Exhibit 10.34
EXECUTIVE CHANGE OF CONTROL
AGREEMENT
This EXECUTIVE CHANGE OF CONTROL
AGREEMENT (“Agreement”) is made as of the 11th day of
February 2008, between CIRCOR, Inc., a Massachusetts corporation
(the “Company”), and Frederic M. Burditt
(“Executive”).
WHEREAS, the Company presently
employs the Executive in which capacity the Executive serves as an
officer of the Company and its Parent (as defined below);
and
WHEREAS, the Board of Directors of
the Parent (the “Board”) recognizes the valuable
services rendered to the Company, the Parent and their respective
affiliates by the Executive; and
WHEREAS, the Board has determined
that it is in the best interests of the Company, the Parent and
their affiliates to encourage in advance the continued loyalty of
the Executive as well as the Executive’s continued attention
to his assigned duties and objectivity in the event of a threatened
or possible change in control of the Parent;
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. Definitions . For purposes
of this Agreement, the following terms shall have the following
meanings:
“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 polo 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 Chief
Executive Officer; or (d) a violation by Executive of the
Company’s employment policies which has continued following
written notice of such violation from the Chief Executive
Officer.
“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, 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) Incumbent Directors (as defined
below) 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;
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 13d3 under the Act), directly or indirectly, shares
representing in the aggregate fifty percent (50%) or more of
the voting shares of the Parent or other party 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).
“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 term of this Agreement, from Executive of his titles as
an officer of 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; (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
opportunity for annual incentive compensation below the annual
incentive opportunity most recently in effect under the
Company’s Executive Bonus Incentive Plan prior to the Change
in Control.
“Incumbent Directors”
shall mean persons who, as of the Commencement Date, constitute the
Board; provided that any person becoming a director of the Parent
subsequent to the
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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.
“Parent” shall mean
CIRCOR International, Inc., a Delaware corporation as well as its
successors by merger or otherwise.
2. Term . The term of this
Agreement shall extend from the date hereof (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.
3. Change in Control Payment
. The provisions of this Paragraph 3 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 Parent. 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 terminate and be of no further force or
effect beginning twelve (12) months after the occurrence of a
Change of Control.
(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 defined in
Section 1 or Executive terminates his employment for Good
Reason as provided in Section 1, 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 highest annual incentive
compensation under the Company’s Executive Bonus Incentive
Plan in the three (3) immediately preceding fiscal years,
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. In addition, all
restricted stock units held by the Executive pursuant to the
Management Stock Purchase Plan shall become fully vested upon a
Change of Control and the Executive shall be entitled to receive
the shares of stock represented by such restricted stock units.
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) The Company shall, for a
period of two (2) 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.
(iv) In addition, the Company shall,
for a period of two (2) 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) 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 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 determ
