1
EXHIBIT 10.15
Date
SUBSIDIARY PRESIDENT VERSION
Name of Recipient
Address
Address
Dear _______________:
This letter agreement (the "Agreement") is made between you (the
"Executive") and __________________________ (the "Employer") and sets out the
agreement between the Executive and the Employer with respect to certain
severance arrangements which shall apply only in the event that a Change in
Control, as hereinafter defined, of TransTechnology Corporation (the
"Corporation") occurs after the date hereof.
1. For 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 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 twenty percent
(20%) or more of the total number of votes for the
election of the Corporation's Board of Directors may
be cast;
b. As a result of, or in connection with, any cash
tender offer, exchange offer, merger or other
business combination, sale of assets or contested
election, or combination of the foregoing, persons
who were directors of the Corporation immediately
prior to such event shall cease to constitute a
majority of the Board of Directors;
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 for shares
of the Corporation's common stock (other than one
made by the Corporation) and shares of common stock
are acquired thereunder.
2. In the event of a Change in Control of the Corporation, and
the termination by the Employer of the Executive's employment
upon such Change in Control or within 24 months thereafter for
reasons other than Cause, as defined in Paragraph 3 below,
2
Date
Page 2
or the Executive terminates his employment with the Employer
for "Good Reason," as defined in Paragraph 5 below, in
connection with, or within 24 months after a Change in
Control, the Employer shall pay to the Executive an amount
equal to (a) 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 2
completed fiscal years prior to the Termination Date, as
defined below (or, in the event the Executive has been
employed by the Employer for less than 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 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) the amount payable to the Executive under the
Corporate Severance Pay Plan of the Employer plus (f) 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. 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
Employer (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 10 days of the close of the Employer's fiscal year
in which the first installment was paid; provided that in the
event of a breach by the Employer of this Agreement as set out
in Paragraph 10 below, the aforesaid sums referenced in
clauses 2(a) through (f) above shall be paid in one
installment within 10 days of the exercise by the Executive of
his rights under Paragraph 10. The aforesaid sums referenced
in clauses 2(a) through (f) 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. The
Employer shall exercise its best efforts 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.
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 Employer involving
personal gain or profit;
c. intentional and repeated failure to perform material
stated duties;
3
Date
Page 3
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 Employer.
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 Employer 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 Employer 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 Employer or upon
such shorter period as may be agreed upon between the
Executive and the Chairman of the Board of the Employer. In
the event of such termination by the Executive, the Employer
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;
b. A reduction by the Employer 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;
4
Date
Page 4
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 Employer to continue to provide
the Executive with compensation and benefits provided
for under this Agreement 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
Employer 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 Employer 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 Present Value (as defined herein) of any benefits
payable under this Agreement and any other payments otherwise
payable to the Executive by the Employer (collectively
referred to as "Severance Benefits") which are deemed under
Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code") to constitute "Parachute Payments" (as defined in
Section 280G), is greater than three times Executive's Base
Amount (as defined herein), the Executive may elect to apply
the provisions set forth below.
a. In the event that any Severance Benefits to be made
to the Executive by the Employer, whether pursuant to
this Agreement or otherwise, upon termination of the
Executive's employment pursuant hereto are deemed, in
the opinion of the Employer's independent public
accountants (the "Accountants") to constitute
Parachute Payments, the Executive may, upon written
notification by or on behalf of the Employer of the
determination of the Accountants, elect to receive
any combination of Severance Benefits from the
Employer 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 for purposes 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 written notification by or on
behalf of the Employer 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
5
Date
Page 5
Severance Benefits which are deemed to constitute
Parachute Payments in the opinion of the Accountants,
and (ii) contain the Employer'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 Employer by the
thirtieth (30th) day following the Termination Date,
and the Employer shall pay to the Executive the
Severance Benefits specified in such election within
five (5) business days of receipt of such election.
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 Employer of the Accountant's
determination that Severance Benefits to which the
Executive is entitled upon termination constitute
Excess Parachute Payments, then the Employer 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 in accordance with the
principles of Section 1274(b)(2) of the Code under
the rules provided in Treasury Regulations under
Section 280G of the Code, and Base Amount means the
average annual compensation payable to the Executive
by the Employer 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 Employer 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 shall be reimbursed to the Executive by
the Employer.
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 Employer, 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
6
Date
Page 6
one (1) year 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 of the
Executive of the provisions of this Paragraph 8, the
Employer or the Corporation as the beneficiary of
this paragraph 8, or any duly authorized officer of
the Employer or the Corporation, 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.
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 reaffirm that the
Employer shall perform this Agreement in the same manner and
to the same extent that the Employer would be required to
perform it if no such succession with respect to the
Corporation had taken place. Failure of the Corporation to
obtain such assumption agreement prior to the effectiveness of
any such succession shall thereupon entitle the Executive to
compensation from the Employer 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 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.
7
Date
Page 7
If to the Employer, to:
Name of Employer
Address
Address
With a copy to:
TransTechnology Corporation
150 Allen Road
Liberty Corner, New Jersey 07938
Attention: Chief Executive Officer
If to the Executive, to:
Executive Name
Address
Address
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.
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 _____________
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 ______________ 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 Employer 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
and/or the
8
Employer to the Executive, or restricted stock agreement
between the Corporation and the Executive, or the provisions
of the 1992 Amended and Restated Long Term Incentive Plan or
other incentive compensation plan for which the Employee is
eligible.
18. Absent a Change in Control or unless extended in writing by
the parties hereto, this Agreement shall expire
_________________.
Please signify your agreement to the terms of this Agreement by signing
in the space provided below and returning one fully executed copy to the
undersigned.
NAME OF EMPLOYER
By: _______________________________
Accepted and agreed:
__________________________________
Name of Recipient
GH:1937