Document:

exv10w36

Exhibit 10.36

July 24, 2009

Mr. Donald Michael Harlan, Jr.

1321 Leighton Circle

Louisville, KY 40222

Dear Mr. Harlan:

     In accord with previous conversations, we are pleased to offer to you the permanent full-time
position of Executive Vice President and Chief Operating Officer of Breeze-Eastern Corporation (the
“Company”) in accordance with the following terms.

	 	 	 
	Position:

	 	     Executive Vice President and Chief Operating Officer, effective
August 17, 2009 (“Company Hire Date”). In this capacity, you
shall devote your best efforts and your 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. You shall report to the Chief Executive Officer of
the Company or at such time as you are elected to the position
of Chief Executive Officer you shall report to the Board.
	 
	 	 
	Salary:

	 	     Effective your Company Hire Date, $260,000 per year. At such
time as the Board elects you to the position of Chief Executive
Officer (“CEO”), your annual salary shall increase to $300,000.
It is the current expectation of the Board that you will be
elected CEO effective April 1, 2010. Your salary will be paid
biweekly in arrears. Commencing Fiscal Year 2012, which begins
April 1, 2011, you will be eligible for periodic salary
increases subject to the Company’s policies on employee
evaluation and compensation and the approval of the Board.
	 
	 	 
	Bonus:

	 	          You will participate as provided herein in the
Breeze-Eastern FY’ 10 Annual Incentive Compensation Plan
(“Annual Plan”), provided that for Fiscal Year 2010, which ends
March 31, 2010, you will be awarded a minimum bonus of $78,000,
fifteen (15%) percent of which shall be paid in shares of the
common stock of the Company (“Company Shares”). Under the Annual
Plan the

 

 

	 	 	 
	 

	 	percentage of your base salary that will be your target award will be 60% if
the EBITDA established in the Tactical Plan as approved by the Board is
achieved. Subject to the minimum established for FY10, your bonus will be
adjusted up or down commensurate with the bonus schedule attached to the
Annual Plan and subsequent plans approved by the Board. The bonus under
the Annual Plan will be payable in June 2010. You will be eligible to
participate in subsequent fiscal year bonus plans as may be established by
the Board of Directors of the Company. In subsequent bonus years and
following your election as CEO, your bonus target will be 70% of the annual
bonus, fifteen (15%) percent of which shall be paid in Company Shares.
	 
	 	 
	Stock Options:

	 	     Upon commencement of employment with the Company,
you will be awarded options to purchase 100,000 shares
of the Company’s common stock at the closing price on
the day before your Company Hire Date. These options
vest 1/3 on each of the subsequent anniversary dates of
the grant and shall be subject to the provisions of the
form of option agreement established by the Company
pursuant to the stock option plan approved by the
shareholders (the “Stock Option Agreement”). In
subsequent years, you shall be eligible for stock
option awards as determined by the Incentive &
Compensation Committee of the Board of Directors and
based on an evaluation of your performance.
	 
	 	 
	Severance:

	 	     In the event you are terminated by the Company
without cause at any time during your first two years
of employment you will receive severance pay equal to
one year’s base annual salary in effect at the time of
termination, but exclusive of bonuses, and the
continuation of employee benefits for a period of one
(1) year. The foregoing severance is in lieu of the
Company’s Corporate Severance Pay Plan and shall be
subject to changes, if any, approved by the Board which
provide for greater severance benefits than provided
under this letter agreement.
	 
	 	 
	Change of Control:

	 	In the event of a change of control, which shall be
defined as set out in the Stock Option Agreement, and
your termination or resignation for good reason, as
hereinafter defined, within 24 months of the change of
control, you would receive a cash payment equal to two
years base pay and the average of your bonuses for two
years. In addition, the vesting of all stock options
and restricted shares would accelerate upon a change in
control. Payments received upon a change of control
and your termination or resignation for good reason
would be in lieu of any and all payments you would
receive upon severance. Termination shall

 

 

	 	 	 
	 

	 	mean a termination that is not voluntary or is other than for cause and
resignation for good reason shall mean a resignation following a reduction
in compensation, benefits or responsibilities or failure by the Company to
obtain an agreement from any successor or assignee legal entity to assume
and perform the obligations set out in this paragraph.
	 
	 	 
	Relocation:

	 	     With respect to relocation of your principal residence, to be completed within
twelve months of your Company Hire Date, the Company will reimburse you for reasonable and
customary (as agreed between the Company and you): moving expenses, closing costs incurred in
connection with the purchase of your new primary residence, and a temporary living allowance
prior to your relocation. In addition, the Company will reimburse you for the cost of economy
air fare for trips twice monthly to your pre-relocation residence for a maximum of twelve
months.
	 
	 	 
	 

	 	The Company will make a tax gross-up for the expenses reimbursed to the
extent permissible under applicable law. In the event that you voluntarily
terminate your employment with the Company within 12 months of relocation,
all amounts reimbursed must be repaid to the Company.
	 
	 	 
	401(k):

	 	     As a Company employee, you will be eligible to participate in the Breeze-Eastern Retirement
Savings Plan in accordance with the provisions of the plan. The plan requires that an
employee have one month of service before he or she is eligible to contribute to the plan.
Company contributions require one year of service.
	 
	 	 
	Medical/Dental:

	 	You will be entitled to the normal benefits accorded the
Company’s salaried employees, which currently include
major medical, hospitalization, dental and
prescriptions. The specifics of these benefits are
subject to modification or termination at any time.
	 
	 	 
	Vacation:

	 	     Four (4) weeks. You will also receive four
personal days and six sick days per year in accordance
with Company policies. The Company does not offer
sabbaticals and there is no policy for comp time for
corporate officers.
	 
	 	 
	Off-Site Support:

	 	You will be provided with the use of a Company-owned
laptop computer comparable to those used by other
corporate officers.
	 
	 	 
	Other Benefits:

	 	The Company’s policy manual contains illustrations of
other benefits, such as tuition reimbursement, travel
insurance, etc. which are available to all Company
employees.

 

 

	 	 	 
	 
	 	 
	Stock Ownership:

	 	During the period of your employment, you shall acquire
and thereafter maintain ownership of Company Shares as
provided herein. Not later than December 31, 2009, you
shall, subject to the availability of Company trading
windows for Company insiders, purchase on the open
market Company Shares having a value of not less than
$50,000. Subsequent thereto you shall pursue a program
to acquire additional Company Shares so that your
aggregate holdings of Company Shares shall equal your
then current base salary (your “Minimum Stock Ownership
Commitment”). As a minimum, beginning calendar year
2010, you shall acquire each year an additional $50,000
of Company Shares towards your Minimum Stock Ownership
Commitment. Company Shares received through the
Company’s annual incentive compensation plan shall be
credited towards your Minimum Stock Ownership
Commitment. In the event that in any year Company Shares
received under the then annual plan have a value of less
than $50,000, you shall purchase on the open market
Company Shares aggregating at least the amount necessary
to equal $50,000 for that year. From the date that you
have achieved your Minimum Stock Ownership Commitment,
you shall, within 6 months of receiving a raise in your
base salary, increase as may be necessary your ownership
of Company Shares to meet your then applicable Minimum
Stock Ownership Commitment.

     The Company maintains an “employment at will” policy, and by acceptance of employment with the
Company you acknowledge and agree to such policy. The Company reserves the right to amend or
change any of its benefit programs at its discretion. Terms of your employment, including the
at-will policy, may not be modified by any oral or implied agreement with any officer of the
Company or by a writing unless approved by the Board. As an officer of Breeze-Eastern Corporation,
you will be subject to certain SEC requirements and restrictions upon your ability to buy and sell
securities of the Company. You will be considered a Section 16(b) employee, subject to SEC
reporting of your holdings, and changes thereto, of Company stock.

     As a condition of your employment, you agree to become familiar with and comply with
the provisions of the Company’s policies and procedures and you agree to sign and agree to comply
with any non-disclosure of confidential information/trade secret agreements and any patent and
invention assignment agreements specified in such policies and procedures. These policies may be,
and are, modified from time to time. It is your responsibility to maintain an up to date knowledge
of these policies and procedures.

     In recognition of the risks and obligations you will undertake in accepting a

 

 

position as an officer in the Company, Breeze-Eastern Corporation will enter into an
indemnification agreement with you relative to claims brought against you in your capacity as an
officer of the Company. This agreement will be provided under separate cover. The Company
maintains a Directors and Officers Insurance policy as added protection.

     Your employment and election to the officer position noted above is contingent upon the Board
of Directors of Breeze-Eastern Corporation approving such appointment, your receipt of any
necessary governmental security clearances, and appropriate credential confirmation. Your
appointment pursuant to this offer of employment is on the agenda of the July 29, 2009 meeting of
the Board.

     If the above offer is acceptable to you, please sign both copies of this letter, keep one copy
for your files and return the other copy to me. If you have any questions about any of the items
noted above, please do not hesitate to call me. This offer will expire, unless accepted, at the
close of business on August 3, 2009.

     We are very enthusiastic about having you join our team. Breeze-Eastern Corporation is poised
to begin another exciting chapter in its quest for growth and achievement of its goals. I, along
with the other members of our management group, am sure that you will make a significant addition
to our team as we pursue the challenges and opportunities facing us.

Very truly yours,

Robert L. G. White

President and

Chief Executive Officer

Agreed and Accepted

	 	 	 
	 

Donald Michael Harlan, Jr.exv10w37

Exhibit 10.37

BREEZE-EASTERN CORPORATION

INCENTIVE STOCK OPTION AGREEMENT

     Agreement dated as of August 17, 2009 between Breeze-Eastern Corporation, a Delaware
corporation (the “Company”), and Donald Michael Harlan, Jr. (“Optionee”), residing at 1321
Leighton Circle, Louisville, KY 40222.

     Whereas, the Board of Directors of the Company has approved a letter agreement between the
Company and Optionee providing for, among others, the employment of Optionee by the Company and, in
connection therewith, the granting to Optionee of a stock option to purchase shares of common stock
of the Company upon the terms and conditions hereinafter stated.

     NOW THEREFORE, in consideration of the covenants herein set forth, the parties agree as
follows:

	 	1.	 	Shares & Price. The Company grants to Optionee the right to purchase,
upon and subject to the terms and conditions herein stated, all or any part of
100,000            shares of common stock ($.01 par value) of the Company (the “Shares”),
for cash at the price of $6.05 per share.
	 
	 	2.	 	Term of Option. This option shall expire on August 17, 2019.
	 
	 	3.	 	Installments. Subject to the provisions hereof, this option shall
become exercisable in one or more installments set forth below. Each installment shall
be for the numbers of Shares and exercisable (in whole or in part) upon and after the
dates set forth.

	 	 	 
	DATE	 	NUMBER OF SHARES
	August 17, 2010
	 	33,333 Shares
	August 17, 2011
	 	33,333 Shares
	August 17, 2012
	 	33,334 Shares

The installments shall be cumulative; i.e., this option may be exercised, as to any
or all shares covered by an installment, at any time after an installment becomes
exercisable and until expiration or termination of this option.

 

 

	 	4.	 	Exercise. This option may only be exercised by delivery to the Company
of (i) a written notice of exercise, in form acceptable to the Company, stating the
number of Shares then being purchased hereunder, and (ii) a check or cash, in the
amount of the purchase price of such shares (or, at the discretion of the Board of
Directors, with Shares of the Company with a market value equal to the purchase price
at date of exercise).
	 
	 	5.	 	Termination of Employment. If Optionee ceases to be employed by the
Company or a subsidiary thereof for any reason other than his death, disability or
Retirement (as defined in Paragraph 7(a) below), either Optionee or the person entitled
to succeed to his rights hereunder shall have the right, at any time within three (3)
months after such termination of employment and prior to the expiration of this option
pursuant to Paragraph 2 hereof, to exercise this option to the extent, but only to the
extent, that this option was exercisable and had not previously been exercised at the
date of such termination of employment; provided, however, that all rights under this
option shall expire in any event on the day specified in Paragraph 2 hereof or three
(3) months after the employment of Optionee terminates, whichever first occurs.
	 
	 	6.	 	Death of Optionee & No Assignment. The option shall not be assignable
or transferable except by will or by the laws of descent and distribution and shall be
exercisable during his lifetime only by the Optionee. If Optionee shall become
disabled or die while in the employ of the Company, the Optionee or the person entitled
to succeed to his rights hereunder may exercise this option until the first to occur of
(i) the date one year from the date of the Optionee’s disability or death, or (ii) the
date such option expires pursuant to Paragraph 2 hereof to the extent that Optionee was
entitled to exercise this Option at the date of his disability or death.
	 
	 	7.	 	Retirement. (a) “Retirement” and “Retire(s)” are defined to mean that
the Optionee ceases to be employed by the Company for other than cause after reaching
sixty (60) years of age and having not less than ten (10) years of service with the
Company.

          (b) Notwithstanding any other provision of this agreement, if Optionee Retires,
then if this option was granted to Optionee more than six (6) months prior to
Optionee’s Retirement, this option shall be deemed to be fully vested and
immediately exercisable at the date of Retirement.

          (c) Optionee, or any person entitled to succeed to his rights hereunder, shall
have the right, at any time within three (3) years after Retirement and prior to the
expiration of this option, to exercise this option to the extent, but only to the
extent, that this option was exercisable and

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had not previously been exercised at the date of Retirement (after giving
effect to the provisions of Paragraph 7(b) above).

          (d) Provided, however, that all rights under this option shall expire in any
event on the day specified herein as the date of option expiration or three (3)
years after the date of Optionee’s Retirement, whichever first occurs.

	 	8.	 	Employment of Optionee. In consideration of the granting of this
option by the Company, the Optionee agrees to render faithful and efficient services to
the Company or a subsidiary thereof, with such duties and responsibilities as the
Company or such subsidiary shall from time to time prescribe, for a period of at least
one year from the date this option is granted or until Optionee Retires as defined in
Paragraph 7(a) above, whichever first occurs. Nothing in this Agreement shall confer
upon the Optionee any right to continue in the employ of the Company or any subsidiary
thereof or shall interfere with or restrict in any way the rights of the Company, and
its subsidiaries, which are hereby expressly reserved, to discharge the Optionee at any
time for any reason whatsoever, with or without good cause.
	 
	 	9.	 	No Rights as Stockholder. Optionee shall have no rights as a
stockholder with respect to the Shares covered by the option until the date of the
issuance of stock certificates to him. No adjustment will be made for dividends or
other rights for which the record date is prior to the date such stock certificates are
issued pursuant to the exercise of options granted hereunder.
	 
	 	10.	 	Shares Purchased for Investment. Optionee represents and agrees that
if he exercises this option in whole or in part, he shall acquire the Shares upon such
exercise for the purpose of investment and not with a view to their resale or
distribution. The Company reserves the right to include a legend on each certificate
representing Shares subject to this option, stating in effect that such shares have not
been registered under the Securities Act of 1933, as amended.
	 
	 	11.	 	Change of Control. In the event of a “Change in Control” of the
Company, as defined in Exhibit A hereto, notwithstanding anything in this Agreement to
the contrary, all stock options granted hereunder then outstanding shall become fully
exercisable as of the date of the Change in Control.
	 
	 	12.	 	Gender. Unless the context otherwise requires, the masculine gender
includes the feminine.
	 
	 	13.	 	Notices. Any notices or other communication required or permitted
hereunder shall be sufficiently given if delivered personally or sent by

3

 

	 	 	 	registered or certified mail, postage prepaid, to the Company at its corporate
headquarters, and to the Optionee at the address above, or to such other address as
shall be furnished in writing by either party to the other party, and shall be
deemed to have been given as of the date so delivered or deposited in the United
States mail, as the case may be.

     IN WITNESS WHEREOF, the parties hereto have executed this agreement.

	 	 	 	 	 	 	 
	 	 	BREEZE-EASTERN CORPORATION
	 	 
	 	 	(“COMPANY”)
	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:
	 	Robert L.G. White	 	 
	 

	 	Title:
	 	President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Donald Michael Harlan, Jr.	 	 

Grant Number: 002278

4

 

Exhibit A to Stock Option Agreement

Definition of “Change in Control,” as referenced in Section 11 of the Stock Option Agreement:

“Change in Control” means the occurrence of any one (or more) of the following events:

1. Any one person, or more than one person acting as a group, as defined in Section
13(d)(3) of the Securities Exchange Act of 1934 (the “Exchange Act”), acquires
ownership of Common Stock that, together with the Common Stock already held by such
person or group, constitutes more than 50% of the total Fair Market Value or the
total voting power of the stock of the Company;

2. Any one person, or more than one person acting as a group, as defined in Section
13(d)(3) of the Exchange Act, acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or persons)
ownership of stock of the Company that possesses 35% or more of the total voting
power of the stock of the Company;

3. A majority of the members of the Company’s Board of Directors is replaced during
any 12-month period by directors whose appointment or election is not endorsed by a
majority of the members of the Company’s Board of Directors prior to the date of
such appointment or election;

4. A change in ownership of a portion of the assets of the Company, which portion of
the assets has a total gross fair market value equal to or more than 40% of the
total gross fair market value of all of the Company’s assets which shall be deemed
to be equal to the total Fair Market Value of all the Company Stock;

5. 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
Company or for a sale or other disposition of all or substantially all of the assets
of the Company; or

6. A tender offer or exchange offer is made by any person, including a group as
defined in Section 13(d)(3) of the Exchange Act, for such amount of shares
representing a majority of the voting power of the Company with respect to the
election of the Company’s Board of Directors, and at least such amount of shares of
Common Stock are acquired pursuant to such tender offer.

With respect to the foregoing provision, the following definition shall apply:

5

 

“Fair Market Value” means the fair market value of the Shares determined as follows:

	 	•	 	if the Shares are publicly traded and are then listed on a national
securities exchange, the closing price on the date of determination on the
principal national securities exchange on which the Shares are listed or
admitted to trading;
	 
	 	•	 	if such Shares are quoted on the NASDAQ National Market, its closing
price on the NASDAQ National Market on the date of determination;
	 
	 	•	 	if such Shares are publicly traded but are not listed or admitted to
trading on a national securities exchange, the average of the closing bid
and asked prices for the Shares on the date of determination; or
	 
	 	•	 	if none of the foregoing is applicable, the weighted average of the mean
selling price of the Shares on the nearest date before and the nearest date
after the determination date.

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