CORDANT TECHNOLOGIES INC.
EXECUTIVE EMPLOYMENT AGREEMENT
Effective July 22, 1999
Section Page
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1 Change of Control Date 1
2 Change of Control 2
3 Employment Period 4
4 Terms of Employment 4
(a) Position and Duties 4
(b) Compensation, Benefits and Support Staff 5
(i) Base salary 5
(ii) Bonus 6
(iii) Incentives, Savings and Retirement Plan 6
(iv) Welfare Benefit Plans 7
(v) Expenses 7
(vi) Other Executive Benefits 7
(vii) Office and Support Staff 8
(viii)Vacation 8
5 Termination of Employment 8
(a) Death or Disability 9
(b) Cause 9
(c) Good Reason 10
(d) Notice of Termination 11
(e) Date of Termination
i
6 Obligations of the Company upon Termination 12
(a) Death 12
(b) Disability 13
(c) Cause, Other Than For Good Reason 13
(d) Good Reason; Other than for Cause or Disability(1) 13
7 Non-exclusivity of Rights 15
8 Full Payments 15
9 Certain Additional Payments by the Company 16
10 Confidential Information 20
11 Successors 21
12 Miscellaneous 22
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(1) the severance benefit formula.
ii
CORDANT TECHNOLOGIES INC.
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement is made by and between CORDANT
TECHNOLOGIES INC. (the "Company") and ____________________ (the
"Executive"), and is dated as of the 22nd day of July 1999.
The Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its stockholders to
assure that the Company will have the continued dedication of the
Executive, notwithstanding the possibility, threat, or occurrence of a
Change of Control (as defined below) of the Company. The Board believes it
is imperative to diminish the inevitable distraction of the Executive by
virtue of the personal uncertainties and risks created by a pending or
threatened Change of Control and to encourage the Executive's full
attention and dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the Executive with
compensation and benefits arrangements upon a Change of Control which
ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board
has caused the Company to enter into this Amended and Restated Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1 . CHANGE OF CONTROL DATE. The "Change of Control Date" shall be the
first date on which a Change of Control (as defined in Section 2) occurs.
Anything in this Agreement to the contrary notwithstanding, if a Change of
Control occurs and the Company has terminated the Executive's employment
(other than under circumstances which would constitute Cause or Disability
(as defined below)) or the Executive has terminated his employment under
circumstances which would constitute Good Reason
1
hereunder if such termination occurred the day after the Change of Control
Date, and if (A) it is reasonably demonstrated by the Executive (i) that
such termination of employment was at the request of a third party who has
taken steps reasonably calculated to effect the Change of Control or (ii)
that the Company's actions otherwise arose in connection with or
anticipation of the Change of Control or (B) such termination is within six
months of the Change of Control Date, then for all purposes of this
Agreement the "Change of Control Date" shall mean the date immediately
prior to the date of such termination of employment.
2. CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of
Control" shall mean:
(a) the acquisition by any individual, entity or group (within
the meaning of sections 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "exchange act")) (a "person") of
beneficial ownership (within the meaning of rule 13d-3 promulgated
under the exchange act) of 20% or more of either (i) the then
outstanding shares of common stock of the company (the "outstanding
company common stock") or (ii) the combined voting power of the then
outstanding voting securities of the company entitled to vote
generally in the election of directors (the "outstanding company
voting securities"); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a
change of control: (i) any acquisition directly from the company, (ii)
any acquisition by the company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the company
or any corporation controlled by the company or (iv) any acquisition
by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (c) of this section 2; or
(b) individuals who, as of the date hereof, constitute the board
(the "incumbent board") cease for any reason to constitute at least a
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majority of the board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination
for election by the company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the incumbent
board shall be considered as though such individual were a member of
the incumbent board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a person other than the board;
or
(c) consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
the company (a "business combination"), in each case, unless,
following such business combination, (i) all or substantially all of
the individuals and entities who were the beneficial owners,
respectively, of the outstanding company common stock and outstanding
company voting securities immediately prior to such business
combination beneficially own, directly or indirectly, more than 50%
of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such business combination
(including, without limitation, a corporation which as a result of
such transaction owns the company or all or substantially all of the
company's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately
prior to such business combination of the outstanding company common
stock and outstanding company voting securities, as the case may be,
(ii) no person (excluding any corporation resulting from such business
combination or any employee benefit plan (or related trust) of the
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company or such corporation resulting from such business combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such business combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the business combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such
business combination were members of the incumbent board at the time
of the execution of the initial agreement, or of the action of the
board, providing for such business combination; or
(d) approval by the shareholders of the company of a complete
liquidation or dissolution of the company.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the
employ of the Company, for the period commencing on the Change of Control
Date and ending on the third anniversary of such date (the "Employment
Period").
4. TERMS OF EMPLOYMENT. (a) POSITION AND DUTIES. (i) During the
Employment Period, (A) the Executive's position (including status, offices,
titles and reporting relationships), authority, duties and responsibilities
shall be at least commensurate in all material respects with the most
significant of those held, exercised and assigned at any time during the
90-day period immediately preceding the Change of Control Date and (B) the
Executive's services shall be performed at the location (the "Principal
Business Location") where the Executive was employed immediately preceding
the Change of Control Date or at any office or location which does not
result in a material increase in the distance or time of commutation
between the Executive's place of primary residence at the Change of Control
Date and the Executive's Principal Business Location, or materially
adversely affect the mode of such commutation.
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(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours
to the business and affairs of the Company and, to the extent necessary to
Discharge the responsibilities assigned to the Executive hereunder, to use
the Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment Period it shall
not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees, (B) deliver lectures,
fulfill speaking engagements or teach at educational institutions and (C)
manage personal investments, so long as such activities do not
significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the
Change of Control Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to
the Change of Control Date shall not thereafter be deemed to interfere with
the performance of the Executive's responsibilities to the Company.
(b) COMPENSATION, BENEFITS AND SUPPORT STAFF. (i) BASE SALARY. During
the Employment Period, the Executive shall receive in accordance with the
Company's payroll practices at the Change of Control Date an annual base
salary ("Annual Base Salary"), at least equal to twelve times the highest
monthly base salary paid or payable to the Executive by the Company and its
affiliated companies in respect of the twelve-month period immediately
preceding the month in which the Change of Control Date occurs. During the
Employment Period, the Annual Base Salary shall be reviewed at least
annually and shall be increased at any time and from time to time as shall
be substantially consistent with increases in base salary awarded in the
ordinary course of business to other peer executives of the Company and its
affiliated companies but in no event shall the annual increase in Base
Salary be less than a percentage at least equal to the increase, if any, in
the cost-of-living shown on the
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Consumer Price Index for the area in which the Principal Business Location
is located, published by the Bureau of Labor Statistics of the United
States Department of Labor for the immediately preceding twelve-month
period (or, if no such Consumer Price Index is then published, any
successor index thereto). Any increase in Annual Base Salary shall not
serve to limit or reduce any other obligation to the Executive under this
Agreement. Annual Base Salary shall not be reduced after any such increase
and the term Annual Base Salary as utilized in this Agreement shall refer
to Annual Base Salary as so increased. As used in this Agreement, the term
"affiliated companies" includes any company controlled by, controlling or
under common control with the Company.
(ii) BONUS. In addition to Annual Base Salary, the Executive shall be
awarded, for each fiscal year beginning or ending during the Employment
Period, an annual bonus (the "Annual Bonus") in cash at least equal to the
highest annualized (for any fiscal year consisting of less than twelve full
months or with respect to which the Executive has been employed by the
Company for less than twelve full months) bonus paid or payable (including
any amount subject to a deferral election) to the Executive by the Company
and its affiliated companies in respect of the three fiscal years
immediately preceding the fiscal year in which the Change of Control Date
occurs (the "Recent Annual Bonus"). Each such Annual Bonus shall be paid no
later than the end of the third month of the fiscal year next following the
fiscal year for which the Annual Bonus is awarded, unless the Executive
shall elect to defer the receipt of such Annual Bonus.
(iii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. In addition to Annual
Base Salary, and Annual Bonus payable as herein above provided, the
Executive shall be entitled to participate during the Employment Period in
all other incentive, savings and retirement plans, practices, policies and
programs applicable to other peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices, policies
and programs provide the Executive with incentive, savings and retirement
benefits opportunities, in each case, less favorable, in the
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aggregate, than the most favorable of those provided by the Company and its
affiliated companies for the Executive under such plans, practices,
policies and programs as in effect at any time during the 90-day period
immediately preceding the Change of Control Date.
(iv) WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and
its affiliated companies (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life, group
life, accidental death and travel accident insurance plans and programs)
and applicable to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and
programs provide benefits which are less favorable, in the aggregate, than
the most favorable of such plans, practices, policies and programs in
effect at any time during the 90-day period immediately preceding the
Change of Control Date.
(v) EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the most favorable policies,
practices and procedures of the Company and its affiliated companies in
effect at any time during the 90-day period immediately preceding the
Change of Control Date or, if more favorable to the Executive, as in effect
at ANY time thereafter with respect to other peer executives of the Company
and its affiliated companies.
(vi) OTHER EXECUTIVE BENEFITS. During the Employment Period, the
Executive shall be entitled to other executive benefits in accordance with
the most favorable plans, practices, programs and policies of the Company
and its affiliated companies in effect at any time during the 90-day period
immediately preceding the Change of Control Date or, if more favorable to
the Executive, as in effect at any time
7
thereafter with respect to other peer executives of the Company and its
affiliated companies.
(vii) OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, to exclusive personal secretarial and
other assistance at least equal to the most favorable of the foregoing
provided to the Executive by the Company and its affiliated companies at
any time during the 90-day period immediately preceding the Change of
Control Date or, if more favorable to the Executive, as provided at any
time thereafter with respect to other peer executives of the Company and
its affiliated companies.
(viii) VACATION. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated
companies as in effect at any time during the 90-day period immediately
preceding the Change of Control Date or, if more favorable to the
Executive, as in effect at any time thereafter with respect to other peer
executives of the Company and its affiliated companies with similar lengths
of service.
5. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY. The Executive's
employment shall terminate automatically upon the Executive's death during
the Employment Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Period
(pursuant to the definition of "Disability" set forth below), it may give
to the Executive written notice in accordance with Section 12(b) of this
Agreement of its intention to terminate the Executive's employment. In such
event, the Executive's employment with the Company shall terminate
effective on the 30th day after receipt of such notice by the Executive
(the "Disability Change of Control Date"), provided that, within the 30
days after such receipt, the Executive shall not have returned to full-time
performance of the
8
Executive's duties. For purposes of this Agreement, "Disability" means the
absence of the Executive from the Executive's duties with the Company on a
Full-time basis for 180 consecutive business days as a result of incapacity
due to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Executive's employment during
the Employment Period for "Cause." For purposes of this Agreement, "Cause"
means (i) an act or acts of personal dishonesty taken by the Executive and
intended to result in substantial personal enrichment of the Executive at
the expense of the Company, (ii) repeated violations by the Executive of
the Executive's obligations under Section 4(a) of this Agreement which are
demonstrably willful and deliberate on the Executive's part and which are
not remedied in a reasonable period of time after receipt of written notice
from the Company or (iii) the conviction of the Executive of a felony
involving moral turpitude. For purposes of this Section 5(b), no act, or
failure to act, on the Executive's part shall be considered "willful"
unless done, or omitted to be done, by him not in good faith and without
reasonable belief that his action or omission was in the best interest of
the Company. Notwithstanding the foregoing, the Executive shall not be
deemed to have been terminated for Cause unless and until there shall have
been delivered to the Executive a copy of a resolution, duly adopted by the
affirmative vote of not less than three-quarters of the entire membership
of the Board at a meeting of the Board called and held for the purpose
(after reasonable notice to the Executive and an opportunity for him,
together with his counsel, to be heard before the Board), finding that in
the good faith opinion of the Board, the Executive was guilty of conduct
set forth above in clause (i), (ii), or (iii) of the second sentence of
this Section 5(b) and specifying the particulars thereof in detail.
9
(c) GOOD REASON. The Executive's employment may be terminated during
the Employment Period by the Executive for Good Reason. For purposes of
this Agreement, "Good Reason" means:
(i) the assignment to the Executive of any duties inconsistent in
any respect with the Executive's position (including status, offices,
titles and reporting relationships), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or
any other action by the Company which results in a diminution in such
position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than that described in Section 4(a)(i)(B)
hereof;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section
11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive. Anything in this
Agreement to the
10
contrary notwithstanding, a termination by the Executive for any reason
during the 30-day period immediately following the first anniversary of the
Change of Control Date shall be deemed to be a termination for Good Reason
for all purposes of this Agreement.
(d) NOTICE OF TERMINATION. Any termination by the Company for Cause or
by the Executive for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section
12(b) of this Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated and (iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen days after the giving of such
notice). The failure by the Executive to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason shall not waive any right of the Executive hereunder or preclude the
Executive from asserting such fact or circumstance in enforcing the
Executive's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means the date of
receipt of the Notice of Termination or any later date specified therein,
as the case may be; provided, however, that (i) if the Executive's
employment is terminated by the Company other than for Cause or Disability,
the Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (ii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall
be the date of death of the Executive or the Disability Change of Control
Date, as the case may be.
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6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) DEATH. If the Executive's employment terminates by reason of the
Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal
representatives under this Agreement, other than the following obligations:
(i) the Executive's Annual Base Salary through the Date of Termination, to
the extent not theretofore paid, (ii) any amount payable to the Executive
pursuant to Section 4(b)(ii) hereof in respect of the most recently
completed fiscal year, to the extent not theretofore paid, (iii) if the
Change of Control Date occurred after the end of the most recently
completed fiscal year and no Annual Bonus was paid to the Executive in
respect of such period, an amount equal to the Recent Annual Bonus, (iv)
the product of the greater of the Annual Bonus paid or payable (and
annualized for any fiscal year consisting of less than twelve full months
or for which the Executive has been employed for less than twelve full
months) to the Executive for the most recently completed fiscal year during
the Employment Period, if any, or the Recent Annual Bonus (such greater
amount hereafter referred to as the "Highest Annual Bonus") and a fraction,
the numerator of which is the number of days in the current fiscal year
through the Date of Termination, and the denominator of which is 365, and
(v) any accrued vacation pay not yet paid by the Company (the amounts
described in paragraphs (i) through (v) hereof are hereinafter referred to
as "Accrued Obligations"). All Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump sum in cash
within 30 days of the Date of Termination. Anything in this Agreement to
the contrary notwithstanding, the Executive's family shall be entitled to
receive benefits at least equal to the most favorable benefits provided by
the Company and any of its affiliated companies to surviving families of
peer executives of the Company and such affiliated companies under such
plans, programs, practices and policies relating to family death benefits,
if any, as in effect with respect to other peer executives and their
families at any time during the 90-day period immediately preceding the
Change of Control Date or, if more favorable to the Executive and/or the
Executive's family, as in effect on the date of the
12
Executive's death with respect to other peer executives of the Company and
its affiliated companies and their families.
(b) DISABILITY. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, this Agreement
shall terminate without further obligations to the Executive, other than
for Accrued Obligations. All Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
Anything in this Agreement to the contrary notwithstanding, the Executive
shall be entitled after the Disability Change of Control Date to receive
disability and other benefits at least equal to the most favorable of those
provided by the Company and its affiliated companies to disabled executives
and/or their families in accordance with such plans, programs, practices
and policies relating to disability, if any, as in effect with respect to
other peer executives and their families at any time during the 90-day
period immediately receding the Change of Control Date or, if more
favorable to the Executive and/or the Executive's family, as in effect at
any time thereafter with respect to other peer executives of the Company
and its affiliated companies and their families.
(c) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's employment
shall be terminated for Cause during the Employment Period or if the
Executive terminates employment during the Employment Period other than for
Good Reason, this Agreement shall terminate without further obligations to
the Executive other than the obligation to pay to the Executive Annual Base
Salary through the Date of Termination and accrued vacation pay, in each
case to the extent theretofore unpaid.
(d) GOOD REASON; OTHER THAN FOR CAUSE OR DISABILITY. If, during the
Employment Period, the Company shall terminate the Executive's employment
other than for Cause or Disability, or if the Executive shall terminate
employment under this Agreement for Good Reason:
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(i) the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the
following amounts:
A. the product of (x) one and (y) the sum of (i) Annual Base
Salary, and (ii) the Highest Annual Bonus; and
B. all Accrued Obligations; and
C. the Executive shall be entitled to receive a lump-sum
retirement benefit equal to the difference between (a) the
actuarial equivalent of the benefit under the Cordant
Technologies Inc. Pension Plan and the Cordant Technologies Inc.
Excess Pension Plan as in effect on the Change of Control Date or
any successor plan which provides more favorable benefits to the
Executive (the "Retirement Plans") which the Executive would
receive if the Executive's employment continued at the
compensation level provided for in Sections 4(b)(i) and 4(b)(ii)
of this Agreement for one year, assuming for this purpose that
all accrued benefits are fully vested, and (b) the actuarial
equivalent of the Executive's actual benefit (paid or payable),
if any, under the Retirement Plans; and
(ii) for the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, the
Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 4(b)(iv) and (vi) of this Agreement if
the Executive's employment had not been terminated in accordance with
the most favorable plans, practices, programs or policies of the
Company and its affiliated companies applicable to other peer
executives and their families during the 90-day period immediately
preceding the Change of Control Date or, if more favorable to the
Executive, as in effect at any time thereafter with respect to other
peer executives of the Company and its
14
affiliated companies and their families. For purposes of determining the
Executive's age and length of service at the time of his termination of
employment in order to determine eligibility of the Executive for retiree
benefits pursuant to such plans, practices, programs and policies, the
Executive shall be considered to have remained employed until the end of
the Employment Period and to have terminated employment on the last day of
such period; provided, however, that the Executive shall be entitled to the
more favorable of the retiree benefits in effect on the Date of Termination
or the retiree benefits in effect on the date that would have been the last
date of the Employment Period if the Executive had remained employed.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plans, programs, policies or practices, provided
by the Company or any of its affiliated companies and for which the
Executive may qualify, nor shall anything herein limit or otherwise affect
such rights as the Executive may have under any other agreements with the
Company or any of its affiliated companies. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any
plan, policy, practice or program of the Company or any of its affiliated
companies at or subsequent to the Date of Termination shall be payable in
accordance with such plan, policy, practice or program except as explicitly
modified by this Agreement.
8. FULL PAYMENTS. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against
the Executive or others. In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this
Agreement. The Company agrees to pay, from time to time promptly upon
invoice, to the full extent permitted by law, all legal fees and expenses
which the Executive may reasonably incur as a result of any contest,
question or controversy (regardless of the
15
outcome thereof and whether or not litigation is involved) by the Company,
the Executive or others over the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by the Executive
about the amount of any payment pursuant to Section 9 of this Agreement).
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPAny.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the
Company to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or any
other compensation plan, program or arrangement including but not limited
to the proceeds from the exercise of stock option grants the Executive is
entitled to receive on the date of a Change of Control or otherwise, but
determined without regard to any additional payments required under this
Section 9) (a "Payment") would be 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 the Executive 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 the Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by the Executive
of all taxes (including any interest or penalties imposed with respect to
such taxes), including without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 9(c) below, all
determinations required to be made under this Section 9, including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions
16
to be utilized in arriving at such determination, shall be made by Ernst &
Young (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days
of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Company. In the event that the
Accounting Firm is serving (or has, during the three years preceding the
Effective Date, served) as accountant or auditor for the individual, entity
or group effecting the Change of Control, the Executive shall appoint
another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 9, shall be paid by the Company to the Executive
within five days of the receipt of the Accounting Firm's determination. If
the Accounting Firm determines that no Excise Tax is payable by the
Executive, it shall furnish the Executive with a written opinion that
failure to report the Excise Tax on the Executive's applicable federal
income tax return would not result in the imposition of a negligence or
similar penalty. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have
been made ("Underpayment"), consistent with the calculations required to be
made hereunder. In the event that the Company exhausts its remedies
pursuant to Section 9(c) and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount
of Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as
soon as practicable but no later than ten business days after the Executive
is informed in writing
17
of such claim and shall apprise the Company of the nature of such claim and
the date on which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Executive in writing prior to
the expiration of such period that it desires to contest such claim, the
Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any Proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result
of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 9(c), the Company
shall control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and
18
conferences with the taxing authority in respect of such claim and may, at
its sole option, either direct the Executive to pay the tax claimed and xxx
for a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however,
that if the Company directs the Executive to pay such claim and xxx for a
refund, the Company shall advance the amount of such payment to the
Executive, on an interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income
tax (including interest or Penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect
to such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised
by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 9(c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 9(c)) promptly
pay to the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 9(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
19
10. CONFIDENTIAL INFORMATION. (a) During the period of his employment
hereunder, the Executive shall not, without the written consent of the
Chief Executive Officer, disclose to any person, other than an employee of
the Company or another person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by the Executive of his
duties as an executive of the Company, any material confidential
information obtained by him while in the employ of the Company with respect
to any of the Company's products, improvements, formulas, designs or
styles, processes, customers, methods of distribution or methods of
manufacture, the disclosure of which he knows will be materially damaging
to the Company; provided, however, that confidential information shall not
include any information known generally to the public (other than as a
result of unauthorized disclosure by the Executive) or any information of a
type not otherwise considered confidential by persons engaged in the same
business or a business similar to that conducted by the Company. For the
period ending two years following the Date of Termination, the Executive
shall not disclose any confidential information of the type described above
except as determined by him to be reasonably necessary in connection with
any business or activity in which he is then engaged.
(b) Any and all inventions made, developed or created by the Executive
(whether at the request or suggestion of the Company or otherwise, whether
alone or in conjunction with others, and whether during regular hours of
work or otherwise) during the period of his employment by the Company,
which may be directly or indirectly useful in, or relate to, the business
of or research and development being carried out by the Company or any of
its subsidiaries or affiliates, will be promptly and fully disclosed by the
Executive to an appropriate executive officer of the Company and shall be
the Company's exclusive property as against the Executive, and the
Executive will promptly deliver to an appropriate executive officer of the
Company all papers, drawings, models, data and other material relating to
any invention made, developed or created by him as aforesaid.
20
(c) The Executive will, upon the Company's request and without any
payment therefor, execute any documents necessary or advisable in the
opinion of the Company's counsel to direct issuance of patents to the
Company with respect to such inventions as are to be the Company's
exclusive property as against the Executive under Section 10(b) above or to
vest in the Company title to such inventions as against the Executive,
provided, however, that the expense of securing any such patent will be
borne by the Company.
(d) The foregoing provisions of this Section 10 shall be binding upon
the Executive's heirs, successors and legal representatives.
(e) In no event shall an asserted violation of the provisions of this
Section 10 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
11. SUCCESSORS. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company 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 Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this
21
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.
12. MISCELLANEOUS. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of this Agreement
are not part of the provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Home address as currently shown on Human Resources
Department records of the Company's Corporate Office or
the Executive's business unit as the case may be.
If to the Company:
Cordant Technologies Inc.
00 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, XX 00000-0000
Attention: Corporate Secretary
22
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision or
any other provision thereof.
(f) This Agreement contains the entire understanding of
the Company and the Executive with respect to the subject matter hereof.
(g) Anything in this Agreement to the contrary notwithstanding, the
Executive and the Company acknowledge that the employment of the Executive
by the Company is "at will", and, except as provided in Section 1 hereof,
prior to the Change of Control Date, the employment of the Executive may be
terminated by either the Executive or the Chief Executive Officer of the
Company at any time. Upon a termination of the Executive's employment prior
to the Change of Control Date, except as provided in Section 1 hereof,
there shall be no further rights under this Agreement.
23
IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of
the day and year first above written. CORDANT TECHNOLOGIES INC.
by __________________________________
Xxxxx X. Xxxxxx
Chairman of the Board, President, and
Chief Executive Officer
by:__________________________________
(name)
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