EXHIBIT 10.13
EXECUTIVE EMPLOYMENT AGREEMENT
AS AMENDED AND RESTATED
The EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") made as of the 16th day
of September, 1999, between CIRCOR, Inc., a Massachusetts corporation (the
"Company"), and David A. Bloss, Sr. ("Executive") is hereby amended and restated
in its entirety this 23rd day of October, 2002 as follows:
WHEREAS, pursuant to the Agreement, Executive serves as the President
andmember 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
WHEREAS, the Company, Parent and Executive desire to amend and restate
the Agreement in its entirety.
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 September 16,
2002 (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 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
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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 annual base
salary shall be $500,000, beginning January 1, 2003. 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.
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(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 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.
(e) Club Membership. The Company shall pay the initiation fees and
annual dues associated with a country club membership of Executive's choice.
(f) Tax Planning. The Company shall provide Executive with tax
preparation and planning services.
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 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
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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, 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.
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(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 or Parent 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) 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 or Parent 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 or Parent 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 or Parent 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
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cure such breach within thirty (30) days after written notice thereof by
Executive; (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; or (F) a reduction in
Executive's annual incentive compensation opportunity below the annual incentive
compensation opportunity most recently in effect for Executive prior to the
Change in Control as determined by the Board or a Committee thereof. "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 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.
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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 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
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
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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) regarding severance pay and benefits 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 highest annual incentive
compensation under Subparagraph 3(a) in the three (3) immediately
preceding fiscal years, excluding any sign-on bonus, retention bonus or
any other special bonus. Such lump sum cash payment shall be paid to
Executive within thirty (30) days following the Date of Termination; 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 shall be credited with
an additional thirty-six (36) months of Benefit Service under the SERP;
and
(iv) The Company shall, for a period of three (3) years
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.
(v) In addition, the Company shall, for a period of three
(3) years commencing on the Date of Termination, pay or promptly
reimburse Executive for expenses incurred for leasing an automobile (the
"Leasing Allowance") in an amount equal to the Leasing Allowance that
Executive was entitled to receive from the Company in accordance with
the Leasing Allowance policies and procedures then in effect 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
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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 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
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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 sue 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, however, that if the Company
directs Executive to pay such claim and sue 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
12
its subsidiaries, any member of the Horne 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
(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
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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.
"Horne Family Group" shall mean Timothy P. Horne, the George B. Horne
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.
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.
35 Corporate Drive
Burlington, MA 01803
Attention: Board of Directors
if to the Parent:
CIRCOR International, Inc.
35 Corporate Drive
Burlington, MA 01803
Attention: Board of Directors
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
14
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 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
15
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 INTERNATIONAL, INC.
By: /S/ DEWAIN K. CROSS
--------------------------------
Dewain K. Cross
Chairman, Compensation Committee
Board of Directors
CIRCOR, INC.
By: /S/ KENNETH W. SMITH
--------------------------------
Kenneth W. Smith
Vice President
EXECUTIVE
/S/ DAVID A. BLOSS, SR.
--------------------------------
David A. Bloss, Sr.
16