EXHIBIT 10.59
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of March 28, 2003,
by and between Xxxxxx X. Xxxxxxx ("Executive") and TransTechnology Corporation,
a Delaware corporation, and any of its subsidiaries and affiliates as may employ
Executive from time to time (collectively the "Company").
W I T N E S S E T H :
WHEREAS, Executive and the Company deem it to be in their
respective best interests to enter into an agreement providing for the Company's
continued employment of Executive pursuant to the terms herein stated;
NOW, THEREFORE, in consideration of the premises and the
mutual promises and agreements contained herein, it is hereby agreed as follows:
1. Effective Date. This Agreement shall be effective as
of the date hereof, which date shall be referred to herein as the "Effective
Date."
2. Position and Duties.
(a) The Company hereby agrees to continue to
employ Executive and Executive hereby agrees to continue his employment as Chief
Financial Officer for the "Term of the Agreement" (as defined in Section 5). In
this capacity, Executive shall devote his best efforts and his full business
time and attention to the performance of the services customarily incident to
such office and position and to such other services of a senior executive nature
as may be reasonably requested by the Board of Directors (the "Board") of the
Company which may include services for one or more subsidiaries or affiliates of
the Company. Executive shall report to the Chief Executive Officer of the
Company.
(b) Executive shall devote his full business
time and attention to such duties, except for sick leave, reasonable vacations
and excused leaves of absence. Executive shall use his best efforts during the
Term of the Agreement to protect, encourage, and promote the interests of the
Company.
(c) In carrying out his duties as contemplated
in this paragraph 2 after March 31, 2003, Executive may, in his discretion,
elect to work out of his personal residence or elsewhere for up to two (2)
business days each week.
3. Compensation.
(a) Initial Base Salary. With respect to the
period beginning on the Effective Date and ending on March 31, 2003, the Company
shall pay to Executive base salary at the rate of $230,000 per annum. Such base
salary shall be payable in accordance with the Company's customary payroll
procedures.
(b) Adjusted Base Salary. With respect to the
period beginning on April 1, 2003 and ending on the last day of the Term of the
Agreement (as defined in Section 5)
the Company shall pay to Executive base salary at a rate of not less than
$138,000 per annum. Such base salary shall be payable in accordance with the
Company's customary payroll procedures. Executive's annual base salary described
in Sections 3(a) or 3(b), as the case may be, shall be collectively referred to
herein as "Base Salary."
(c) Lump-Sum Payments. In addition to the Base
Salary, the Executive shall receive the following lump-sum cash payments:
(i) Accrued Leave Pay-Out Bonus. The
Executive hereby agrees that, effective as of March 31, 2003, he shall waive all
of his rights with respect to accrued vacation, sick-leave, or other similar
paid leave, in exchange for a lump-sum payment by the Company in an amount equal
to the value of same, which amount shall be paid to Executive no later than
April 2, 2003.
(ii) Closing Bonus. Immediately
following the later to occur of (A) the completion of the sale of Norco, Inc.
("Norco") and (B) the completion of (x) a secondary offering or (y) a
refinancing of the Company's residual debt following the sale of Norco, but not
later than April 30, 2003, regardless of whether either or both such events
shall have by then occurred, the Company shall pay to Executive a cash lump-sum
amount equal to $402,500.
(iii) Fiscal Year 2003 Bonus. The Company
shall pay to Executive an annual bonus with respect to fiscal year 2003 in an
amount determined in accordance with the Company's fiscal 2003 annual bonus
program. Any such bonus shall be payable at such time as provided in accordance
with the Company's 2003 annual bonus program, but in any event not later than
June 30, 2003.
(iv) Promissory Note. As of March 31,
2003 (x) the Company shall be obligated to pay to Executive an additional amount
equal to $237,000 and (y) the Company, in lieu of making such payment, shall
issue a promissory note (the "Note") to Executive in the principal amount of
$237,000 in substantially the form attached hereto as Exhibit A. The Note shall
bear simple interest at a rate per annum equal to the interest rate in effect as
of March 31, 2003 with respect to the Company's senior debt. In the event of
Executive's death or permanent disability (as defined in the applicable long
term disability plan of the Company), the Note shall remain in effect and all
amounts payable thereunder shall be payable to the Executive (or, in the event
of his death, to the lawfully designated representative of the Executive's
estate) in accordance with the terms of the Note. All other terms of the Note
set forth on Exhibit A are incorporated herein by reference.
(v) Change in Control. For purposes of
the Note, a "Change in Control" shall be deemed to have occurred upon the first
to occur of any of the following events following the date hereof:
(A) Any person, including a
group as defined in Section 13(d)(3) of the Exchange Act, with the stated
intention to acquire control of the Company, becomes the beneficial owner of the
shares of the Company with respect to which twenty percent (20%) or more of the
total number of votes for the election of the Board may be cast;
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(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 Company immediately prior to such
event shall cease to constitute a majority of the Board;
(C) The stockholders of the
Company shall approve an agreement providing either for a transaction in which
the Company 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 Company;
or
(D) A tender offer or exchange
offer is made for shares of the Company's Common Stock (other than one made by
the Company) and shares of Common Stock are acquired thereunder.
4. Benefits. During the Term of the Agreement:
(a) Executive shall be eligible to participate
in any life, health and long-term disability insurance programs, 401(k) plans,
and other fringe benefit programs made available to senior executive employees
of the Company from time to time and Executive shall be entitled to receive such
other fringe benefits as may be granted to him from time to time by the Board.
(b) Executive shall be allowed vacations,
sabbaticals and leaves of absence with pay on the same basis as other senior
executive employees of the Company.
(c) The Company shall reimburse Executive for
reasonable business expenses incurred in performing Executive's duties
hereunder. Such reimbursement shall be made in accordance with the Company's
customary business expense reimbursement policies and procedures and shall be
consistent with the reimbursement policies and procedures applicable to other
comparable executives of the Company and its affiliated companies.
(d) The Company shall bear the reasonable and
documented costs of legal counsel and/or other advisors incurred by the
Executive in the review and negotiation of this Agreement.
5. Term; Termination of the Agreement. As used herein,
the phrase "Term of the Agreement" shall mean the period commencing on the
Effective Date and, except as otherwise specifically provided below, ending on
March 31, 2006. Notwithstanding the foregoing, the Term of the Agreement shall
expire on the first to occur of the following:
(a) Termination for any reason other than Cause.
In the event Executive's employment hereunder is terminated for any reason other
than for Cause, the Company shall (i) to the extent not otherwise paid prior to
the effective date of termination, pay to Executive a lump sum amount equal to
all amounts not theretofore paid under Section 3(c) of this Agreement, (ii) pay
to Executive all Base Salary that is accrued but unpaid as of the date of such
termination of employment and (iii) pay to Executive a lump sum amount equal to
the amount of Base Salary that, absent such termination of employment, would
have been payable to Executive hereunder during the period beginning on the date
of such termination of employment
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and ending on the March 31, 2006, all such amounts to be paid no later than the
tenth day after the Executive's last day of employment with the Company.
(b) Termination for Cause. In the event that the
Company terminates Executive's employment for Cause, the Company shall pay to
Executive all Base Salary that is accrued but unpaid as of the date of such
termination of employment and the Company shall have no further obligation
hereunder from and after the effective date of such termination (other than the
accelerated payment obligations set forth in the Note). For purposes of this
Agreement, "Cause" shall mean Executive's conviction of, or plea of guilty or
nolo contendere to, a felony or crime of moral turpitude.
6. Non-Solicitation. Subject to the condition that the
Company is not in default under this Agreement, the Executive agrees that during
the Term of the Agreement and for two years thereafter, he will not directly or
indirectly:
(a) Solicit, divert or take away any of the
customers, business or patronage of the Company or its subsidiaries or
affiliates; or
(b) Induce or attempt to influence any employee
of the Company or its subsidiaries or affiliates to terminate his or her
employment therewith.
In the event of a breach or threatened breach by the Executive of the provisions
of this Section 6 the Company, or any duly authorized officer thereof, will be
entitled to a temporary restraining order or injunction.
7. Taxes. All payments to be made to Executive under
this Agreement will be subject to any applicable withholding of federal, state
and local income and employment taxes.
8. Miscellaneous. This Agreement shall also be subject
to the following:
(a) Executive and the Company each represent and
warrant to the other that he or it has the authorization, power and right to
deliver, execute, and fully perform his or its obligations under this Agreement
in accordance with its terms.
(b) If any provision of this Agreement or any
portion thereof is declared invalid, illegal, or incapable of being enforced by
any court of competent jurisdiction, the remainder of such provisions and all of
the remaining provisions of this Agreement shall continue in full force and
effect.
(c) This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New Jersey,
except to the extent governed by federal law.
(d) The Company will require any successor
(whether by merger, consolidation, spin-off, purchase or otherwise) to all or
substantially all of the stock, assets or business of the Company or any
subsidiary or parent of the Company to expressly agree to assume this Agreement
and to perform all duties and obligations hereunder in the same manner and to
the same extent that the Company would have been required to perform had no such
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succession taken place. Failure by the Company to obtain a successor's agreement
to assume this Agreement shall constitute a breach of this Agreement and
Executive shall be entitled to receive payments and benefits from the Company in
the same amount and on the same terms that he would be entitled to under Section
5(a) if his employment is terminated other than for Cause; provided, that in no
event shall the foregoing result in a duplication of any payments or benefits
provided for hereunder.
(e) Subject to the provisions of Section 10, any
rights of Executive hereunder shall be in addition to any rights Executive may
otherwise have under benefit plans, agreements, or arrangements of the Company
to which he is a party or in which he is a participant, including, but not
limited to, any stock option grants.
(f) For the purpose of this Agreement, notices
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered by Federal Express,
or similar overnight express delivery service, or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the named Executive at the address contained in the Company's
records concerning the Executive. All notices to the Company shall be directed
to the attention of the Secretary of the Company.
(g) Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
(h) Failure to insist upon strict compliance
with any of the terms, covenants, or conditions hereof shall not be deemed a
waiver of such term, covenant, or condition, nor shall any waiver or
relinquishment of, or failure to insist upon strict compliance with, any right
or power hereunder at any one or more times be deemed a waiver or relinquishment
of such right or power at any other time or times.
(i) This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
9. Resolution of Disputes. Any dispute or controversy
arising under or in connection with this Agreement shall be settled exclusively
by arbitration, conducted in Princeton, New Jersey in accordance with the rules
of the American Arbitration Association governing employment disputes as then in
effect. The Company and Executive hereby agree that the arbitrator will not have
the authority to award punitive damages, damages for emotional distress or any
other damages that are not contractual in nature. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that the
Company shall be entitled to seek a restraining order or injunction in any court
of competent jurisdiction to prevent any continuation of any violation of the
provisions of Section 6, and Executive consents that such restraining order or
injunction may be granted without the necessity of the Company's posting any
bond except to the extent otherwise required by applicable law. The fees and
expenses of the American Arbitration Association and the arbitrator shall be
borne by the Company.
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10. Entire Agreement. Except as otherwise provide for
herein, this Agreement shall constitute the entire agreement between Executive
and the Company with respect to the subject matter hereof and shall supersede
that certain Executive Severance Agreement by and between Executive and the
Company, as originally dated November 11, 1996, and as amended on each of
October 15, 1998 and January 18, 2001) (the "Severance Agreement"). In exchange
for the payments and benefits described in this Agreement, Executive agrees, on
behalf of himself and, to the maximum extent permitted by applicable law, on
behalf of his heirs, agents, representatives and assigns, to irrevocably waive
and forever release and discharge the Company, its parents, subsidiaries,
affiliates, officers, directors, employees, agents, predecessors, successors and
assigns from any and all payments and obligations that the Company now has, has
ever had or may hereafter have arising under or in connection with the Severance
Agreement. Nothing herein shall be deemed to modify or supersede any stock
option grant or restricted stock award outstanding on the Effective Date or any
of Executive's rights or benefits thereunder.
11. Indemnification Letter. That certain Indemnification
Letter dated January 13, 2000 by and between Executive and the Company shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------
XXXXXX X. XXXXXXX
TRANSTECHNOLOGY CORPORATION
By: /s/ Xxxxxx X.X. Xxxxx
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Name: Xxxxxx X.X. Xxxxx
Title: President and CEO
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EXHIBIT A
PROMISSORY NOTE
$237,000 Dated: March 31, 2003
Union, New Jersey
FOR VALUE RECEIVED, TRANSTECHNOLOGY CORPORATION, a Delaware
corporation (the "Maker"), hereby promises to pay to the order of XXXXXX X.
XXXXXXX (the "Payee"), the principal sum of TWO HUNDRED AND THIRTY SEVEN
THOUSAND DOLLARS ($237,000.00) in lawful money of the United States of America
and in immediately available funds in accordance with the terms set forth herein
and in that certain Employment Agreement dated as of March 28, 2003, by and
between the Maker and the Payee (as amended, supplemented or otherwise modified
from time to time, the "Employment Agreement") and to pay interest on the unpaid
principal amount of such Note, in like money and funds, for the period
commencing on the date of such Note until such Note shall be paid in full, at
5 1/4% per annum and on the dates provided herein.
Repayments of principal, in installments of $79,000 each, plus
accrued but unpaid interest thereon, shall be due and payable on each of March
31, 2004, March 31, 2005 and March 31, 2006; provided, however, that
notwithstanding the foregoing the Company shall pay to Payee all unpaid
principal plus accrued but unpaid interest thereon upon the first to occur of
the following events: (a) Payee's termination of employment by the Company for
any reason; (b) the occurrence of a transaction resulting in a Change in
Control (as defined in Section 3(c)(vii) of the Employment Agreement); (c)
Maker fails to make any principal and/or interest payment when due hereunder;
(d) Maker shall breach its obligations under Section 8(d) of the Employment
Agreement; or (e) Maker shall (i) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or liquidator;
(ii) be generally unable to pay the Maker's debts as such debts become due;
(iii) make a general assignment for the benefit of the Maker's creditors; (iv)
commence a voluntary case under the United States Bankruptcy Code (as now or
hereafter in effect); (v) file a petition seeking to take advantage of any
other law of any jurisdiction relating to bankruptcy, insolvency, or
composition or readjustment of debts; (vi) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against the
Maker in an involuntary case under the United States Bankruptcy Code, or (vii)
take any action for the purpose of effecting any of the foregoing.
During the term of this Note, Maker reserves the right to
prepay all or any part of the principal sum upon ten (10) days prior written
notice to Payee and without the payment of any premium or penalty, provided that
Maker pays all accrued and unpaid Interest on the principal sum prepaid in
accordance with the provisions set forth herein.
No act or omission or commission of Payee, including
specifically any failure to exercise any right, remedy or recourse or acceptance
by Payee of any payment hereunder in an amount which is less than payment in
full of all amounts due and payable at the time of such payment, shall be deemed
to be a waiver or release of the same, such waiver or release to be effected
only through a written document executed by Payee and then only to the extent
specifically recited therein. A waiver or release with reference to any one
event shall not be construed as continuing, as a bar to, or as a waiver or
release of any subsequent right, remedy or recourse as to a subsequent event.
IN WITNESS WHEREOF, Maker has executed and delivered this Note
as of the date first written above.
TRANSTECHNOLOGY CORPORATION
By: /s/ Xxxxxx X.X. Xxxxx
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