EXHIBIT 10.15
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made as of the
16th day of September, 1999, between CIRCOR, Inc., a Massachusetts
corporation (the "Company"), and Xxxxx X. Xxxxx, Xx. ("Executive").
WHEREAS, Executive has previously had a valued association with Xxxxx
Industries, Inc., a Delaware corporation ("Previous Employer");
WHEREAS, on and after the date on which Xxxxx Industries, Inc. completes
the distribution of common stock of CIRCOR International, Inc. to shareholders
of Xxxxx Industries, Inc., Executive will be employed by the Company in a senior
executive capacity; and
WHEREAS, the Company desires to employ Executive and Executive
desires to be employed by the Company on the terms contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. EMPLOYMENT. The term of this Agreement shall extend from the date on which
Xxxxx Industries, Inc. completes the distribution of common stock of CIRCOR
International, Inc. to shareholders of Xxxxx Industries, Inc. (the "Commencement
Date") until the third anniversary of the Commencement Date; provided, however,
that the term of this Agreement shall automatically be extended for one
additional year on the third anniversary of the Commencement Date and each
anniversary thereafter unless, not less than 90 days prior to each such date,
either party shall have given notice to the other that it does not wish to
extend this Agreement; provided, further, that if a Change in Control occurs
during the original or extended term of this Agreement, the term of this
Agreement shall continue in effect for a period of not less than eighteen (18)
months beyond the month in which the Change in Control occurred. The term of
this Agreement shall be subject to termination as provided in Paragraph 6 and
may be referred to herein as the "Period of Employment."
2. POSITION AND DUTIES. During the Period of Employment, Executive shall serve
as the President and member of the Board of Directors of the Company and the
Chairman of the Board, Chief Executive Officer and President of CIRCOR
International, Inc., a Delaware corporation of which the company is a wholly-
owned subsidiary (the "Parent"), and shall have supervision and control over and
responsibility for the day-to-day business and affairs of those functions and
operations of the Company and the Parent and shall have such other powers and
duties as may from time to time be prescribed by the Board of Directors of the
Parent (the "Board"), provided that such duties are consistent with Executive's
position or other positions that he may hold from time to time. Executive shall
devote his full working time and efforts to the business and affairs of the
Company and the Parent. Notwithstanding the foregoing, Executive may serve on
other boards of directors, with the approval of the Board, or engage in
religious, charitable or other community activities as long as such services and
activities are disclosed to the Board and do not materially interfere with
Executive's performance of his duties to the Company as provided in this
Agreement.
3. COMPENSATION AND RELATED MATTERS.
(A) BASE SALARY AND INCENTIVE COMPENSATION. Executive's initial annual
base salary shall be $400,000. Executive's base salary shall be redetermined
from time to time by the Board or a Committee thereof. The base salary in
effect at any given time is referred to herein as "Base Salary." The Base
Salary shall be payable in substantially equal bi-weekly installments. In
addition to Base Salary, Executive shall be eligible to receive cash incentive
compensation as determined by the Board or a Committee thereof from time to
time, and shall also be eligible to participate in such incentive compensation
plans as the Board or a Committee thereof shall determine from time to time for
employees of the same status within the hierarchy of the Company.
(B) EXPENSES. Executive shall be entitled to receive prompt reimbursement
for all reasonable expenses incurred by him in performing services hereunder
during the Period of Employment, in accordance with the policies and procedures
then in effect and established by the Company for its senior executive officers.
(C) OTHER BENEFITS. During the Period of Employment, Executive shall be
entitled to continue to participate in or receive benefits under all of the
Company's Employee Benefit Plans in effect on the date hereof, or under plans or
arrangements that provide Executive with benefits at least substantially
equivalent to those provided under such Employee Benefit Plans. As used herein,
the term "Employee Benefit Plans" includes, without limitation, each pension and
retirement plan; supplemental pension, retirement and deferred compensation
plan; savings and profit-sharing plan; stock ownership plan; stock purchase
plan; stock option plan; life insurance plan; medical insurance plan; disability
plan; and health and accident plan or arrangement established and maintained by
the Company on the date hereof for employees of the same status within the
hierarchy of the Company. To the extent that the scope or nature of benefits
described in this section is determined under the policies of the Company based
in whole or in part on the seniority or tenure of an employee's service,
Executive shall be deemed to have a tenure with the Company equal to the actual
time of Executive's service with the Company plus the actual service by
Executive to the Previous Employer. During the Period of Employment, Executive
shall be entitled to participate in or receive benefits under any employee
benefit plan or arrangement which may, in the future, be made available by the
Company to its executives and key management employees, subject to and on a
basis consistent with the terms, conditions and overall administration of such
plan or arrangement. Any payments or benefits payable to Executive under a
plan or arrangement referred to in this Subparagraph 3(c) in respect of any
calendar year during which Executive is employed by the Company for less than
the whole of such year shall, unless otherwise provided in the applicable plan
or arrangement, be prorated in accordance with the number of days in such
calendar year during which he is so employed. Should any such payments or
benefits accrue on a fiscal (rather than calendar) year, then the proration in
the preceding sentence shall be on the basis of a fiscal year rather than
calendar year.
(D) VACATIONS. Executive shall be entitled to twenty (20) paid vacation
days in each calendar year, which shall be accrued ratably during the calendar
year. Executive shall also be entitled to all paid holidays given by the
Company to its executives. To the extent that the scope or nature of benefits
described in this section are determined under the policies of the Company based
in whole or in part on the seniority or tenure of an employee's service,
Executive shall be
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deemed to have a tenure with the Company equal to the actual time of Executive's
service with Company plus the actual service by Executive to the Previous
Employer.
4. UNAUTHORIZED DISCLOSURE.
(A) CONFIDENTIAL INFORMATION. Executive acknowledges that in the course of
his employment with the Company (and, if applicable, its predecessors), he has
been allowed to become, and will continue to be allowed to become, acquainted
with the Company's and the Parent's business affairs, information, trade
secrets, and other matters which are of a proprietary or confidential nature,
including but not limited to the Company's, the Parent's and their affiliates'
and predecessors' operations, business opportunities, price and cost
information, finance, customer information, business plans, various sales
techniques, manuals, letters, notebooks, procedures, reports, products,
processes, services, and other confidential information and knowledge
(collectively the "Confidential Information") concerning the Company's, the
Parent's and their affiliates' and predecessors' business. The Company agrees to
provide on an ongoing basis such Confidential Information as the Company deems
necessary or desirable to aid Executive in the performance of his duties.
Executive understands and acknowledges that such Confidential Information is
confidential, and he agrees not to disclose such Confidential Information to
anyone outside the Company or the parent, as appropriate, except to the extent
that (i) Executive deems such disclosure or use reasonably necessary or
appropriate in connection with performing his duties on behalf of the Company
and the Parent, (ii) Executive is required by order of a court of competent
jurisdiction (by subpoena or similar process) to disclose or discuss any
Confidential Information, provided that in such case, Executive shall promptly
inform the Company or the Parent, as appropriate, of such event, shall cooperate
with the Company or the Parent, as appropriate, in attempting to obtain a
protective order or to otherwise restrict such disclosure, and shall only
disclose Confidential Information to the minimum extent necessary to comply with
any such court order; (iii) such Confidential Information becomes generally
known to and available for use in the Company's industry (the "Fluid-Control
Industry"), other than as a result of any action or inaction by Executive; or
(iv) such information has been rightfully received by a member of the Fluid-
Control Industry or has been published in a form generally available to the
Fluid-Control Industry prior to the date Executive proposes to disclose or use
such information. Executive further agrees that he will not during employment
and/or at any time thereafter use such Confidential Information in competing,
directly or indirectly, with the Company or the Parent. At such time as
Executive shall cease to be employed by the Company, he will immediately turn
over to the Company or the Parent, as appropriate, all Confidential Information,
including papers, documents, writings, electronically stored information, other
property, and all copies of them provided to or created by him during the course
of his employment with the Company.
(B) HEIRS, SUCCESSORS, AND LEGAL REPRESENTATIVES. The foregoing provisions
of this Paragraph 4 shall be binding upon Executive's heirs, successors, and
legal representatives. The provisions of this Paragraph 4 shall survive the
termination of this Agreement for any reason.
5. COVENANT NOT TO COMPETE. In consideration for Executive's employment by
the Company under the terms provided in this Agreement and as a means to aid in
the performance and enforcement of the terms of the provisions of Paragraph 4,
Executive agrees that
(A) during the term of Executive's employment with the Company and for a
period of twenty-four (24) months thereafter, regardless of the reason for
termination of employment,
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Executive will not, directly or indirectly, as an owner, director, principal,
agent, officer, employee, partner, consultant, servant, or otherwise, carry on,
operate, manage, control, or become involved in any manner with any business,
operation, corporation, partnership, association, agency, or other person or
entity which is engaged in a business that is competitive with any of the
Company's or the Parent's products which are produced by the Company or the
Parent or any affiliate of either entity as of the date of Executive's
termination of employment with the Company, in any area or territory in which
the Company or the Parent or any affiliate of either entity conducts operations;
provided, however, that the foregoing shall not prohibit Executive from owning
up to one percent (1%) of the outstanding stock of a publicly held company
engaged in the Fluid- Control Industry; and
(B) during the term of Executive's employment with the Company and for a
period of twenty-four (24) months thereafter, regardless of the reason for
termination of employment, Executive will not directly or indirectly solicit or
induce any present or future employee of the Company or the Parent or any
affiliate of either entity to accept employment with Executive or with any
business, operation, corporation, partnership, association, agency, or other
person or entity with which Executive may be associated, and Executive will not
employ or cause any business, operation, corporation, partnership, association,
agency, or other person or entity with which Executive may be associated to
employ any present or future employee of the Company or the Parent without
providing the Company or the Parent, as appropriate, with ten (10) days' prior
written notice of such proposed employment.
Should Executive violate any of the provisions of this Paragraph, then in
addition to all other rights and remedies available to the Company at law or in
equity, the duration of this covenant shall automatically be extended for the
period of time from which Executive began such violation until he permanently
ceases such violation.
6. TERMINATION. Executive's employment hereunder may be terminated without
any breach of this Agreement under the following circumstances:
(A) DEATH. Executive's employment hereunder shall terminate upon his
death.
(B) DISABILITY. If, as a result of Executive's incapacity due to physical
or mental illness, Executive shall have been absent from his duties hereunder on
a full-time basis for one hundred eighty (180) calendar days in the aggregate in
any twelve (12) month period, the Company may terminate Executive's employment
hereunder.
(C) TERMINATION BY COMPANY FOR CAUSE. At any time during the Period of
Employment, the Company may terminate Executive's employment hereunder for Cause
if such termination is approved by not less than a majority of the Board at a
meeting of the Board called and held for such purpose. For purposes of this
Agreement, "Cause" shall mean: (A) conduct by Executive constituting a material
act of willful misconduct in connection with the performance of his duties,
including, without limitation, misappropriation of funds or property of the
Company or any of its affiliates other than the occasional, customary and de
minimis use of Company property for personal purposes; (B) criminal or civil
conviction of Executive, a plea of nolo contendere by Executive or conduct by
Executive that would reasonably be expected to result in material injury to the
reputation of the Company if he were retained in his position with the Company,
including, without limitation, conviction of a felony involving moral
turpitude;(C)
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continued, willful and deliberate non-performance by Executive of his duties
hereunder (other than by reason of Executive's physical or mental illness,
incapacity or disability) which has continued for more than thirty (30) days
following written notice of such non-performance from the Board; (D) a breach by
Executive of any of the provisions contained in Paragraphs 4 and 5 of this
Agreement; or (E) a violation by Executive of the Company's employment policies
which has continued following written notice of such violation from the Board.
(D) TERMINATION WITHOUT CAUSE. At any time during the Period of
Employment, the Company may terminate Executive's employment hereunder without
Cause if such termination is approved by a majority of the Board at a meeting of
the Board called and held for such purpose. Any termination by the Company of
Executive's employment under this Agreement which does not constitute a
termination for Cause under Subparagraph 6(c) or result from the death or
disability of the Executive under Subparagraph 6(a) or (b) shall be deemed a
termination without Cause. If the Company provides notice to Executive under
Paragraph 1 that it does not wish to extend the Period of Employment, such
action shall be deemed a termination without Cause.
(E) TERMINATION BY EXECUTIVE. At any time during the Period of Employment,
Executive may terminate his employment hereunder for any reason, including but
not limited to Good Reason. If Executive provides notice to the Company under
Paragraph 1 that he does not wish to extend the Period of Employment, such
action shall be deemed a voluntary termination by Executive and one without Good
Reason. For purposes of this Agreement, "Good Reason" shall mean that Executive
has complied with the "Good Reason Process" (hereinafter defined) following the
occurrence of any of the following events: (A) a substantial diminution or
other substantive adverse change, not consented to by Executive, in the nature
or scope of Executive's responsibilities, authorities, powers, functions or
duties; (B) any removal, during the Period of Employment, from Executive of his
titles of Chief Executive Officer and President of the Parent; (C) an
involuntary reduction in Executive's Base Salary except for across-the-board
reductions similarly affecting all or substantially all management employees;
(D) a breach by the Company of any of its other material obligations under this
Agreement and the failure of the Company to cure such breach within thirty (30)
days after written notice thereof by Executive; or (E) the involuntary
relocation of the Company's offices at which Executive is principally employed
or the involuntary relocation of the offices of Executive's primary workgroup to
a location more than thirty (30) miles from such offices, or the requirement by
the Company that Executive be based anywhere other than the Company's offices at
such location on an extended basis, except for required travel on the Company's
business to an extent substantially consistent with Executive's business travel
obligations. "Good Reason Process" shall mean that (i) Executive reasonably
determines in good faith that a "Good Reason" event has occurred; (ii) Executive
notifies the Company in writing of the occurrence of the Good Reason event;
(iii) Executive cooperates in good faith with the Company's efforts, for a
period not less than ninety (90) days following such notice, to modify
Executive's employment situation in a manner acceptable to Executive and
Company; and (iv) notwithstanding such efforts, one or more of the Good Reason
events continues to exist and has not been modified in a manner acceptable to
Executive. If the Company cures the Good Reason event in a manner acceptable to
Executive during the ninety (90) day period, Good Reason shall be deemed not to
have occurred.
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(F) NOTICE OF TERMINATION. Except for termination as specified in
Subparagraph 6(a), any termination of Executive's employment by the Company or
any such termination by Executive shall be communicated by written Notice of
Termination to the other party hereto. 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.
(G) DATE OF TERMINATION. "Date of Termination" shall mean: (A) if
Executive's employment is terminated by his death, the date of his death; (B) if
Executive's employment is terminated on account of disability under Subparagraph
6(b) or by the Company for Cause under Subparagraph 6(c), the date on which
Notice of Termination is given; (C) if Executive's employment is terminated by
the Company under Subparagraph 6(d), sixty (60) days after the date on which a
Notice of Termination is given; and (D) if Executive's employment is terminated
by Executive under Subparagraph 6(e), thirty (30) days after the date on which a
Notice of Termination is given.
7. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(A) If Executive's employment terminates by reason of his death, the
Company shall, within ninety (90) days of death, pay in a lump sum amount to
such person as Executive shall designate in a notice filed with the Company or,
if no such person is designated, to Executive's estate, Executive's accrued and
unpaid Base Salary to the date of his death, plus his accrued and unpaid
incentive compensation, if any, under Subparagraph 3(a). Upon the death of
Executive, all unvested stock options shall immediately vest in Executive's
estate or other legal representatives and become exercisable, and Executive's
estate or other legal representatives shall have 360 days from the Date of
Termination or the remaining option term, if earlier, to exercise all stock
options granted to Executive. All other stock-based grants and awards held by
Executive shall vest or be canceled upon the death of Executive in accordance
with their terms. For a period of one (1) year following the Date of
Termination, the Company shall pay such health insurance premiums as may be
necessary to allow Executive's spouse and dependents to receive health insurance
coverage substantially similar to coverage they received prior to the Date of
Termination. In addition to the foregoing, any payments to which Executive's
spouse, beneficiaries, or estate may be entitled under any employee benefit plan
shall also be paid in accordance with the terms of such plan or arrangement.
Such payments, in the aggregate, shall fully discharge the Company's obligations
hereunder.
(B) During any period that Executive fails to perform his duties hereunder
as a result of incapacity due to physical or mental illness, Executive shall
continue to receive his accrued and unpaid Base Salary and accrued and unpaid
incentive compensation, if any, under Subparagraph 3(a), until Executive's
employment is terminated due to disability in accordance with Subparagraph 6(b)
or until Executive terminates his employment in accordance with Subparagraph
6(e), whichever first occurs. Upon the Date of Termination, all unvested stock
options shall immediately vest and become exercisable and Executive shall have
360 days from the Date of Termination or the remaining option term, if earlier,
to exercise all stock options granted to Executive. All other stock-based
grants and awards held by Executive shall vest or be canceled upon the Date of
Termination in accordance with their terms. For a period of one (1) year
following the Date of Termination, the Company shall pay such health insurance
premiums as may be necessary to allow Executive and Executive's spouse and
dependents to receive health
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insurance coverage substantially similar to coverage they received prior to the
Date of Termination. Upon termination due to death prior to the termination
first to occur as specified in the preceding sentence, Subparagraph 7(a) shall
apply.
(C) If Executive's employment is terminated by Executive other than for
Good Reason as provided in Subparagraph 6(e), then the Company shall, through
the Date of Termination, pay Executive his accrued and unpaid Base Salary at the
rate in effect at the time Notice of Termination is given. Thereafter, the
Company shall have no further obligations to Executive except as otherwise
expressly provided under this Agreement, provided any such termination shall not
adversely affect or alter Executive's rights under any employee benefit plan of
the Company in which Executive, at the Date of Termination, has a vested
interest, unless otherwise provided in such employee benefit plan or any
agreement or other instrument attendant thereto. In addition, all vested but
unexercised stock options held by Executive as of the Date of Termination must
be exercised by Executive within three (3) months following the Date of
Termination or by the end of the option term, if earlier. All other stock-based
grants and awards held by Executive shall vest or be canceled upon the Date of
Termination in accordance with their terms.
(D) If Executive terminates his employment for Good Reason as provided in
Subparagraph 6(e) or if Executive's employment is terminated by the Company
without Cause as provided in Subparagraph 6(d), then the Company shall, through
the Date of Termination, pay Executive his accrued and unpaid Base Salary at the
rate in effect at the time Notice of Termination is given and his accrued and
unpaid incentive compensation, if any, under Subparagraph 3(a). In addition,
subject to signing by Executive of a general release of claims in a form and
manner satisfactory to the Company,
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(i) the Company shall pay Executive an amount equal to two (2) times
the sum of Executive's Average Base Salary and his Average Incentive
Compensation (the "Severance Amount"). The Severance Amount shall be paid
out in substantially equal bi-weekly installments over twenty-four (24)
months, in arrears. For purposes of this Agreement, "Average Base Salary"
shall mean the average of the annual Base Salary received by Executive for
each of the three (3) immediately preceding fiscal years or such fewer
number of complete fiscal years as Executive may have been employed by the
Company or the Previous Employer. For purposes of this Agreement, "Average
Incentive Compensation" shall mean the average of the annual incentive
compensation under Subparagraph 3(a) received by Executive for the three
(3) immediately preceding fiscal years or such fewer number of complete
fiscal years as Executive may have been employed by the Company or the
Previous Employer. In no event shall "Average Incentive Compensation"
include any sign-on bonus, retention bonus or any other special bonus.
Notwithstanding the foregoing, if the Executive breaches any of the
provisions contained in Paragraphs 4 and 5 of this Agreement, all payments
of the Severance Amount shall immediately cease. Furthermore, in the event
Executive terminates his employment for Good Reason as provided in
Subparagraph 6(e), he shall be entitled to the Severance Amount only if he
provides the Notice of Termination provided for in Subparagraph 6(f) within
thirty (30) days after the occurrence of the event or events which
constitute such Good Reason as specified in clauses (A), (B), (C), (D) and
(E) of Subparagraph 6(e); and
(ii) upon the Date of Termination, each unvested stock option shall
continue to vest in accordance with the vesting schedule set forth in such
stock option for an additional twenty-four (24) months following the Date
of Termination as if Executive's employment had not ceased. Each such
stock option, to the extent exercisable, must be exercised by Executive
within 180 days after the last installment of such stock option first
becomes exercisable as described herein. In addition, each restricted
stock unit held by Executive under the CIRCOR International, Inc.
Management Stock Purchase Plan shall continue to vest for an additional
twenty-four (24) months following the Date of Termination as if Executive's
employment had not ceased, and Executive shall be credited with an
additional twenty-four (24) months of Benefit Service solely for purposes
of determining vesting status under the CIRCOR International, Inc.
Supplemental Executive Retirement Plan (the "SERP") as of the Date of
Termination; and
(iii) in addition to any other benefits to which Executive may be
entitled in accordance with the Company's then existing severance policies,
the Company shall, for a period of one (1) year commencing on the Date of
Termination, pay such health insurance premiums as may be necessary to
allow Executive and Executive's spouse and dependents to continue to
receive health insurance coverage substantially similar to the coverage
they received prior to the Date of Termination.
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(E) If Executive's employment is terminated by the Company for Cause as
provided in Subparagraph 6(c), then the Company shall, through the Date of
Termination, pay Executive his accrued and unpaid Base Salary at the rate in
effect at the time Notice of Termination is given. Thereafter, the Company
shall have no further obligations to Executive except as otherwise expressly
provided under this Agreement, provided any such termination shall not adversely
affect or alter Executive's rights under any employee benefit plan of the
Company in which Executive, at the Date of Termination, has a vested interest,
unless otherwise provided in such employee benefit plan or any agreement or
other instrument attendant thereto. In addition, all stock options held by
Executive as of the Date of Termination shall immediately terminate and be of no
further force and effect, and all other stock-based grants and awards shall be
canceled or terminated in accordance with their terms.
(F) Nothing contained in the foregoing Subparagraphs 7(a) through 7(e)
shall be construed so as to affect Executive's rights or the Company's
obligations relating to agreements or benefits which are unrelated to
termination of employment.
8. CHANGE IN CONTROL PAYMENT. The provisions of this Paragraph 8 set forth
certain terms of an agreement reached between Executive and the Company
regarding Executive's rights and obligations upon the occurrence of a Change in
Control of the Company. These provisions are intended to assure and encourage
in advance Executive's continued attention and dedication to his assigned duties
and his objectivity during the pendency and after the occurrence of any such
event. These provisions shall apply in lieu of, and expressly supersede, the
provisions of Subparagraph 7(d)(i) regarding severance pay upon a termination of
employment, if such termination of employment occurs within eighteen (18) months
after the occurrence of the first event constituting a Change of Control,
provided that such first event occurs during the Period of Employment. These
provisions shall terminate and be of no further force or effect beginning
eighteen (18) months after the occurrence of a Change of Control.
(A) CHANGE IN CONTROL.
(i) If within eighteen (18) months after the occurrence of the first
event constituting a Change in Control, Executive's employment is
terminated by the Company without Cause as provided in Subparagraph 6(d) or
Executive terminates his employment for Good Reason as provided in
Subparagraph 6(e), then the Company shall pay Executive a lump sum in cash
in an amount equal to three (3) times the sum of (A) Executive's current
Base Salary plus (B) Executive's most recent annual incentive compensation
under Subparagraph 3(a) for the most recent fiscal year, excluding any
sign-on bonus, retention bonus or any other special bonus; and
(ii) Notwithstanding anything to the contrary in any applicable option
agreement or stock-based award agreement, upon a Change in Control, all
stock options and other stock-based awards granted to Executive by the
Parent shall immediately accelerate and become exercisable or non-
forfeitable as of the effective date of such Change in Control. Executive
shall also be entitled to any other rights and benefits with respect to
stock-related awards, to the extent and upon the terms provided in the
employee stock option or incentive plan or any agreement or other
instrument attendant thereto pursuant to which such options or awards were
granted; and
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(iii) Executive shall be fully vested in his accrued benefit under the
SERP as of the Date of Termination; and
(iv) The Company shall, for a period of one (1) year commencing on the Date
of Termination, pay such health insurance premiums as may be necessary to allow
Executive, Executive's spouse and dependents to continue to receive health
insurance coverage substantially similar to the coverage they received prior to
the Date of Termination.
(B) GROSS UP PAYMENT.
(i) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any compensation, payment or distribution
by the Company to or for the benefit of Executive, whether paid or payable
or distributed or distributable pursuant to the terms of this Agreement or
otherwise (the "Severance Payments"), would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code"), or any interest or penalties are incurred by Executive with
respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") such that the net amount retained by
Executive, after deduction of any Excise Tax on the Severance Payments, any
Federal, state, and local income tax, employment tax and Excise Tax upon
the payment provided by this subsection, and any interest and/or penalties
assessed with respect to such Excise Tax, shall be equal to the Severance
Payments.
(ii) Subject to the provisions of Subparagraph 8(b)(iii), all
determinations required to be made under this Subparagraph 8(b)(ii),
including whether a Gross-Up Payment is required and the amount of such
Gross-Up Payment, shall be made by KPMG Peat Marwick LLP or any other
nationally recognized accounting firm selected by the Company (the
"Accounting Firm"), which shall provide detailed supporting calculations
both to the Company and Executive within fifteen (15) business days of the
Date of Termination, if applicable, or at such earlier time as is
reasonably requested by the Company or Executive. For purposes of
determining the amount of the Gross-Up Payment, Executive shall be deemed
to pay federal income taxes at the highest marginal rate of federal income
taxation applicable to individuals for the calendar year in which the
Gross-Up Payment is to be made, and state and local income taxes at the
highest marginal rates of individual taxation in the state and locality of
Executive's residence on the Date of Termination, net of the maximum
reduction in federal income taxes which could be obtained from deduction of
such state and local taxes. The initial Gross-Up Payment, if any, as
determined pursuant to this Subparagraph 8(b)(iii), shall be paid to
Executive within five (5) days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is
payable by Executive, the Company shall furnish Executive with an opinion
of counsel that failure to report the Excise Tax on Executive's applicable
federal income tax return would not result in the imposition of a
negligence or similar penalty. Any determination by the Accounting Firm
shall be binding upon the Company and Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments which will not have been made by the Company should
have been made (an "Underpayment"). In the event
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that the Company exhausts its remedies pursuant to Subparagraph 8(b)(iii)
and Executive thereafter is required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of the Underpayment that has
occurred, consistent with the calculations required to be made hereunder,
and any such Underpayment, and any interest and penalties imposed on the
Underpayment and required to be paid by Executive in connection with the
proceedings described in Subparagraph 8(b)(iii), shall be promptly paid by
the Company to or for the benefit of Executive.
(iii) Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-up Payment. Such notification shall be given
as soon as practicable but no later than ten (10) business days after
Executive knows of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid.
Executive shall not pay such claim prior to the expiration of the 30-day
period following the date on which he gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies Executive in
writing prior to the expiration of such period that it desires to contest
such claim, provided that the Company has set aside adequate reserves to
cover the Underpayment and any interest and penalties thereon that may
accrue, Executive shall:
(A) give the Company any information reasonably requested by the
Company relating to such claim,
(B) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney selected by the Company,
(C) cooperate with the Company in good faith in order to
effectively contest such claim, and
(D) permit the Company to participate in any proceedings relating
to such claim; provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall
indemnify and hold Executive harmless, on an after-tax basis, for any
Excise Tax or income tax, including interest and penalties with
respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing
provisions of this Subparagraph 8(b)(iii), the Company shall control
all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct
Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and Executive agrees to prosecute
such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts,
as the Company shall determine; provided,
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however, that if the Company directs Executive to pay such claim and
xxx for a refund, the Company shall advance the amount of such payment
to Executive on an interest- free basis and shall indemnify and hold
Executive harmless, on an after-tax basis, from any Excise Tax or
income tax, including interest or penalties with respect thereto,
imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes
for the taxable year of Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and Executive shall be entitled to settle or
contest, as the case may be, any other issues raised by the Internal
Revenue Service or any other taxing authority.
(iv) If, after the receipt by Executive of an amount advanced by the
Company pursuant to Subparagraph 8(b)(iii), Executive becomes entitled to
receive any refund with respect to such claim, Executive shall (subject to
the Company's complying with the requirements of Subparagraph 8(b)(iii))
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If,
after the receipt by Executive of an amount advanced by the Company
pursuant to Subparagraph 8(b)(iii), a determination is made that Executive
shall not be entitled to any refund with respect to such claim and the
Company does not notify Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
(C) DEFINITIONS. For purposes of this Paragraph 8, the following terms
shall have the following meanings:
"CHANGE IN CONTROL" shall mean any of the following:
(a) any "person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Act") (other than the
Parent, any of its subsidiaries, any member of the Xxxxx Family Group (as
defined herein) or any trustee, fiduciary or other person or entity holding
securities under any employee benefit plan or trust of the Parent or any
of its subsidiaries), together with all "affiliates" and "associates" (as
such terms are defined in Rule 12b-2 under the Act) of such person, shall
become the "beneficial owner" (as such term is defined in Rule 13d-3 under
the Act), directly or indirectly, of securities of the Parent representing
twenty-five percent (25%) or more of either (A) the combined voting power
of the Parent's then outstanding securities having the right to vote in an
election of the Parent's Board ("Voting Securities") or (B) the then
outstanding shares of Parent's common stock, par value $0.01 per share
("Common Stock") (other than as a result of an acquisition of securities
directly from the Parent); or
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(b) persons who, as of the Commencement Date, constitute the Parent's
Board (the "Incumbent Directors") cease for any reason, including, without
limitation, as a result of a tender offer, proxy contest, merger or similar
transaction, to constitute at least a majority of the Board, provided that
any person becoming a director of the Parent subsequent to the
Commencement Date shall be considered an Incumbent Director if such
person's election was approved by or such person was nominated for election
by a vote of at least a majority of the Incumbent Directors; but provided
further, that any such person whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of members of the Board or other actual or threatened solicitation
of proxies or consents by or on behalf of a person other than the Board,
including by reason of agreement intended to avoid or settle any such
actual or threatened contest or solicitation, shall not be considered an
Incumbent Director; or
(c) the stockholders of the Parent shall approve (A) any
consolidation or merger of the Parent where the stockholders of the
Parent, immediately prior to the consolidation or merger, would not,
immediately after the consolidation or merger, beneficially own (as such
term is defined in Rule 13d-3 under the Act), directly or indirectly,
shares representing in the aggregate fifty percent (50%) or more of the
voting shares of the Parent issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation, if any),
(B) any sale, lease, exchange or other transfer (in one transaction or a
series of transactions contemplated or arranged by any party as a single
plan) of all or substantially all of the assets of the Parent or (C) any
plan or proposal for the liquidation or dissolution of the Parent.
Notwithstanding the foregoing, a "Change of Control" shall not be deemed to
have occurred for purposes of the foregoing clause (a) solely as the result of
an acquisition of securities by the Parent which, by reducing the number of
shares of Common Stock or other Voting Securities outstanding, increases the
proportionate number of shares beneficially owned by any person to twenty-five
percent (25%) or more of either (A) the combined voting power of all of the then
outstanding Voting Securities or (B) Common Stock; provided, however, that if
any person referred to in this sentence shall thereafter become the beneficial
owner of any additional shares of Voting Securities or Common Stock (other than
pursuant to a stock split, stock dividend, or similar transaction or as a result
of an acquisition of securities directly from the Parent) and immediately
thereafter beneficially owns twenty-five percent (25%) or more of either (A) the
combined voting power of all of the then outstanding Voting Securities or (B)
Common Stock, then a "Change of Control" shall be deemed to have occurred for
purposes of the foregoing clause (a).
"PARENT" shall mean not only CIRCOR International, Inc., but also its
successors by merger or otherwise.
"XXXXX FAMILY GROUP" shall mean Xxxxxxx X. Xxxxx, the Xxxxxx X. Xxxxx
Voting Trust, and any other person who or which, together with its
affiliates and associates, beneficially owns 15% or more of the outstanding
shares of common stock of the Parent on the Commencement Date.
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9. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed as follows:
if to the Executive:
At his home address as shown
in the Company's personnel records;
if to the Company:
CIRCOR, Inc.
00 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Board of Directors of CIRCOR International, Inc.
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
10. MISCELLANEOUS. No provisions of this Agreement may be modified, waived, or
discharged unless such waiver, modification, or discharge is agreed to in
writing and signed by Executive and such officer of the Company as may be
specifically designated by the Board. No waiver by either 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 agreements or
representations, oral or otherwise, express or implied, unless specifically
referred to herein, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. The validity,
interpretation, construction, and performance of this Agreement shall be
governed by the laws of the Commonwealth of Massachusetts (without regard to
principles of conflicts of laws).
11. VALIDITY. The invalidity or unenforceability of any provision or
provisions 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. The invalid portion of this Agreement, if any, shall be modified by any
court having jurisdiction to the extent necessary to render such portion
enforceable.
12. 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.
13. ARBITRATION; OTHER DISPUTES. In the event of any dispute or controversy
arising under or in connection with this Agreement, the parties shall first
promptly try in good faith to settle such dispute or controversy by mediation
under the applicable rules of the American Arbitration Association before
resorting to arbitration. In the event such dispute or controversy remains
unresolved in whole or in part for a period of thirty (30) days after it arises,
the parties will settle
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any remaining dispute or controversy exclusively by arbitration in Boston,
Massachusetts, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction. Notwithstanding the above, the Company shall be
entitled to seek a restraining order or injunction in any court of competent
jurisdiction to prevent any continuation of any violation of Paragraph 4 or 5
hereof. Furthermore, should a dispute occur concerning Executive's mental or
physical capacity as described in Subparagraph 6(b), 6(c) or 7(b), a doctor
selected by Executive and a doctor selected by the Company shall be entitled to
examine Executive. If the opinion of the Company's doctor and Executive's doctor
conflict, the Company's doctor and Executive's doctor shall together agree upon
a third doctor, whose opinion shall be binding.
14. THIRD-PARTY AGREEMENTS AND RIGHTS. Executive represents to the Company
that Executive's execution of this Agreement, Executive's employment with the
Company and the performance of Executive's proposed duties for the Company and
the Parent will not violate any obligations Executive may have to any employer
or other party, and Executive will not bring to the premises of the Company any
copies or other tangible embodiments of non-public information belonging to or
obtained from any such previous employment or other party.
15. LITIGATION AND REGULATORY COOPERATION. During and after Executive's
employment, Executive shall reasonably cooperate with the Company and the Parent
in the defense or prosecution of any claims or actions now in existence or which
may be brought in the future against or on behalf of the Company and/or the
Parent which relate to events or occurrences that transpired while Executive was
employed by the Company; provided, however, that such cooperation shall not
materially and adversely affect Executive or expose Executive to an increased
probability of civil or criminal litigation. Executive's cooperation in
connection with such claims or actions shall include, but not be limited to,
being available to meet with counsel to prepare for discovery or trial and to
act as a witness on behalf of the Company and/or the Parent at mutually
convenient times. During and after Executive's employment, Executive also shall
cooperate fully with the Company and the Parent in connection with any
investigation or review of any federal, state or local regulatory authority as
any such investigation or review relates to events or occurrences that
transpired while Executive was employed by the Company. The Company shall also
provide Executive with compensation on an hourly basis (to be derived from the
sum of his Base Compensation and Average Incentive Compensation) for requested
litigation and regulatory cooperation that occurs after his termination of
employment, and reimburse Executive for all costs and expenses incurred in
connection with his performance under this Paragraph 15, including, but not
limited to, reasonable attorneys' fees and costs.
16. GENDER NEUTRAL. Wherever used herein, a pronoun in the masculine gender
shall be considered as including the feminine gender unless the context clearly
indicates otherwise.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective on
the date and year first above written.
CIRCOR, INC.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Its: Chief Financial Officer
-------------------------------
/s/ Xxxxx X. Xxxxx, Xx.
------------------------------------
Xxxxx X. Xxxxx, Xx.
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