Exhibit 99.01
February 10, 2003
Mark A. Koch, CPA
54 Beekman Avenue
Croton-on-Hudson, NY 10520
Dear Mark:
Del Global Technologies Corp. (the "Corporation") acknowledges that the
maintenance of strong and experienced employees is essential in protecting and
enhancing the best interest of the Corporation and its stockholders. In this
connection the Corporation recognizes that, as is the case with many
corporations, the possibility of a change in control may arise and may result in
the departure or distraction of key employees to the detriment of the
Corporation and its stockholders.
In order to assure that it will have the continued dedication of its key
employees and the availability of their advice and counsel notwithstanding the
possibility or occurrence of a Change in Control (as hereinafter defined), and
to induce key employees to remain in the employ of the Corporation, and for
other good and valuable consideration, the Corporation is taking the following
action:
1. In the event of a Change in Control of the Corporation at any time
during the period in which you are an employee of the Corporation, and
your employment with the Corporation is terminated as a result of such
Change in Control ("Change in Control Termination"), the Corporation
and/or its successor shall be obligated to pay to you an amount equal
to one (1) times the sum of (i) your base salary for the calendar year
in which the Change in Control Termination occurs, plus (ii) the
bonus, if any, declared payable to you for the year immediately
preceding the Change in Control Termination, [or if none declared, the
bonus for the year of the Change in Control Termination (based on a
full year) pursuant to targets or goals]; plus (iii) the amount, if
any, credited to you as deferred compensation for the year immediately
preceding the Change in Control Termination. In addition, upon a
Change in Control Termination the Corporation shall pay you an amount
in cash equal to your unvested balances in the Corporation Profit
Sharing Plan and any matching contributions to the Corporation's
401(k) Plan that are foregone or not vested as of the Change in
Control Termination (the foregoing payments and benefit collectively
referred to hereinafter as "Change in Control Payments"). The Change
Mark A. Koch
February 10, 2003
Page 2
in Control Payments shall be conditioned upon the execution of a
mutual release of claims by you and the Corporation, and shall
otherwise be made as soon as practicable after the termination of your
employment as a result of the Change in Control, but in no event more
than five (5) days after the Change in Control Termination.
2. The Corporation shall also pay to you your base salary for unused
vacation days and, pursuant to a bonus plan adopted by the
Corporation, a pro-rata portion of your accrued but unpaid bonus for
the year in which a Change in Control Termination occurs, at a level
consistent with 100% pay-out versus set targets or goals.
3. In addition, the Corporation shall continue to allow you to
participate in the hospitalization, group health benefit and
disability plans of the Corporation for twelve (12) months from the
date of the Change in Control Termination on the same terms and
conditions as immediately prior to such Change in Control Termination.
If such plans do not allow such participation, the Corporation will
reimburse you for the costs of providing equivalent coverage by some
other means.
4. You will not be required to seek other employment or to attempt in any
way to reduce the Change in Control Payments payable to you. Further,
the Change in Control payments shall not be reduced by any
compensation earned by you as a result of employment by another
employer. The Change in Control Payments shall be in lieu of any other
severance payments to which you may be entitled pursuant to any
severance plan of the Corporation or otherwise, and shall be reduced
by all other payments made by the Corporation that are in the nature
of severance, including, without limitation, payments required under
the WARN Act (or equivalent state law) that are made in lieu of an
advance notice of a mass termination.
5. In the event it shall be determined that Change in Control Payments
shall, together with any perquisites or payment received by you
(whether paid or payable or distributed or distributable pursuant to
the terms of this letter or otherwise, is 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 you
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 you shall be entitled to receive an
additional payment (a "Gross-Up Payment") from the Corporation in an
amount such that after payment by you of all taxes including, without
limitation, any income taxes (and any interest and penalties imposed
with respect thereto) and any Excise Tax imposed upon the Gross-Up
Payment, the Employee retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Change in Control Payments.
Mark A. Koch
February 10, 2003
Page 3
6. A "Change in Control" shall be deemed to occur upon the earliest to
occur after the date of this letter of any of the following events:
(a) Acquisition of Stock by Third Party: Any Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the
Corporation (not including in the securities beneficially owned
by such Person any securities acquired directly from the
Corporation or its Affiliates) representing thirty (30%) percent
or more of the combined voting power of the Corporation's then
outstanding securities;
(b) Change in Board of Directors: The date when Continuing Directors
cease to be a majority of the Directors then in office;
(c) Corporate Transactions: The shareholders of the Corporation
approve a merger or consolidation of the Corporation with any
other corporation, which merger or consolidation is consummated,
other than (i) a merger or consolidation which would result in
the voting securities of the Corporation outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity), in combination with newly acquired ownership
acquired in such transaction by any trustee or other fiduciary
holding securities under an employee benefit plan of the
Corporation or an Affiliate, at least 50% of the combined voting
power of the voting securities of the Corporation or such
surviving entity outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Corporation (or similar
transaction) in which no Person acquires more than 50% of the
combined voting power of the Corporation's then outstanding
securities; or
(d) Liquidation: The approval by the shareholders of the Corporation
of a complete liquidation of the Corporation or an agreement for
the sale or disposition by the Corporation of all or
substantially all of the Corporation's assets, which liquidation,
sale or disposition is consummated.
7. The termination of your employment shall be deemed a Change in Control
Termination if (i) your employment is terminated by the Corporation
(except by reason of your death) within twenty-four (24) months after
the Change in Control or (ii) you voluntarily terminate your
employment within twenty-four (24) months after the Change in Control
because (i) your salary, bonus potential and/or benefits have been
decreased (ii) your duties, functions, responsibilities or authorities
have substantially changed, (iii) your work location has changed by
forty (40) miles or more or (iv) the principal business of the
Corporation has substantially changed.
Mark A. Koch
February 10, 2003
Page 4
8. For purposes of this letter, the following terms shall have the
following meanings:
(a) "Affiliate" shall mean any entity that directly or indirectly
through one or more intermediaries, controls, is controlled by or
is under common control with the Corporation as determined by the
Board of Directors in its discretion.
(b) "Beneficial Owner" shall have the meaning given to such term in
Rule 13d-3 under the Exchange Act.
(c) "Continuing Directors" as used in this letter shall mean the
persons who constitute the Board of Directors of the Corporation
on the date hereof together with their successors whose
nominations were approved by a majority of Continuing Directors.
(d) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(e) "Person" shall have the meaning as set forth in Section 13(d) and
14(d) of the Exchange Act; provided however, that Person shall
exclude (i) the Corporation or any of its Affiliates, (ii) any
trustee or other fiduciary holding securities under an employee
benefit plan of the Corporation or any of its Affiliates, (iii)
an underwriter temporarily holding securities pursuant to an
offering of such securities; and (iv) any corporation owned,
directly or indirectly, by the shareholders of the Corporation in
substantially the same proportion as their ownership of stock of
the Corporation.
9. EMPLOYMENT. Notwithstanding anything to the contrary contained herein,
you and the Corporation agree that you shall be entitled to receive
the Change in Control Payments solely in the event of a Change in
Control and nothing herein shall be deemed to grant to you any
additional rights to continued employment by the Corporation.
10. TAX WITHHOLDING. Both the Change in Control Payments and any other
payments or benefits provided hereunder will be subject to withholding
for all applicable employment and income taxes.
11. LEGAL FEES. The Corporation agrees to pay as incurred, to the fullest
extent allowed by law, all legal fees and expenses which you may
reasonably incur as a result of any contest by the Corporation, you or
others of the validity or enforceability of, or liability under, any
of the terms of this letter, plus in each case interest on any delayed
payment at the applicable federal rate under the Code.
Mark A. Koch
February 10, 2003
Page 5
This letter sets forth the entire agreement of the parties hereto with respect
to the subject matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, with respect to the subject matter
contained herein, including, without limitation, any prior severance agreements
or change in control agreements.
If the foregoing is acceptable to you, please so indicate in the space provided
below and return the enclosed copy of this letter to the undersigned.
Very truly yours,
DEL GLOBAL TECHNOLOGIES CORP.
By: /s/ Samuel E. Park
-------------------------------------
Samuel E. Park
President and Chief Executive Officer
Accepted and Agreed to
this 11th day of February, 2003
/s/ Mark A. Koch
- ---------------------------------
Mark A. Koch
