Plan (the “Prior Plans”). Upon shareholder approval of this Plan,
the Prior Plans will terminate and no new awards will be granted under the
Prior Plans, although awards granted under the Prior Plans and still
outstanding will continue to be subject to all terms and conditions of the
Prior Plans.
	 
	 	c.	 	Effective Date. This Plan will become effective, and Awards may
be granted under this Plan, on and after the Effective Date. This Plan will
terminate as provided in Section 15.

	 	2.	 	Definitions

Capitalized terms used in this Plan have the following meanings:

	 	a.	 	“Administrator” means the Committee with respect to all
Participants other than Directors, and the Board with respect to Participants
who are Non-Employee Directors.
	 
	 	b.	 	“Affiliate” has the meaning ascribed to such term in Rule 12b-2
under the Exchange Act or any successor rule or regulation thereto.
	 
	 	c.	 	“Award” means a grant of Options, Stock Appreciation Rights,
Performance Shares, Performance Units, Shares, Restricted Stock, Restricted
Stock Units, an Incentive Award or any other type of award permitted under this
Plan. Any Award granted under this Plan shall be provided or made in such
manner and at such time as complies with the
applicable requirements of Code Section 409A to avoid a plan failure
described in Code Section 409A(a)(1), including, without limitation,

 

 

	 	 	 	deferring payment to a specified employee or until a specified distribution
event, as provided in Code Section 409A(a)(2).

	 	d.	 	“Board” means the Board of Directors of the Company.
	 
	 	e.	 	“Change of Control” means the occurrence of an event or series
of events which qualify as a change in control event for purposes of Code
Section 409A and Treas. Reg. §1.409A-3(i)(5), including:

	 	i.	 	A change in the ownership of the Company, which
shall occur on the date that any one Person, or more than one Person
Acting as a Group (as defined below), other than Excluded Person(s) (as
defined below), acquires ownership of the stock of the Company that,
together with the stock then held by such Person or group, constitutes
more than fifty percent (50%) of the total fair market value of the
stock of the Company. However, if any one Person or more than one
Person Acting as a Group is considered to own more than fifty (50%) of
the total fair market value of the stock of the Company, the
acquisition of additional stock by the same Person or Persons is not
considered to cause a Change of Control.
	 
	 	ii.	 	A change in the effective control of the
Company, which shall occur on the date that:
	 
	 	(1)	 	Any one Person, or more than one Person Acting
as a Group, other than Excluded Person(s), acquires (or has acquired
during the twelve (12) month period ending on the date of the most
recent acquisition by such Person or Persons) ownership of stock of the
Company possessing thirty percent (30%) or more of the total voting
power of the stock of the Company. However, if any one Person or more
than one Person Acting as a Group is considered to own more than thirty
percent (30%) of the total voting power of the stock of the Company,
the acquisition of additional voting stock by the same Person or
Persons is not considered to cause a Change of Control; or
	 
	 	(2)	 	A majority of the members of the Board is
replaced during any twelve (12) month period by directors whose
appointment or election is not endorsed by a majority of the members of
the Board prior to the date of the appointment or election.
	 
	 	iii.	 	A change in the ownership of a substantial
portion of the Company’s assets, which shall occur on the date that any
one Person, or more than one Person Acting as a Group, other than
Excluded Person(s), acquires (or has acquired during the twelve 

 

 

	 	 	 	(12) month period ending on the date of the most recent acquisition by such
person or persons) assets from the Company that have a total Gross Fair
Market Value (as defined below) equal to more than fifty percent (50%)
of the total Gross Fair Market Value of all the assets of the Company
immediately prior to such acquisition or acquisitions, other than an
Excluded Transaction (as defined below).

For purposes of this subsection (e):

     “Gross Fair Market Value” means the value of the assets of the Company, or the value of
the assets being disposed of, as applicable, determined without regard to any liabilities
associated with such assets.

     Persons will not be considered to be “Acting as a Group” solely because they purchase
or own stock of the Company at the same time, or as a result of the same public offering, or
solely because they purchase assets of the Company at the same time, or as a result of the
same public offering, as the case may be. However, Persons will be considered to be Acting
as a Group if they are owners of an entity that enters into a merger, consolidation,
purchase or acquisition of assets, or similar business transaction with the Company.

     The term “Excluded Transaction” means any transaction in which assets are transferred
to: (A) a shareholder of the Company (determined immediately before the asset transfer) in
exchange for or with respect to its stock; (B) an entity, fifty percent (50%) or more of the
total value or voting power of which is owned, directly or indirectly, by the Company
(determined after the asset transfer); (C) a Person, or more than one Person Acting as a
Group, that owns, directly or indirectly, fifty percent (50%) or more of the total value or
voting power of all the outstanding stock of the Company (determined after the asset
transfer); or (D) an entity at least fifty percent (50%) of the total value or voting power
of which is owned, directly or indirectly, by a Person described in clause (C) (determined
after the asset transfer).

     The term “Excluded Person(s)” means (A) the Company or any Badger Meter Entity, (B) a
trustee or other fiduciary holding securities under an employee benefit plan of the Company
or any Badger Meter Entity, (C) an underwriter temporarily holding securities pursuant to an
offering of such securities, or (D) a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as their ownership of
stock in the Company.

The term “Change of Control” as defined above shall be construed in accordance with Code Section
409A.

 

 

	 	f.	 	“Code” means the Internal Revenue Code of 1986, as amended. Any
reference to a specific provision of the Code includes any successor provision
and the regulations promulgated under such provision.
	 
	 	g.	 	“Committee” means a committee of the Board designated by the
Board to administer the Plan and comprised solely of at least two directors,
each of whom must qualify as an “outside director” within the meaning of Code
Section 162(m) and as a “non-employee” director within the meaning of Rule
16b-3 promulgated under the Exchange Act.
	 
	 	h.	 	“Company” means Badger Meter, Inc., a Wisconsin corporation, or
any successor thereto.
	 
	 	i.	 	“Director” means a member of the Board, and “Non-Employee
Director” means a Director who is not an employee of the Company or its
Subsidiaries.
	 
	 	j.	 	“Effective Date” means the date the Company’s shareholders
approve this Plan.
	 
	 	k.	 	“Exchange Act” means the Securities Exchange Act of 1934, as
amended. Any reference to a specific provision of the Exchange Act includes any
successor provision and the regulations and rules promulgated under such
provision.
	 
	 	l.	 	“Fair Market Value” means, per Share on a particular date, the
last sales price on such date on the national securities exchange on which the
Stock is then traded, as reported in The Wall Street Journal, or if no sales of
Stock occur on the date in question, on the last preceding date on which there
was a sale on such exchange. If the Shares are not listed on a national
securities exchange, but are traded in an over-the-counter market, the last
sales price (or, if there is no last sales price reported, the average of the
closing bid and asked prices) for the Shares on the particular date, or on the
last preceding date on which there was a sale of Shares on that market, will be
used. If the Shares are neither listed on a national securities exchange nor
traded in an over-the-counter market, the price determined by the
Administrator, in its discretion, will be used. Notwithstanding the foregoing,
in the case of the sale of Shares, the actual sale price shall be the Fair
Market Value of such Shares.
	 
	 	m.	 	“Incentive Award” means the right to receive a cash payment to
the extent Performance Goals are achieved, and shall include “Annual Incentive
Awards” as described in Section 10 and “Long-Term Incentive Awards”
as described in Section 11.
	 
	 	n.	 	“Option” means the right to purchase Shares at a stated price
for a specified period of time.

 

 

	 	o.	 	“Participant” means an individual selected by the Administrator
to receive an Award.
	 
	 	p.	 	“Performance Goals” means any goals the Administrator
establishes that relate to one or more of the following with respect to the
Company or any one or more Subsidiaries, Affiliates or other business units:

	 	i.	 	Net income;
	 
	 	ii.	 	Operating income;
	 
	 	iii.	 	Income from continuing operations;
	 
	 	iv.	 	Net sales;
	 
	 	v.	 	Cost of sales;
	 
	 	vi.	 	Revenue;
	 
	 	vii.	 	Gross income;
	 
	 	viii.	 	Earnings (including before taxes, and/or interest and/or depreciation and amortization);
	 
	 	ix.	 	Net earnings per share (including diluted earnings per share);
	 
	 	x.	 	Price per share;
	 
	 	xi.	 	Dividends per share;
	 
	 	xii.	 	Increase in dividends per share;
	 
	 	xiii.	 	Cash flow;
	 
	 	xiv.	 	Net cash provided by operating activities;
	 
	 	xv.	 	Net cash provided by operating activities less net cash used in investing activities;
	 
	 	xvi.	 	Net operating profit;
	 
	 	xvii.	 	Pre-tax profit;
	 
	 	xviii.	 	Ratio of debt to debt plus equity;
	 
	 	xix.	 	Return on shareholder equity;
	 
	 	xx.	 	Total shareholder return;

 

 

	 	xxi.	 	Return on capital;
	 
	 	xxii.	 	Return on assets;
	 
	 	xxiii.	 	Return on equity;
	 
	 	xxiv.	 	Return on investment;
	 
	 	xxv.	 	Return on revenues;
	 
	 	xxvi.	 	Operating working capital;
	 
	 	xxvii.	 	Working capital as a percentage of net sales;
	 
	 	xxviii.	 	Cost of capital;
	 
	 	xxix.	 	Average accounts receivable;
	 
	 	xxx.	 	Economic value added;
	 
	 	xxxi.	 	Performance value added;
	 
	 	xxxii.	 	Customer satisfaction;
	 
	 	xxxiii.	 	Customer loyalty and/or retention;
	 
	 	xxxiv.	 	Employee safety;
	 
	 	xxxv.	 	Employee engagement;
	 
	 	xxxvi.	 	Market share;
	 
	 	xxxvii.	 	Cost structure reduction;
	 
	 	xxxviii.	 	Cost savings;
	 
	 	xxxix.	 	Operating goals;
	 
	 	xl.	 	Operating margin;
	 
	 	xli.	 	Profit margin;
	 
	 	xlii.	 	Sales performance; and
	 
	 	xliii.	 	Internal revenue growth.

As to each Performance Goal, the relevant measurement of performance shall be computed in
accordance with generally accepted accounting principles to the extent applicable, but, unless

 

 

otherwise determined by the Administrator, will exclude the effects of the following: (i) charges
for reorganizing and restructuring; (ii) discontinued operations; (iii) asset write-downs; (iv)
gains or losses on the disposition of a business; (v) changes in tax or accounting principles,
regulations or laws; (vi) mergers, acquisitions or dispositions; and (vii) extraordinary, unusual
and/or non-recurring items of gain or loss, that, in case of each of the foregoing, the Company
identifies in its audited financial statements, including notes to the financial statements, or the
Management’s Discussion and Analysis section of the Company’s annual report; provided that, to the
extent Code Section 162(m) is applicable, such exclusion shall be made only to the extent
consistent with Code Section 162(m). Also, the Administrator may appropriately adjust any
evaluation of performance under a Performance Goal to exclude any of the following events that
occurs during a performance period: (i) litigation, claims, judgments or settlements; (ii) the
effects of changes in other laws or regulations affecting reported results; and (iii) accruals of
any amounts for payment under this Plan or any other compensation arrangements maintained by the
Company; provided that, to the extent Code Section 162(m) is applicable, such adjustment may be
made only to the extent consistent with Code Section 162(m). In addition, in the case of Awards
that at the date of grant the Administrator determines are not or will not be considered
“performance-based compensation” under Code Section 162(m), the Administrator may establish other
Performance Goals not listed in this Plan. Where applicable, the Performance Goals may be
expressed, without limitation, in terms of attaining a specified level of the particular criterion
or the attainment of an increase or decrease (expressed as absolute numbers or a percentage) in the
particular criterion or achievement in relation to a peer group or other index. The Performance
Goals may include a threshold level of performance below which no payment will be made (or no
vesting will occur), levels of performance at which specified payments will be paid (or specified
vesting will occur), and a maximum level of performance above which no additional payment will be
made (or at which full vesting will occur).

	 	q.	 	“Performance Shares” means the right to receive Shares to the
extent Performance Goals are achieved.
	 
	 	r.	 	“Performance Units” means the right to receive cash and/or
Shares valued in relation to a unit that has a designated dollar value or the
value of which is equal to the Fair Market Value of one or more Shares, to the
extent Performance Goals are achieved.
	 
	 	s.	 	“Person” has the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, or any
group of Persons acting in concert that would be considered “persons acting as
a group” within the meaning of Treas. Reg. § 1.409A-3(i)(5).
	 
	 	t.	 	“Plan” means this Badger Meter, Inc. 2011 Omnibus Incentive
Plan, as may be amended from time to time.
	 
	 	u.	 	“Prior Plans” has the meaning set forth above in Section
1(b).
	 
	 	v.	 	“Badger Meter Entity” means the Company, its Subsidiaries and
Affiliates and any other entities that along with the Company are considered a
single employer pursuant to Code Section 414(b) or (c), determined by applying

 

 

	 	 	 	the phrase “at least 50 percent” in place of the phrase “at least 80 percent”
each place it appears in Code Section 1563(a).

	 	w.	 	“Restricted Stock” means Shares that are subject to a risk of
forfeiture and/or restrictions on transfer, which may lapse upon the
achievement or partial achievement of Performance Goals and/or upon the
completion of a period of service.
	 
	 	x.	 	“Restricted Stock Unit” means the right to receive cash and/or
Shares the value of which is equal to the Fair Market Value of one Share.
	 
	 	y.	 	“Rule 16b-3” means Rule 16b-3 as promulgated by the United
States Securities and Exchange Commission under the Exchange Act.
	 
	 	z.	 	“Section 16 Participants” means Participants who are subject to
the provisions of Section 16 of the Exchange Act.
	 
	 	aa.	 	“Share” means a share of Stock.
	 
	 	bb.	 	“Stock” means the Common Stock of the Company, $1 par value per
share (and any associated common share purchase rights issued pursuant to that
certain Rights Agreement, dated February 15, 2008, between Badger Meter, Inc.
and American Stock Transfer & Trust Company, or similar share purchase rights
that the Company might authorize and issue in the future).
	 
	 	cc.	 	“Stock Appreciation Right” or “SAR” means the right of a
Participant to receive cash, and/or Shares with a Fair Market Value, equal to
the appreciation of the Fair Market Value of a Share during a specified period
of time.
	 
	 	dd.	 	“Subsidiary” means any corporation, limited liability company
or other limited liability entity in an unbroken chain of entities beginning
with the Company if each of the entities (other than the last entities in the
chain) owns the stock or equity interest possessing more than fifty percent
(50%) of the total combined voting power of all classes of stock or other
equity interests in one of the other entities in the chain.

	 	3.	 	Administration.

	 	a.	 	Committee and Board Administration. In addition to the
authority specifically granted to the Administrator in this Plan, the
Administrator
has full discretionary authority to administer this Plan, including but not
limited to the authority to (i) interpret the provisions of this Plan, (ii)
prescribe, amend and rescind rules and regulations relating to this Plan,
(iii) correct any defect, supply any omission, or reconcile any
inconsistency in the Plan or any Award or agreement covering an Award 

 

 

	 	 	 	in the
manner and to the extent it deems desirable to carry this Plan or such Award
into effect and (iv) make all other determinations necessary or advisable
for the administration of this Plan. All Administrator determinations shall
be made in the sole discretion of the Administrator and are final and
binding on all interested parties.

	 	b.	 	Delegation to Other Committees or Officers. To the extent
applicable law permits, the Board may delegate to another committee of the
Board, or the Committee may delegate to one or more officers of the Company,
any or all of the authority and responsibility of the Administrator; provided,
however, that no such delegation is permitted with respect to Awards made to
Section 16 Participants at the time any such delegated authority or
responsibility is exercised unless the delegation is to another committee of
the Board consisting entirely of two or more “non-employee directors” within
the meaning of Rule 16b-3 promulgated under the Exchange Act and does not
relate to awards intended to qualify as performance-based compensation under
Code Section 162(m). If the Board or the Committee has made such a delegation,
then all references to the Administrator in this Plan include such other
committee or one or more officers to the extent of such delegation.
	 
	 	c.	 	Indemnification. The Company will indemnify and hold harmless
each member of the Board and the Committee, and each officer or member of any
other committee to whom a delegation under Section 3(b) has been made,
as to any acts or omissions, or determination made, with respect to this Plan
or any Award to the maximum extent that the law and the Company’s by-laws
permit.

	 	4.	 	Eligibility.

     The Committee may designate any of the following as a Participant from time to time: any
officer or other employee of the Company or its Affiliates, an individual that the Company or an
Affiliate has engaged to become an officer or employee, or a consultant who provides services to
the Company or its Affiliates. The Board may designate any Non-Employee Director as a Participant
from time to time. The Administrator’s designation of a Participant in any year will not require
the Administrator to designate such person to receive an Award in any other year. The
Administrator’s granting of a particular type of Award to a Participant will not require the
Administrator to grant any other type of Award to such individual.

	 	5.	 	Types of Awards.

     Subject to the terms of this Plan, the Administrator may, within the discretion granted it
under this Plan, grant any type of Award to any Participant it selects, but only employees of the
Company or a Subsidiary may receive grants of incentive stock options within the meaning of Code
Section 422. Awards may be granted alone or in addition to, in tandem with, or in substitution for
any other Award (or any other award granted under another plan of the Company or any Affiliate).

 

 

	 	6.	 	Shares Reserved under this Plan.

	 	a.	 	Plan Reserve. Subject to adjustment as provided in Section
17, an aggregate of 700,000 Shares, plus the number of Shares described in
Section 6(c), are reserved for issuance under this Plan; provided that
only 200,000 shares may be issued pursuant to the exercise of incentive stock
options. The Shares reserved for issuance may be either authorized and unissued
Shares or Shares reacquired at any time and now or hereafter held as treasury
stock. The aggregate number of Shares reserved under this Section 6(a)
shall be depleted on the date of grant of an Award by the maximum number of
Shares, if any, with respect to which such Award is granted.
	 
	 	b.	 	Replenishment of Shares Under this Plan. If (i) an Award
lapses, expires, terminates or is cancelled without the issuance of Shares
under, or the payment of other compensation with respect to Shares covered by,
the Award (whether due currently or on a deferred basis), (ii) it is determined
during or at the conclusion of the term of an Award that all or some portion of
the Shares with respect to which the Award was granted will not be issuable, or
that other compensation with respect to Shares covered by the Award will not be
payable, (iii) Shares are forfeited under an Award or (iv) Shares are issued
under any Award and the Company subsequently reacquires them pursuant to rights
reserved upon the issuance of the Shares, then such Shares shall be recredited
to the Plan’s reserve and may again be used for new Awards under this Plan.
Notwithstanding the foregoing, in no event shall the following Shares be
recredited to the Plan’s reserve: (i) Shares purchased by the Company using
proceeds from Option exercises; and (ii) Shares tendered or withheld in payment
of the exercise price of an Option or as a result of the net settlement of an
outstanding Stock Appreciation Right or to satisfy federal, state or local tax
withholding obligations.
	 
	 	c.	 	Addition of Shares from Prior Plans. After the Effective Date,
if any Shares subject to awards granted under the Prior Plans would again
become available for new grants under the terms of any such plan if such plan
were still in effect, those Shares will not be available for the purpose of
granting Awards under this Plan and will not increase the number of Shares
available for issuance under this Plan as determined under the first sentence
of Section 6(a).
	 
	 	d.	 	Participant Limitations. Subject to adjustment as provided in
Section 17, to the extent Code Section 162(m) is applicable, no
Participant may be granted Awards that could result in such Participant:

	 	i.	 	receiving Options for, and/or Stock
Appreciation Rights with respect to, more than 100,000 Shares during
any fiscal year of the Company;

 

 

	 	ii.	 	receiving Awards of Restricted Stock and/or
Restricted Stock Units relating to more than 100,000 Shares during any
fiscal year of the Company;
	 
	 	iii.	 	receiving, with respect to an Award of
Performance Shares and/or an Award of Performance Units the value of
which is based on the Fair Market Value of a Share, payment of more
than 150,000 Shares in respect of any period of two consecutive fiscal
years of the Company, or of more than 200,000 Shares in respect of any
period of three consecutive fiscal years of the Company;
	 
	 	iv.	 	receiving, with respect to an Annual Incentive
Award in respect of any single fiscal year of the Company, a cash
payment of more than $1,500,000;
	 
	 	v.	 	receiving, with respect to a Long-Term
Incentive Award and/or an Award of Performance Units the value of which
is not based on the Fair Market Value of a Share, a cash payment of
more than $2,500,000 in respect of any period of two consecutive fiscal
years of the Company, or of more than $3,500,000 in respect of any
period of three consecutive fiscal years of the Company; or
	 
	 	vi.	 	receiving other Stock-based Awards pursuant to
Section 12 relating to more than 50,000 Shares during any
fiscal year of the Company.

     In all cases, to the extent Code Section 162(m) is applicable, determinations under this
Section 6(d) should be made in a manner that is consistent with the exemption for
performance-based compensation that Code Section 162(m) provides.

	 	7.	 	Options.

     Subject to the terms of this Plan, the Administrator will determine all terms and conditions
of each Option, including but not limited to: (a) whether the Option is an “incentive
stock option” which meets the requirements of Code Section 422, or a “nonqualified stock
option” which does not meet the requirements of Code Section 422; (b) the grant date, which may not
be any day prior to the date that the Administrator approves the grant; (c) the number of Shares
subject to the Option; (d) the exercise price, which may never be less than the Fair Market Value
of the Shares subject to the Option as determined on the date of grant; (e) the terms and
conditions of exercise, including vesting; and (f) the term, except that an Option must terminate
no later than 10 years after the date of grant. In all other respects, the terms of any

 

 

incentive stock option should comply with the provisions of Code Section 422 except to the extent
Administrator determines otherwise. Except to the extent Administrator determines otherwise, a
Participant may exercise an Option in whole or part after the right to exercise the Option has
accrued, provided that any partial exercise must be for one hundred (100) Shares or multiples
thereof. If an Option that is intended to be an incentive stock option fails to meet the
requirements thereof, the Option shall automatically be treated as a nonqualified stock option to
the extent of such failure.

	 	8.	 	Stock Appreciation Rights.

     Subject to the terms of this Plan, the Administrator will determine all terms and conditions
of each SAR, including but not limited to: (a) whether the SAR is granted independently of an
Option or relates to an Option; (b) the grant date, which may not be any day prior to the date that
Administrator approves the grant; (c) the number of Shares to which the SAR relates; (d) the grant
price, which may never be less than the Fair Market Value of the Shares subject to the SAR as
determined on the date of grant; (e) the terms and conditions of exercise or maturity, including
vesting; (f) the term, provided that an SAR must terminate no later than 10 years after the date of
grant; and (g) whether the SAR will be settled in cash, Shares or a combination thereof. If an SAR
is granted in relation to an Option, then unless otherwise determined by Administrator, the SAR
shall be exercisable or shall mature at the same time or times, on the same conditions and to the
extent and in the proportion, that the related Option is exercisable and may be exercised or mature
for all or part of the Shares subject to the related Option. Upon exercise of any number of SARs,
the number of Shares subject to the related Option shall be reduced accordingly and such Option may
not be exercised with respect to that number of Shares. The exercise of any number of Options that
relate to an SAR shall likewise result in an equivalent reduction in the number of Shares covered
by the related SAR.

	 	9.	 	Performance and Stock Awards.

     Subject to the terms of this Plan, the Administrator will determine all terms and conditions
of each award of Shares, Restricted Stock, Restricted Stock Units, Performance Shares or
Performance Units, including but not limited to: (a) the number of Shares and/or units to which
such Award relates; (b) whether, as a condition for the Participant to realize all or a portion of
the benefit provided under the Award, one or more Performance Goals must be achieved during such
period as Administrator specifies; (c) the length of the vesting and/or performance period and, if
different, the date on which payment of the benefit provided under the Award will be made; (d) with
respect to Performance Units, whether to measure the value of each unit in relation to a designated
dollar value or the Fair Market Value of one or more Shares; and (e) with respect to Performance
Shares, Performance Units and Restricted Stock Units,
whether to settle such Awards in cash, in Shares (including Restricted Stock), or in a
combination of cash and Shares. Notwithstanding the foregoing, subject to the provisions of
Sections 13 and 17, no condition or vesting provision applicable to an Award of Shares,
Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units that is based on
performance criteria shall be based on performance over a period of less than one year, and no
condition or vesting provision applicable to such an Award that is based upon continued service or
the passage of time shall provide for vesting in less than pro rata installments over

 

 

three years from the date the Award is made, other than with respect to such Awards that are issued upon
exercise or settlement of Options or SARs.

	 	10.	 	Annual Incentive Awards.

     Subject to the terms of this Plan, the Administrator will determine all terms and conditions
of an Annual Incentive Award, including but not limited to the Performance Goals, performance
period, the potential amount payable, the type of payment, and the timing of payment, subject to
the following: (a) Administrator must require that payment of all or any portion of the amount
subject to the Annual Incentive Award is contingent on the achievement or partial achievement of
one or more Performance Goals during the period Administrator specifies, although the Administrator
may specify that all or a portion of the Performance Goals subject to an Award are deemed achieved
upon a Participant’s death, disability (as defined by the Administrator) or a Change of Control or,
in the case of Awards that at the date of grant the Administrator determines will not be considered
performance-based compensation under Code Section 162(m) or to which the Administrator determines
Code Section 162(m) is inapplicable, retirement (as defined by the Administrator) or such other
circumstances as the Administrator may specify; (b) the performance period must relate to a period
of at least one fiscal year of the Company except that, if the Award is made at the time of
commencement of employment with the Company or on the occasion of a promotion, then the Award may
relate to a period shorter than one fiscal year; and (c) payment will be in cash except to the
extent that the Administrator determines that payment will be in Shares, Restricted Stock or
Restricted Stock Units, either on a mandatory basis or at the election of the Participant, having a
Fair Market Value at the time of the payment equal to the amount payable with respect to the Annual
Incentive Award; provided, that any such determination by the Administrator or election by the
Participant must be made in accordance with the requirements of Code Section 409A.

	 	11.	 	Long-Term Incentive Awards.

     Subject to the terms of this Plan, the Administrator will determine all terms and conditions
of a Long-Term Incentive Award, including but not limited to the Performance Goals, performance
period, the potential amount payable, the type of payment, and the timing of payment, subject to
the following: (a) the Administrator must require that payment of all or any portion of the amount
subject to the Long-Term Incentive Award is contingent on the achievement or partial achievement of
one or more Performance Goals during the period the Administrator specifies, although the
Administrator may specify that all or a portion of the Performance Goals subject to an Award are
deemed achieved upon a Participant’s death, disability (as defined by the Administrator) or a
Change of Control or, in the case of Awards that at the date of grant the Administrator determines
will not be considered performance-based
compensation under Code Section 162(m) or to which the Administrator determines Code Section
162(m) is inapplicable, retirement (as defined by the Administrator) or such other circumstances as
the Administrator may specify; (b) the performance period must relate to a period of more than one
fiscal year of the Company except that, if the Award is made at the time of commencement of
employment with the Company or on the occasion of a promotion, then the Award may relate to a
shorter period; and (c) payment will be in cash except to the extent that the Administrator
determines that payment will be in Shares, Restricted Stock or Restricted

 

 

Stock Units, either on a
mandatory basis or at the election of the Participant, having a Fair Market Value at the time of
the payment equal to the amount payable with respect to the Long-Term Incentive Award; provided,
that any such determination by the Administrator or election by the Participant must be made in
accordance with the requirements of Code Section 409A.

	 	12.	 	Other Stock-Based Awards.

     Subject to the terms of this Plan, the Administrator may grant to Participants other types of
Awards, which may be denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, Shares, either alone or in addition to or in conjunction with other Awards, and
payable in Stock or cash. Without limitation, such Award may include the issuance of shares of
unrestricted Stock, which may be awarded in payment of director fees, in lieu of cash compensation,
in exchange for cancellation of a compensation right, as a bonus, or upon the attainment of
Performance Goals or otherwise, or rights to acquire Stock from the Company. The Administrator
shall determine all terms and conditions of the Award, including but not limited to, the time or
times at which such Awards shall be made, and the number of Shares to be granted pursuant to such
Awards or to which such Award shall relate; provided that any Award that provides for purchase
rights shall be priced at no less than 100% of Fair Market Value on the grant date of the Award.

	 	13.	 	Amendment of Minimum Vesting and Performance Periods.

     Notwithstanding any provision of this Plan that requires a minimum vesting and/or performance
period for an Award, the Administrator, at the time an Award is granted or any later date, may
subject an Award to a shorter vesting and/or performance period to take into account a
Participant’s hire or promotion, or may accelerate the vesting or deem an Award to be earned, in
whole or in part, in the event of a Participant’s death, disability (as defined by the
Administrator) or retirement (as defined by the Administrator) or a Change of Control.

	 	14.	 	Transferability.

     Awards are not transferable other than by will or the laws of descent and distribution, unless
and to the extent the Administrator allows a Participant to: (a) designate in writing a beneficiary
to exercise the Award or receive payment under the Award after the Participant’s death; (b)
transfer an Award to the former spouse of the Participant as required by a domestic relations order
incident to a divorce; or (c) transfer an Award; provided, however, that with respect to clause (c)
above the Participant may not receive consideration for such a transfer of an Award.

 

 

	 	15.	 	Termination and Amendment of Plan; Amendment, Modification or Cancellation of
Awards.

	 	a.	 	Term of Plan. Unless the Board earlier terminates this Plan
pursuant to Section 15(b), this Plan will terminate on the earlier of
(i) the date that is 10 years from the Effective Date and (ii) the date when
all Shares reserved for issuance have been issued.
	 
	 	b.	 	Termination and Amendment. The Board or the Committee may
amend, alter, suspend, discontinue or terminate this Plan at any time, subject
to the following limitations:

	 	i.	 	the Board must approve any amendment of this
Plan to the extent the Company determines such approval is required by:
(A) prior action of the Board, (B) applicable corporate law or (C) any
other applicable law;
	 
	 	ii.	 	shareholders must approve any amendment of this
Plan to the extent the Company determines such approval is required by:
(A) Section 16 of the Exchange Act, (B) the Code, (C) the listing
requirements of any principal securities exchange or market on which
the Shares are then traded or (D) any other applicable law; and
	 
	 	iii.	 	shareholders must approve any of the following
Plan amendments: (A) an amendment to materially increase any number of
Shares specified in Section 6(a) or 6(d) (except as permitted
by Section 17); or (B) an amendment to the provisions of
Section 15(e).

	 	c.	 	Amendment, Modification or Cancellation of Awards. Except as
provided in Section 15(e) and subject to the requirements of this Plan,
the Administrator may modify or amend any Award, or waive any restrictions or
conditions applicable to any Award or the exercise of the Award, or amend,
modify or cancel any terms and conditions applicable to any Award, in each case
by mutual agreement between the Administrator and the Participant or any other
person(s) as may then have an interest in the Award, so long as any such action
does not increase the number of Shares issuable under this Plan (except as
permitted by Section 17), but the Administrator need not obtain
Participant (or other interested party) consent for any such action that is
permitted by the provisions of Section 17(a) or for any such action:
(i) to the extent the action is deemed necessary by the Administrator to comply
with any applicable law or the listing requirements of any principal securities
exchange or market on which the Shares are then traded; (ii) to the extent the
action is deemed
necessary by the Administrator to preserve favorable accounting or tax

 

 

	 	 	 	treatment of any Award for the Company; or (iii) to the extent the
Administrator determines that such action does not materially and adversely
affect the value of an Award or that such action is in the best interest of
the affected Participant or any other person(s) as may then have an interest
in the Award. In addition, except as provided in Section 15(e) and
subject to the requirements of this Plan, the Administrator may modify or
amend any Award granted to a Participant under the Prior Plans, or waive any
restrictions or conditions applicable to any such Award, in order to reflect
Award terms consistent with the permitted terms of Awards granted under this
Plan regardless of the terms of the Prior Plans.

	 	d.	 	Survival of Authority and Awards. Notwithstanding the
foregoing, the authority of the Board and the Committee under this Section
15 will extend beyond the date of this Plan’s termination. In addition,
termination of this Plan will not affect the rights of Participants with
respect to Awards previously granted to them, and all unexpired Awards will
continue in force and effect after termination of this Plan except as they may
lapse or be terminated by their own terms and conditions.
	 
	 	e.	 	Repricing Prohibited. Notwithstanding anything in this Plan to
the contrary, and except for the adjustments provided in Section 17,
neither the Administrator nor any other person may decrease the exercise price
for any outstanding Option or SAR after the date of grant, cancel an
outstanding Option or SAR in exchange for cash (other than cash equal to the
excess of the Fair Market Value of the Shares subject to such Option or SAR at
the time of cancellation over the exercise or grant price for such Shares), or
allow a Participant to surrender an outstanding Option or SAR to the Company as
consideration for the grant of a new Option or SAR with a lower exercise price.

	 	16.	 	Taxes.

	 	a.	 	Withholding. In the event the Company or an Affiliate of the
Company is required to withhold any federal, state or local taxes or other
amounts in respect of any income recognized by a Participant as a result of the
grant, vesting, payment or settlement of an Award or disposition of any Shares
acquired under an Award, the Company may deduct (or require an Affiliate to
deduct) from any payments of any kind otherwise due the Participant cash, or
with the consent of the Administrator, Shares otherwise deliverable or vesting
under an Award, to satisfy such tax obligations. Alternatively, the Company may
require such Participant to pay to the Company, in cash, promptly on demand, or
make other arrangements satisfactory to the Company regarding the payment to
the Company of the aggregate amount of any such taxes and other amounts. If
Shares are deliverable upon exercise or payment of an Award, the

 

 

	 	 	 	Administrator may permit a Participant to satisfy all or a portion of the
federal, state and local withholding tax obligations arising in connection
with such Award by electing to (a) have the Company withhold Shares
otherwise issuable under the Award, (b) tender back Shares received in
connection with such Award or (c) deliver other previously owned Shares, in
each case having a Fair Market Value equal to the amount to be withheld;
provided that the amount to be withheld may not exceed the total minimum
federal, state and local tax withholding obligations associated with the
transaction to the extent needed for the Company to avoid an accounting
charge. If an election is provided, the election must be made on or before
the date as of which the amount of tax to be withheld is determined and
otherwise as the Administrator requires. In any case, the Company may defer
making payment or delivery under any Award if any such tax may be pending
unless and until indemnified to its satisfaction.

	 	b.	 	No Guarantee of Tax Treatment. Notwithstanding any provision of
this Plan to the contrary, the Company does not guarantee to any Participant or
any other person(s) with an interest in an Award that (i) any Award intended to
be exempt from Code Section 409A shall be so exempt, (ii) any Award intended to
comply with Code Section 409A or Code Section 422 shall so comply, or (iii) any
Award shall otherwise receive a specific tax treatment under any other
applicable tax law, nor in any such case will the Company or any Affiliate be
required to indemnify, defend or hold harmless any individual with respect to
the tax consequences of any Award.

	 	17.	 	Adjustment Provisions; Change of Control.

	 	a.	 	Adjustment of Shares. If (i) the Company shall at any time be
involved in a merger or other transaction in which the Shares are changed or
exchanged; or (ii) the Company shall subdivide or combine the Shares or the
Company shall declare a dividend payable in Shares, other securities (other
than any common share purchase rights issued pursuant to that certain Rights
Agreement, dated February 15, 2008, between Badger Meter, Inc. and American
Stock Transfer & Trust Company, or similar share purchase rights that the
Company might authorize and issue in the future) or other property; or (iii)
the Company shall effect a cash dividend the amount of which, on a per Share
basis, exceeds 10% of the trading price of the Shares at the time the dividend
is declared, or the Company shall effect any other dividend or other
distribution on the Shares in the form of cash, or a repurchase of Shares, that
the Board determines by resolution is special or extraordinary in nature or
that is in connection with a transaction that the Company characterizes
publicly as a recapitalization or reorganization involving the Shares; or (iv)
any other event shall occur which, in the case of this clause (iv), in the
judgment of the Administrator 

 

 

	 	 	 	necessitates an adjustment to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under this Plan, then the
Administrator shall, in such manner as it may deem equitable, adjust any or
all of (A) the number and type of Shares subject to this Plan (including the
number and type of Shares described in Sections 6(a) and 6(d)) and
which may after the event be made the subject of Awards under this Plan,
including incentive stock options, (B) the number and type of Shares subject
to outstanding Awards, (C) the grant, purchase, or exercise price with
respect to any Award, and (D) to the extent such discretion does not cause
an Award that is intended to qualify as performance-based compensation under
Code Section 162(m) to lose its status as such, the Performance Goals of an
Award. In any such case, the Administrator may also (or in lieu of the
foregoing) make provision for a cash payment to the holder of an outstanding
Award in exchange for the cancellation of all or a portion of the Award
(without the consent of the holder of an Award) in an amount determined by
the Administrator effective at such time as the Administrator specifies
(which may be the time such transaction or event is effective). However, in
each case, with respect to Awards of incentive stock options, no such
adjustment may be authorized to the extent that such authority would cause
this Plan to violate Code Section 422(b). Further, the number of Shares
subject to any Award payable or denominated in Shares must always be a whole
number. In any event, previously granted Options or SARs are subject to only
such adjustments as are necessary to maintain the relative proportionate
interest the Options and SARs represented immediately prior to any such
event and to preserve, without exceeding, the value of such Options or SARs.
Without limitation, in the event of any such merger or similar transaction,
subdivision or combination of Shares, dividend or other event described
above (other than any such transaction in which the Company is the
continuing corporation and in which the outstanding Stock is not being
converted into or exchanged for different securities, cash or other
property, or any combination thereof), the Administrator shall substitute,
on an equitable basis as the Administrator determines, for each Share then
subject to an Award, the number and kind of shares of stock, other
securities, cash or other property to which holders of Stock are or will be
entitled in respect of each Share pursuant to the transaction.

     Notwithstanding the foregoing, if the Company shall subdivide the Shares or the Company shall
declare a dividend payable in Shares, and if no action is taken by the Administrator, then the
adjustments contemplated by this Section 17(a) that are proportionate shall nevertheless
automatically be made as of the date of such subdivision of the Shares or dividend in Shares.

	 	b.	 	Issuance or Assumption. Notwithstanding any other provision of
this Plan, and without affecting the number of Shares otherwise reserved or
available under this Plan, in connection with any merger, consolidation,

 

 

	 	 	 	acquisition of property or stock, or reorganization, the Administrator may
authorize the issuance in exchange for the cancellation or assumption of awards under
this Plan upon such terms and conditions as it may deem appropriate.

	 	c.	 	Change of Control. The Administrator may specify in any
agreement evidencing an Award the effect of a Change of Control upon such
Award. If the agreement evidencing an Award does not specify the effect of a
Change of Control upon such Award, then upon a Change of Control, the
Administrator may, in its discretion and without the consent of any Participant
(or other person with rights in an Award) affected thereby, determine that any
or all outstanding Awards shall vest or be deemed to have been earned in part
or full (assuming the target performance goals provided under such Award were
met, if applicable), and:

	 	i.	 	If the successor or surviving corporation (or
parent thereof) so agrees, some or all outstanding Awards shall be
assumed, or replaced with the same type of award with similar terms and
conditions, by the successor or surviving corporation (or parent
thereof) in the Change of Control transaction. If applicable, each
Award which is assumed by the successor or surviving corporation (or
parent thereof) shall be appropriately adjusted, immediately after such
Change of Control, to apply to the number and class of securities which
would have been issuable to the Participant upon the consummation of
such Change of Control had the Award been exercised, vested or earned
immediately prior to such Change of Control, and such other appropriate
adjustments in the terms and conditions of the Award shall be made.
	 
	 	ii.	 	If the provisions of paragraph (i) do not apply
with respect to any particular outstanding Award, then the
Administrator may provide that all such outstanding Awards shall be
cancelled as of the date of the Change of Control in exchange for a
payment in cash and/or Shares (which may include shares or other
securities of any surviving or successor entity or the purchasing
entity or any parent thereof) equal to: (x) in the case of an Option
or SAR, the excess of the Fair Market Value of the Shares on the date
of the Change of Control covered by the vested portion of the Option or
SAR that has not been exercised over the exercise or grant price of
such Shares under the Award, provided that if such excess is zero, then
the Option or SAR shall be cancelled without payment therefor; (y) in
the case of Restricted Stock or Restricted Stock Units, the Fair Market
Value of a Share on the date of the Change of Control multiplied by the
number of vested Shares or units, as applicable; and (z) in the case of
Performance Shares or Performance Units, 

 

 

	 	 	 	the Fair Market Value of a Share or the value of such unit, as
applicable, on the date of the Change of Control multiplied by the
number of earned Shares or units, as applicable.

The effect of a Change of Control on other Stock-Based Awards and Incentive Awards
shall be as set forth in the applicable agreement evidencing such Award or as
determined by the Administrator in its discretion prior to the Change of Control.

	 	18.	 	Miscellaneous.

	 	a.	 	Other Terms and Conditions. The grant of any Award may also be
subject to other provisions (whether or not applicable to the Award granted to
any other Participant) as the Administrator determines appropriate, including,
without limitation, provisions for:

	 	i.	 	one or more means to enable Participants to
defer the delivery of Shares or recognition of taxable income relating
to Awards or cash payments derived from the Awards on such terms and
conditions as the Administrator determines, including, by way of
example, the form and manner of the deferral election, the treatment of
dividends paid on the Shares during the deferral period or a means for
providing a return to a Participant on amounts deferred, and the
permitted distribution dates or events (provided that no such deferral
means may result in an increase in the number of Shares issuable under
this Plan);
	 
	 	ii.	 	the payment of the purchase price of Options
(A) by delivery of cash or other Shares or other securities of the
Company (including by attestation) having a then Fair Market Value
equal to the purchase price of such Shares, (B) by delivery (including
by fax) to the Company or its designated agent of an executed
irrevocable option exercise form together with irrevocable instructions
to a broker-dealer to sell or margin a sufficient portion of the Shares
and deliver the sale or margin loan proceeds directly to the Company to
pay for the exercise price, (C) by surrendering the right to receive
Shares otherwise deliverable to the Participant upon exercise of the
Award having a Fair Market Value at the time of exercise equal to the
total exercise price, or (D) by any combination of (A), (B) and/or (C);
	 
	 	iii.	 	giving the Participant the right to receive
dividend payments, dividend equivalents or other distributions with
respect to Awards that are denominated or payable in, valued in whole
or in part by

 

 

	 	 	 	reference to, or otherwise based on, Shares; provided, however, that
any such dividends, dividend equivalents or distributions shall be
held in the custody of the Company and shall be subject to the same
restrictions on transferability and forfeitability that apply to the
corresponding Award;

	 	iv.	 	restrictions on resale or other disposition of
Shares; and
	 
	 	v.	 	compliance with federal or state securities
laws and stock exchange requirements.

	 	b.	 	Employment and Service. The issuance of an Award shall not
confer upon a Participant any right with respect to continued employment or
service with the Company or any Affiliate, or the right to continue as a
Director. Unless determined otherwise by the Administrator, for purposes of
the Plan and all Awards, the following rules shall apply:

	 	i.	 	a Participant who transfers employment between
the Company and its Affiliates, or between Affiliates, will not be
considered to have terminated employment;
	 
	 	ii.	 	a Participant who ceases to be a Non-Employee
Director because he or she becomes an employee of the Company or an
Affiliate shall not be considered to have ceased service as a Director
with respect to any Award until such Participant’s termination of
employment with the Company and its Affiliates;
	 
	 	iii.	 	a Participant who ceases to be employed by the
Company or an Affiliate and immediately thereafter becomes a
Non-Employee Director, a non-employee director of an Affiliate, or a
consultant to the Company or any Affiliate shall not be considered to
have terminated employment until such Participant’s service as a
director of, or consultant to, the Company and its Affiliates has
ceased; and
	 
	 	iv.	 	a Participant employed by an Affiliate will be
considered to have terminated employment when such entity ceases to be
an Affiliate.

Notwithstanding the foregoing, with respect to an Award that is considered deferred compensation
subject to Code Section 409A, if a Participant’s termination of employment or service triggers the
payment of compensation under such Award, then the Participant will be

 

 

deemed to have terminated employment or service upon the Participant’s “separation from service”
within the meaning of Code Section 409A. Notwithstanding any other provision in this Plan or an
Award to the contrary, if any Participant is a “specified employee” within the meaning of Code
Section 409A as of the date of his or her “separation from service” within the meaning of Code
Section 409A, then, to the extent required by Code Section 409A, any payment made to the
Participant on account of such separation from service shall not be made before a date that is six
months after the date of the separation from service.

	 	c.	 	No Fractional Shares. No fractional Shares or other securities
may be issued or delivered pursuant to this Plan, and the Administrator may
determine whether cash, other securities or other property will be paid or
transferred in lieu of any fractional Shares or other securities, or whether
such fractional Shares or other securities or any rights to fractional Shares
or other securities will be canceled, terminated or otherwise eliminated.
	 
	 	d.	 	Unfunded Plan. This Plan is unfunded and does not create, and
should not be construed to create, a trust or separate fund with respect to
this Plan’s benefits. This Plan does not establish any fiduciary relationship
between the Company and any Participant or other person. To the extent any
person holds any rights by virtue of an Award granted under this Plan, such
rights are no greater than the rights of the Company’s general unsecured
creditors.
	 
	 	e.	 	Requirements of Law and Securities Exchange. The granting of
Awards and the issuance of Shares in connection with an Award are subject to
all applicable laws, rules and regulations and to such approvals by any
governmental agencies or national securities exchanges as may be required.
Notwithstanding any other provision of this Plan or any award agreement, the
Company has no liability to deliver any Shares under this Plan or make any
payment unless such delivery or payment would comply with all applicable laws
and the applicable requirements of any securities exchange or similar entity,
and unless and until the Participant has taken all actions required by the
Company in connection therewith. The Company may impose such restrictions on
any Shares issued under the Plan as the Company determines necessary or
desirable to comply with all applicable laws, rules and regulations or the
requirements of any national securities exchanges. Notwithstanding any
provision of this Plan or any document pertaining to Awards granted hereunder
to the contrary, this Plan shall be so construed, interpreted and administered
to meet the applicable requirements of Code Section 409A to avoid a plan
failure described in Code Section 409A(a)(1).
	 
	 	f.	 	Awards Not Includable for Benefits Purposes. Income recognized
by a Participant pursuant to an Award shall not be included in the
determination of benefits under any employee pension benefit plan (as such term
is defined in Section 3(2) of the Employee Retirement Income

 

 

	 	 	 	Security Act of 1974, as amended) or group insurance or other benefit plans
applicable to the Participant which are maintained by the Company or any
Affiliate, except as may be provided under the terms of such plans or
determined by resolution of the Board.

	 	g.	 	Governing Law. The Plan, all agreements under the Plan and all
determinations made and actions taken pursuant to the Plan shall be governed by
the laws of the state of Wisconsin and applicable federal laws, excluding any
conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of the Plan or such agreement to the substantive
law of another jurisdiction.
	 
	 	h.	 	Construction. Whenever any words are used herein in the
masculine, they shall be construed as though they were used in the feminine in
all cases where they would so apply; and wherever any words are used in the
singular or plural, they shall be construed as though they were used in the
plural or singular, as the case may be, in all cases where they would so apply.
Title of sections are for general information only, and this Plan is not to be
construed with reference to such titles.
	 
	 	i.	 	Severability. If any provision of this Plan or any award
agreement or any Award (i) is or becomes or is deemed to be invalid, illegal or
unenforceable in any jurisdiction, or as to any person or Award, or (ii) would
cause this Plan, any award agreement or any Award to violate any law the
Administrator deems applicable, then such provision should be construed or
deemed amended to conform to applicable laws, or if it cannot be so construed
or deemed amended without, in the determination of the Administrator,
materially altering the intent of this Plan, award agreement or Award, then
such provision should be stricken as to such jurisdiction, person or Award, and
the remainder of this Plan, such award agreement and such Award will remain in
full force and effect.

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