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Exhibit
10.31
SEVERANCE
AGREEMENT
This Severance Agreement (the
“ Agreement ”) is made and entered into as of
March 24, 2008 by and between CIRCOR, Inc. (“
CIRCOR ”) and A. William Higgins (the “
Executive ”).
WHEREAS , CIRCOR
presently employs the Executive in which capacity the Executive
serves as an officer of the Company, as President and Chief
Executive Officer of its parent, CIRCOR International, Inc. (the
“ Parent ”) and as an officer and/or director of
other direct and indirect subsidiaries of the Parent (for purposes
herein, CIRCOR and the Parent shall hereinafter be collectively
referred to as the “ Company ”); and
WHEREAS , the Company
desires to provide severance compensation to the Executive upon the
occurrence of certain events; and
WHEREAS , in exchange
for the severance compensation provided for under this Agreement,
Executive agrees to certain non-competition and non-solicitation
covenants as set forth herein,
NOW, THEREFORE , in
consideration of the foregoing and the mutual promises of the
parties herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Executive hereby covenant and
agree with each other as follows:
1. Definitions . For purposes of
the Agreement, the following terms shall have the following
meanings:
(a) “ Base
Salary ” shall mean the Executive’s annual base
salary.
(b) “ Disability
” shall mean, as a result of Executive’s incapacity due
to physical or mental illness, Executive shall have been absent
from his duties with the Company on a full-time basis for 180
calendar days in the aggregate in any twelve month
period.
(c) “ For Cause
” shall mean: (i) 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; (ii) 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;
(iii) 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 of
Directors of the Company (the “ Board ”); or
(iv) a violation by Executive of the Company’s
employment policies which has continued following written notice of
such violation from the Board.
(d) “ 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 material
diminution or other material adverse change, not consented to by
Executive, in the nature or scope of Executive’s
responsibilities, authorities, powers, functions or duties;
(b) an involuntary material reduction in Executive’s
Base Salary except for across-the-board reductions similarly
affecting all or substantially all management employees; (c) a
material breach of this Agreement by the Company; or (d) a
material change in the geographic location at which the Executive
provides services to the Company.
“ 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 within 60 days of such
occurrence; (iii) Executive cooperates in good faith with the
Company’s efforts, for a period not less than 30 days
following such notice (the “ Cure Period ”), to
remedy the condition; (iv) notwithstanding such efforts, the
Good Reason event continues to exist; and (v) the Executive
terminates his employment within 60 days after the end of the Cure
Period. If the Company cures the Good Reason event during the Cure
Period, Good Reason shall be deemed not to have
occurred.
(e) “ Target Bonus
Opportunity ” shall mean the percentage of Base Salary
that has been set by the Company’s Compensation Committee as
the target level of achievement for Executive in the
Company’s annual short-term bonus or other similar plan that
affords the Executive the opportunity to achieve an annual bonus on
account of performance against certain goals for a given fiscal
year.
2. Severance Payment .
(a) Termination by the
Company For Cause, Death or Disability . Upon termination of
the Executive’s employment by the Company for Cause, death,
or Disability, the Company shall, through the Date of Termination
(hereinafter defined), pay Executive his accrued and unpaid Base
Salary (including compensation for any accrued vacation) 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 or as required by law, 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.
(b) Termination by the
Executive other than for Good Reason . If Executive’s
employment is terminated by the Executive other than for Good
Reason, then the Company shall, through the Date of Termination,
pay Executive his accrued and unpaid Base Salary (including
compensation for any accrued vacation) 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.
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(c) Termination by the
Company Other Than for Cause, Death or Disability or by the
Executive for Good Reason . If Executive’s employment is
terminated (i) by the Company other than For Cause or
Executive’s death or Disability or (ii) by the Executive
for Good Reason, then the Company shall, through the Date of
Termination, pay Executive his accrued and unpaid Base Salary
(including compensation for any accrued vacation) at the rate in
effect at the time Notice of Termination is given and his accrued
and unpaid incentive compensation, if any. In addition, if the
Executive signs a general release of claims in a form and manner
satisfactory to the Company (the “ Release ”)
within 21 days of the receipt of the Release and does not revoke
such Release during the seven-day revocation period:
(i) the Company shall pay
Executive a lump sum payment equal to two (2) times
the sum of the Executive’s current Base Salary and
Target Bonus Opportunity;
(ii) the Company shall pay
Executive a lump sum amount equal to the product of (x) the
bonus compensation Executive would have received had he remained
with the Company through the entire fiscal year in which the Date
of Termination occurs, times (y) a fraction the numerator of
which is the number of calendar days elapsed in the fiscal year as
of the Termination Date and the denominator of which is 365; such
amount shall be paid at such later time as bonus payments on
account of the fiscal year in question are generally paid;
and
(iii) as required by COBRA,
Executive will be given the option to continue medical and dental
insurance for a period of up to eighteen (18) months from the
Termination Date or as otherwise provided by law under COBRA. If
COBRA coverage is elected, then the Company and Executive each will
make payments directly to the COBRA administrator for the cost of
such coverage in accordance with their same percentage
contributions made toward medical and dental coverage immediately
prior to the Date of Termination. Executive’s eligibility for
COBRA coverage (and therefore any obligation on the part of the
Company with respect to such coverage) shall cease on the earlier
of eighteen (18) months after the Date of Termination and such
date as Executive becomes eligible for medical/dental insurance
under another group health insurance plan (as defined by
COBRA).
(d) Termination Covered
Under Executive Change of Control Agreement . If
Executive’s employment is terminated under circumstances that
would afford Executive certain rights under the Amended and
Restated Executive Change of Control Agreement currently in effect
between the Company and Executive (or any successor agreement), the
provisions of the Amended and Restated Executive Change of Control
Agreement shall govern and this Agreement shall have no force and
effect, it being intended that the Amended and Restated Executive
Change of Control Agreement shall govern the rights and obligations
of the parties in the event of a termination covered under the
Amended and Restated Executive Change of Control Agreement and this
Agreement shall govern the rights and obligations of the parties in
the event of any other termination.
3. Notice of Termination . Any
termination of Executive’s employment by the Company or any
such termination by Executive shall be communicated by written
Notice of Termination to
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the other party hereto. For purposes of
this Agreement, a “ Notice of Termination ”
shall mean a notice that indicates the specific termination
provision in this Agreement relied upon.
4. Date of Termination . The
“ Date of Termination ” shall be the date on
which Notice of Termination is provided by either party or such
later date as may be specified in such Notice of
Termination.
5. Withholding . All payments
made to the Executive under this Agreement shall be net of any tax
or other amounts required to be withheld by the Company under
applicable law.
6. No Mitigation . The
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