EXHIBIT 10.16
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. Xxxxxxx ("Executive").
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 first anniversary of the Commencement Date; provided, however,
that the term of this Agreement shall automatically be extended for one
additional year on the first 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 twelve (12)
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 Treasurer and Secretary of the Company and the Treasurer, Secretary and
the Chief Financial Officer 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 Parent and
shall have such other powers and duties as may from time to time be prescribed
by the Chairman ("Chairman") of the Board of Directors of the Parent (the
"Board"), the Chief Executive Officer of the Parent (the "CEO") or such other
executive authorized by the Chairman or the CEO, 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 Chairman or CEO, or engage in religious, charitable or other community
activities as long as such services and activities are disclosed to the Chairman
or CEO and do not materially interfere with Executive's performance of his
duties to the Company and the Parent as provided in this Agreement.
3. COMPENSATION AND RELATED MATTERS.
(A) BASE SALARY AND INCENTIVE COMPENSATION. Executive's initial annual
base salary shall be $225,000. Executive's base salary shall be redetermined
from time to time by the CEO. 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 CEO or a Committee of the Board from time to time, and shall also be
eligible to participate in such incentive compensation plans as the CEO or a
Committee of the Board 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. 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.
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, 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, 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 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 or 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 twelve (12) months thereafter, regardless of the reason for
termination of employment, Executive
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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 twelve (12) 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 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 or any affiliate of either entity 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 the CEO. 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)
continued, willful and deliberate non-performance by Executive of his duties
hereunder
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(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 the CEO. 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 title of
Chief Financial Officer 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.
(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
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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 insurance coverage substantially similar to
coverage they received prior to the Date of
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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,
(i) the Company shall pay Executive an amount equal to 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 twelve (12) 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.
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. 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
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(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 eighteen (18) 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 eighteen (18) months
following the Date of Termination as if Executive's employment had not
ceased, and Executive shall be credited with an additional eighteen (18)
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.
(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 twelve (12) 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 twelve
(12) months after the occurrence of a Change of Control.
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(A) CHANGE IN CONTROL.
(i) If within twelve (12) 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 two (2)
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
(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) ADDITIONAL LIMITATION.
(i) Anything in this Agreement to the contrary notwithstanding, in
the event 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"),
the following provisions shall apply:
(A) If the Severance Payments, reduced by the sum of (1) the
Excise Tax and (2) the total of the Federal, state, and local income
and employment taxes payable by Executive on the amount of the
Severance Payments which are in excess of the Threshold Amount, are
greater than or equal to the Threshold Amount, Executive shall be
entitled to the full benefits payable under this Agreement.
(B) If the Threshold Amount is less than (x) the Severance
Payments, but greater than (y) the Severance Payments reduced by the
sum of (1) the Excise Tax and (2) the total of the Federal, state, and
local income and employment taxes on the amount of the Severance
Payments which are in excess of the Threshold
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Amount, then the benefits payable under this Agreement shall be
reduced (but not below zero) to the extent necessary so that the
maximum Severance Payments shall not exceed the Threshold Amount. To
the extent that there is more than one method of reducing the payments
to bring them within the Threshold Amount, Executive shall determine
which method shall be followed; provided that if Executive fails to
make such determination within 45 days after the Company has sent
Executive written notice of the need for such reduction, the Company
may determine the amount of such reduction in its sole discretion.
For the purposes of this Paragraph 8, "Threshold Amount" shall mean three
times Executive's "base amount" within the meaning of Section 280G(b)(3) of
the Code and the regulations promulgated thereunder less one dollar
($1.00); and "Excise Tax" shall mean the excise tax imposed by Section 4999
of the Code, and any interest or penalties incurred by Executive with
respect to such excise tax.
(ii) The determination as to which of the alternative provisions of
Paragraph 8(b)(i) shall apply to Executive 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 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 which of the alternative provisions of Paragraph 8(b)(i)
shall apply, 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 determination 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. Any
determination by the Accounting Firm shall be binding upon the Company and
Executive.
(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,
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par value $0.01 per share ("Common Stock") (other than as a result of an
acquisition of securities directly from the Parent); or
(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
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associates, beneficially owns 15% or more of the outstanding shares of
common stock of the Parent on the Commencement Date.
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: Chief Executive Officer 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
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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 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.
IN WITNESS WHEREOF, the parties have executed this Agreement effective on
the date and year first above written.
CIRCOR, INC.
By: /s/ Xxxxx X. Xxxxx, Xx.
------------------------------
Its: President
-----------------------------
/s/ Xxxxx X. Xxxxxxx
---------------------------------
Xxxxx X. Xxxxxxx
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