EXHIBIT 10.28
[TRANSTECHNOLOGY CORPORATION LOGO]
engineered products for global partners (TM)
February 10, 2004
Gerald C. Harvey
18 Countryside Drive
Summit, NJ 07901
Dear Mr. Harvey:
This letter agreement (the "Agreement") sets out the agreement between you
(the "Executive") and TransTechnology Corporation (the "Corporation") with
respect to certain severance arrangements which shall apply only in the event
that a Change in Control, as hereinafter defined, of the Corporation occurs
after the date hereof.
1. For the purposes of this Agreement, a "Change in Control" shall mean
the occurrence of any one (or more) of the following events after the date
of this Agreement:
a. When (i) the Corporation acquires actual knowledge that any person,
including a group as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, is or has become the beneficial owner of
shares of the Corporation with respect to which thirty-three percent
(33%) or more of the total number of votes for the election of the
Corporation's Board of Directors may be cast, and (ii) such person
or group publicly makes known, or communicates to the Corporation in
writing, its intention to either (A) acquire control of the business
of the Corporation, (B) liquidate the Corporation, (C) sell the
assets of the Corporation or merge the Corporation with any other
persons, or (D) make any material change in the business or
corporate structure of the Corporation;
b. During any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the
Corporation (together with any new directors whose election by such
Board of Directors or whose nomination for election was previously
approved by the Board of Directors of the Corporation) cease for any
reason to constitute a majority of the Board of Directors of the
Corporation; or
c. The stockholders of the Corporation shall approve an agreement
providing either for a transaction in which the Corporation will
cease to be an independent publicly owned corporation or for a sale
or other disposition of all or substantially all the assets of the
Corporation; or
d. A tender offer or exchange offer is made by any person, including a
group as defined in Section 13(d)(3) of the Securities Exchange Act
of 1934, for such amount of shares representing a majority of the
voting power of the Corporation with respect to the election of the
Corporation's Board of Directors, and at least
700 Liberty Avenue - P.O. Box 3300 - Union - New Jersey 07083
February 10, 2004
Page 2
such amount of shares of common stock are acquired pursuant to such
tender offer.
2. In the event of a Change in Control of the Corporation, and the
termination by the Corporation of the Executive's employment upon such
Change in Control or within 24 months thereafter for reason other than
Cause, as defined in Paragraph 3 below, or in the event the Executive
terminates his employment with the Corporation for "Good Reason," as
defined in Paragraph 5 below, in connection with, or within 24 months
after a Change in Control, the Corporation shall pay to the Executive an
amount equal to (a) 200% of the Executive's annual salary in effect on the
date of said termination ("Base Salary"), plus (b) the average of his
total bonuses paid or due for each of the last two (2) completed fiscal
years prior to the Termination Date as defined below (or, in the event the
Executive has been employed by the Corporation for less than two (2)
fiscal years and has received only one bonus, an amount equal to the bonus
received by the Executive), plus (c) the working days pay equivalent of
earned but unused vacation, comp time and sick time, plus (d) the fair
market value of any accrued but unvested restricted stock and stock
options outstanding as of the Executive's Termination Date, plus (e) all
accrued and unpaid salary, less any governmentally required withholdings
on the foregoing. As used in clause (d), the term "fair market value"
means the closing price of the common stock of the Corporation on the New
York Stock Exchange on the Termination Date, less any amounts remaining to
be paid by the Executive for such restricted stock or the exercise of such
stock options.
Subject to Paragraph 6 below, said lump sum shall be paid in two (2)
installments, the first installment to be in an amount which (x) does not,
in combination with all other compensation received by the Executive in
the same fiscal year, exceed the deductible limit for the Executive's
compensation under Internal Revenue Code Section 162(m) and (y) subject to
the preceding clause (x), is equal to the maximum aggregate amount which
can be paid to the Executive without constituting Excess Parachute
Payments as defined in Paragraph 6 below. The first installment shall be
paid within 10 days of the Executive's last day of employment with the
Corporation (said last day being hereinafter the "Termination Date") and
the second installment, which shall equal the balance due to the Executive
under this Agreement, shall be paid within ten (10) days of the close of
the Corporation's fiscal year in which the first installment was paid;
provided that in the event of a breach by the Corporation of this
Agreement as set out in Paragraph 10 below, the aforesaid sums referenced
in clauses 2(a) through (e) above shall be paid in one installment within
ten (10) days of the exercise by the Executive of his rights under
Paragraph 10. The aforesaid sums referenced in clauses 2(a) through (e)
shall be in addition to all other amounts which may become payable to the
Executive pursuant to other agreements and plans which the Corporation may
have in force for the benefit of its executive employees and for which the
Executive is eligible, including without limitation the agreements and
plans referred to in paragraph 17 below; provided that any amount paid to
the Executive pursuant to the Corporate Severance Pay Plan of the
Corporation shall be credited against amounts due under this Agreement.
The Corporation shall continue to provide the Executive for a period of 24
months from the Termination Date with life, health, and disability
insurance coverage substantially identical to the coverage maintained for
the Executive prior to the Termination Date.
February 10, 2004
Page 3
3. For purposes of this Agreement, termination for "Cause" shall mean
only the following conduct by the Executive:
a. material breach of any provision of this Agreement;
b. breach of fiduciary duty to the Corporation involving personal
gain or profit;
c. intentional and repeated failure to perform material stated
duties;
d. conviction of any felony, any crime involving moral turpitude,
or any crime committed in the conduct of his or her official
duties which is materially adverse to the welfare of the
Corporation.
The Executive shall not be deemed to have been terminated for Cause
unless there shall have been delivered to the Executive a copy of a
resolution adopted by the affirmative vote of not less than a
majority of the entire membership of the Board of Directors of the
Corporation at a meeting of the Board of Directors duly called and
held for the purpose (and reasonable notice to the Executive and an
opportunity for the Executive, together with his counsel, to be
heard before the Board of Directors), finding that in the good faith
opinion of the Board of Directors of the Corporation the Executive
was guilty of conduct specified in this Paragraph 3 and specifying
the particulars thereof in detail. Except in the event of a
conviction as described in subparagraph 3(d), in no event will the
Executive be subject to termination for Cause pursuant to this
Agreement unless the Executive shall have failed to cure, correct or
prevent the alleged breach or failure within thirty (30) days after
such resolution has been delivered to the Executive.
4. This Agreement may be terminated by the Executive at any time upon
ninety (90) days' written notice to the Corporation or upon such shorter
period as may be agreed upon between the Executive and the Chairman of the
Board and Chief Executive Officer of the Corporation. In the event of such
termination by the Executive, the Corporation shall be obligated only to
continue to pay the Executive his salary up to the date of termination,
and those retirement and/or employee benefits which have been earned or
become payable up to the date of termination.
5. For purposes of this Agreement, "Good Reason" shall mean the
occurrence, in connection with, or within 24 months after, a Change in
Control, of any of the events or conditions described in subparagraphs (a)
through (g) hereof without the Executive's express written consent.
Executive's right to terminate his employment pursuant to this Paragraph 5
shall not be affected by his incapacity due to physical or mental illness.
a. A change in the Executive's status, title, position or
responsibilities (including reporting responsibilities) which, in
the Executive's reasonable judgment, does not represent a promotion
from his status, title, position or responsibilities as in effect
immediately prior thereto; the assignment to the Executive of any
duties or responsibilities which, in the Executive's reasonable
judgment, are inconsistent with such status, title, position or
responsibilities; or any removal of the Executive from or failure to
reappoint him to any of such positions, except in connection with
the termination of his employment for (i) Cause, (ii) as a result of
his death or (iii) by the Executive other than for Good Reason;
February 10, 2004
Page 4
b. A reduction by the Corporation in the Executive's Base Salary
as in effect on the date of a Change in Control or as the same may
be increased from time to time;
c. The intention to relocate or transfer the Executive to a
location outside a 50 mile radius of the location which is his
primary office location as of the date immediately preceding the
date of a Change in Control.
d. The adverse and substantial alteration in the nature and
quality of the office space from which the Executive performs his
duties, including the size and location thereof, as well as the
secretarial and administrative support provided to him;
e. The failure by the Corporation to continue to provide the
Executive with compensation and benefits provided as of the date
hereof or benefits substantially similar to those provided under any
of the employee benefit plans in which the Executive becomes a
participant or the taking of any action by the Corporation which
would directly or indirectly materially reduce any of such benefits
or deprive the Executive of any material benefit enjoyed by him at
the time of the Change in Control;
f. Any material breach by the Corporation of any provision of
this Agreement; or
g. The failure of the Corporation to obtain a satisfactory
agreement from any successor or assignee of the Corporation to
assume and agree to perform this Agreement, as contemplated in
Paragraph 10 hereof.
6. If the benefits payable under this Agreement and any other payments
otherwise payable to the Executive by the Corporation (collectively
referred to as "Severance Benefits") have a Present Value (as defined
herein) equal to or in excess of three times the Executive's Base Amount
(as defined herein) and, in addition thereto, meet the other requirements
set forth in Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code") so that the Severance Benefits constitute "Parachute
Payments" (as defined in Section 280G of the Code), the Executive may
elect to apply the provisions set out below.
a. In the event that any Severance Benefits to be made to the
Executive by the Corporation, whether pursuant to this Agreement or
otherwise, upon termination of the Executive's employment pursuant
hereto are deemed, in the opinion of the Corporation's independent
public accountants (the "Accountants") to constitute Parachute
Payments, the Executive may, upon written notification by the
Corporation of the determination of the Accountants, elect to
receive any combination of Severance Benefits from the Corporation
due to him as a result of termination which equal the maximum
aggregate amount which can be paid to the Executive without
constituting Excess Parachute Payments as defined in Section 280G of
the Code. The Executive undertakes to make such election in the
event that receipt by him of amounts constituting Excess Parachute
Payments will result in a net amount payable to him after taxes
which is less than the amount he would be entitled to receive by
making the aforesaid election. The
February 10, 2004
Page 5
written notification by the Corporation of any determination of the
Accountants pursuant to this Paragraph 6 shall be provided to the
Executive within five (5) business days of the Termination Date, and
shall (i) list all Severance Benefits which are deemed to constitute
Parachute Payments in the opinion of the Accountants, and (ii)
contain the Corporation's opinion as to the Present Value of each of
such Severance Benefits, which opinion shall be determined in
consultation with the Accountants. Any election by the Executive
pursuant to this paragraph shall be made by the Executive and
submitted to the Corporation by the thirtieth (30th) day following
the Termination Date, and the Corporation shall pay to the Executive
the Severance Benefits specified in such election in one (1) or two
(2) installments, as the case may be, the first installment to be in
an amount equal to the maximum amount which can be paid to the
Executive which does not, in combination with all other compensation
received by the Executive in the same fiscal year, exceed the
deductible limit for the Executive's compensation under Internal
Revenue Code Section 162(m). The first installment shall be paid
within five (5) business days of receipt of such election, and the
second installment, if needed, which shall equal the balance, if
any, due to the Executive under such election shall be paid within
ten (10) days of the close of the Corporation's fiscal year in which
the first installment was paid.
b. In the event that the Executive does not file a written
election with the Corporation pursuant to subparagraph (a) upon
receipt of a written notification by the Corporation of the
Accountant's determination that Severance Benefits to which the
Executive is entitled upon termination constitute Excess Parachute
Payments, then the Corporation shall pay the Executive all Severance
Benefits due him pursuant to this Agreement or otherwise.
c. For purposes of this Paragraph 6, Present Value means the
value determined under the rules provided in Proposed Treasury
Regulations under Section 280G of the Code, and Base Amount means
the average annual compensation payable to the Executive by the
Corporation and includable in the Executive's gross income for
Federal income tax purposes during the shorter of the period
consisting of the most recent five taxable years ending before the
date of any Change in Control or the portion of such period during
which the Executive was an employee.
d. References to Code Section 280G herein are intended as
references to Section 280G as added to the Code by the Tax Reform
Act of 1984, Pub. L. No. 98-369, 98th Cong., 2nd Sess., and as it
may be amended.
e. In the event the Corporation fails to give the notification to
the Executive of the determination by the Accountants as
contemplated by subparagraph 6(a) hereof; or if the Accountants
erroneously fail to determine the existence of Excess Parachute
Payments; or in the event of any other circumstance caused by the
Corporation which results in the imposition of tax pursuant to
Section 4999 of the Code, then any such tax, including any penalty
or interest paid by the Executive (the "Excise Tax") shall be
reimbursed to the Executive by the Corporation. In addition, the
Executive shall be entitled to receive an additional payment or
payments (a "Gross Up Payment") in an amount such that, after
payment by the Executive of all taxes (including federal, state and
local taxes and any interest or penalties imposed with respect to
such taxes and including
February 10, 2004
Page 6
any Excise Tax) imposed upon the Gross Up Payment, the Executive
and/or his estate collectively retain (or have withheld and credited
on his behalf for tax purposes) an amount of the Gross Up Payment
equal to the Excise Tax.
7. All reasonable legal fees, arbitration fees, and expenses paid or
incurred by the Executive relating to any dispute, controversy or claimed
breach regarding this Agreement shall be paid or reimbursed by the
Corporation, if the Executive is successful, or as may be determined to be
appropriate by any arbitrator's award based on the relative merits of the
two parties.
8. The Executive agrees that during the term of this Agreement, and for
a period of two (2) years commencing the Termination Date, he will not
directly or indirectly:
a. Solicit, divert or take away any of the customers, business or
patronage of the Corporation or its subsidiaries or affiliates; or
b. Induce or attempt to influence any employee of the Corporation
or its subsidiaries or affiliates to terminate his or her employment
therewith.
c. In the event of a breach or threatened breach by the Executive
of the provisions of this Paragraph 8, the Corporation, or any duly
authorized officer thereof, will be entitled to a temporary
restraining order or injunction.
9. The Executive shall not, during the term of this Agreement, have any
other employment (exclusive of volunteer services with not-for-profit
institutions or occasional speaking engagements) except with the prior
approval of the Chairman of the Board and Chief Executive Officer of the
Corporation.
10. The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation, by an
assumption agreement in form and substance satisfactory to the Executive,
to expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Corporation would be required to perform
it if no such succession had taken place. Failure of the Corporation to
obtain such assumption agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Corporation in the same amount and on
the same terms that he would be entitled to hereunder if he terminated his
employment for Good Reason in connection with, or within 24 months after,
a Change in Control.
This Agreement and all rights of the Executive hereunder shall inure
to the benefit of and be enforceable by his personal or legal
representatives, successors, heirs, distributees, devisees, legatees and
permitted assigns.
11. This Agreement is personal to each of the parties hereto and, except
as provided in Paragraph 10, neither party may assign or delegate any of
its rights or obligations hereunder without first obtaining the written
consent of the other party.
12. All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed, certified or registered mail, return receipt
requested with postage prepaid, or delivered
February 10, 2004
Page 7
by next day courier service such as is offered by Federal Express and
competing carriers, to the following addresses or to such other address as
either party may designate by like notice.
If to the Corporation, to:
TransTechnology Corporation
700 Liberty Avenue
Union, New Jersey 07083
Attention: President and Chief Executive Officer
If to the Executive, to:
Gerald C. Harvey
18 Countryside Drive
Summit, NJ 07901
13. No amendments or additions to this Agreement shall be binding unless
in writing and signed by both parties.
14. The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof. In the event a
court declares a provision of this Agreement to be invalid or
unenforceable, that court may, in the exercise of its discretion, reform
the provision so that it is valid and enforceable to the greatest extent
possible.
15. This Agreement shall, except to the extent that Federal law shall be
deemed to preempt it, be governed by and construed and enforced in
accordance with the laws of the State of New Jersey applicable to
contracts made and performed within the State.
16. Except for injunctive relief, any dispute or controversy arising
under or in connection with this Agreement, or the breach thereof, shall
be settled exclusively by binding arbitration at a site in the State of
New Jersey and administered by the American Arbitration Association
("AAA") in accordance with the National Rules for the Resolution of
Employment Disputes of the AAA then in effect. Notwithstanding the
pendency of any arbitration proceeding, the Corporation will continue to
pay the Executive's full compensation in effect when the dispute,
controversy, or claimed breach, arose and continue the Executive as a
participant in all compensation, benefit and insurance plans in which the
Executive was then participating, until the matter submitted to
arbitration is finally resolved. Judgment may be entered on the
arbitrator's award in any court having competent jurisdiction.
17. Nothing in this Agreement amends or modifies, or shall be deemed or
construed to amend or modify, the terms and provisions (including the
triggers and dates of payments thereunder) of any stock option granted by
the Corporation to the Executive, or restricted stock agreement between
the Corporation and the Executive, or the provisions of the 1992 Long Term
Incentive Plan and the 1999 Long Term Incentive Plan.
18. Absent a change in control or unless extended in writing by the
parties hereto, this Agreement shall expire on January 31, 2006.
February 10, 2004
Page 8
Please signify your agreement to the terms of this Agreement by signing in
the space provided below and returning one (1) fully executed copy to the
undersigned.
TRANSTECHNOLOGY CORPORATION
/s/ Robert L.G. White
-------------------------------------
Robert L.G. White
President and Chief Executive Officer
Accepted and agreed:
/s/ Gerald C. Harvey
- ------------------------
Gerald C. Harvey