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Exhibit 10.13
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SPECIAL SECURITY AGREEMENT
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SPECIAL SECURITY AGREEMENT
This Agreement (the "Agreement") is made this ____ day of
March, 1996 by and between AXA, a French Corporation; The Equitable Companies
Incorporated, a Delaware Corporation; Xxxxxxxxx, Xxxxxx & Xxxxxxxx, Inc., a
Delaware Corporation, DLJ Capital Investors, Inc., a Delaware Corporation; DLJ
Merchant Banking, Inc., a Delaware Corporation; Fiberite Holdings, Inc., a
Delaware Corporation (the "Parent Corporation"); Fiberite Inc., a Delaware
Corporation (the "Corporation"); and the United States Department of Defense
("DoD"), all of the above collectively "the Parties".
* RECITALS
WHEREAS, the Corporation is duly organized and existing under
the laws of the State of Delaware, and has an authorized capital of 1,000
shares, all of which are common voting shares, par value $.01 per share, and of
which 1,000 are issued and outstanding (the "Shares"); and
WHEREAS, AXA owns approximately 60.6% of the outstanding
voting shares of The Equitable Companies Incorporated; and
WHEREAS, The Equitable Companies Incorporated directly or
indirectly owns 80.2% of the outstanding voting shares of Xxxxxxxxx, Lufkin &
Xxxxxxxx, Inc.; and
WHEREAS, Xxxxxxxxx, Lufkin & Xxxxxxxx, Inc. owns all the
outstanding voting shares of DLJ Capital Investors, Inc.; and
WHEREAS, DLJ Capital Investors, Inc. owns all the outstanding
voting shares of DLJ Merchant Banking, Inc.; and
WHEREAS, DLJ Merchant Banking, Inc. is a general partner of
DLJ Merchant Banking Partners, L.P., DLJ International Partners, C.V. and DLJ
Offshore Partners, C.V., which in the aggregate own approximately 61.3% of the
outstanding voting shares of the Parent Corporation(1); and
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(1) Of the remaining approximately 28.4% of the outstanding voting shares
of the Parent Corporation owned by investors affiliated with Xxxxxxxxx,
Lufkin & Xxxxxxxx, Inc. ("DLJ"), approximately 17.8% is owned by DLJ
Merchant Banking Funding, Inc., an indirect wholly-owned subsidiary of
DLJ and approximately 9.7% is owned by DLJ First ESC L.L.C., an
employee securities corporation which is managed by an indirect
wholly-owned subsidiary of DLJ.
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WHEREAS, the Parent Corporation owns all of the Shares of the
Corporation; and
WHEREAS, the Corporation's business consists of the research,
design, development and manufacture of defense and defense-related items for
various User Agencies(2) of the United States Government, including, without
limitation, the DoD; and
WHEREAS, the offices and plants of the Corporation require
facility security clearances(3) issued under the DoD Industrial Security Program
("DISP") to conduct its business and the DISP requires that a corporation
maintaining a facility security clearance be effectively insulated from foreign
ownership, control or influence ("FOCI"); and
WHEREAS, the Assistant Secretary of Defense for Command,
Control, Communications and Intelligence ("C(3)I") has determined that the
provisions of the Agreement are necessary to enable the United States to protect
itself against the unauthorized disclosure of information relating to the
national security; and
WHEREAS, the DoD has agreed to grant or continue the
Corporation's facility security clearance from and after the effective date of
the Agreement in consideration for, inter alia, the Parties' execution and
compliance with the provisions of the Agreement, the purpose of which is to
reasonably and effectively insulate the Parent Corporation and its parent
corporations and all entities which the aforementioned companies control, all of
the above (other than the Corporation) collectively the "Affiliates," from
unauthorized access to classified(4) and controlled
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(2) The Office of the Secretary of Defense (including all boards, councils,
staffs, and commands), DoD agencies, and the Department of Army, Navy,
and Air Force (including all of their activities); the Departments of
State, Commerce, Treasury, Transportation, Interior, Agriculture,
Labor, and Justice; National Aeronautics and Space Administration;
General Services Administration; Small Business Administration;
National Science Foundation; Environmental Protection Agency; United
States Arms Control and Disarmament Agency; Federal Emergency
Management Agency; Federal Reserve System; United States Information
Agency; International Trade Commission; United States Trade
Representative; and the General Accounting Office (the "User
Agencies").
(3) An administrative determination that a facility is eligible for access
to classified information of a certain category.
(4) Any information that has been determined pursuant to Executive Order
12356 or any predecessor order to require protection against
unauthorized disclosure and is so designated. The classifications TOP
SECRET, SECRET, and CONFIDENTIAL are used to designate such
information.
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unclassified information(5) and influence over the Corporation's business or
management in a manner which could result in the compromise of classified
information or could adversely affect the performance of classified contracts;
and
WHEREAS, the Corporation has agreed to establish a formal
organizational structure to ensure the protection of classified information and
controlled unclassified information entrusted to it and to place the
responsibility therefor with a committee of its Board of Directors to be known
as the Defense Security Committee, all as hereinafter provided; and
WHEREAS, the Parties agree that control of the Corporation
should be vested in the Board of Directors of the Corporation; and
WHEREAS, a company under FOCI is not normally authorized to
have access to the following classified information:
1. TOP SECRET information;
2. RESTRICTED DATA as defined in the United States Atomic
Energy Act of 1954, as amended;
3. Communications Security ("COMSEC") information, except
classified keys used to operate secure telephone units (STU III's);
4. Special Access Program Information; and
5. Sensitive Compartmented Information.
WHEREAS, in order to comply fully with the policies of DoD
that require a corporation maintaining a facility security clearance to be
insulated effectively from undue foreign ownership, control or influence, all
parties hereto have agreed that management control of the defense and technology
security affairs and classified contracts of the Corporation should be vested in
resident citizens of the United States who have DoD personnel security
clearances;(6) and
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(5) Unclassified information, the export of which is controlled by the
International Traffic in Arms Regulations ("ITAR") and/or the Export
Administration Regulations ("EAR"). The export of technical data which
is inherently military in nature is controlled by the ITAR. The export
of technical data which has both military and commercial uses is
controlled by the EAR.
(6)
An administrative determination that an individual is eligible for
access to classified information of a certain category.
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WHEREAS, the Parent Corporation, by its authorized
representatives, hereby affirms on behalf of itself and its Affiliates that
a. they will not seek access to or accept DoD classified
information or controlled unclassified information entrusted to the Corporation,
except as permissible under the DISP and applicable United States Government
laws and regulations, and
b. they will not attempt to control or influence the
Corporation's performance of classified contracts and participation in
classified programs; and
c. except as expressly authorized by the Agreement, their
involvement (individually and collectively) in the business affairs of the
Corporation shall be limited to participation in the deliberations and decisions
of the Corporation's Board of Directors and authorized committees thereof; and
WHEREAS, in order to meet DoD's national security objectives
in the matter of the Corporation's facility security clearance and to further
the Corporation's business objectives, the Parties intend to be bound by the
provisions of the Agreement;
NOW THEREFORE, it is expressly agreed by and between the
Parties that the Agreement is hereby created and established, subject to the
following terms and conditions, to which all of the Parties expressly assent and
agree:
* ORGANIZATION
ARTICLE I
Management of the Corporation's Business
1.1 Composition of the Corporation Board of Directors.
The Board of Directors of the Corporation (the "Corporation
Board") shall be appointed by the Parent Corporation, and shall be composed of:
(i) at least two individuals who have had no prior relationship with the
Corporation or the Affiliates (the "Outside Directors"), except as otherwise
allowed by DoD; (ii) at least two representatives of the Parent Corporation (the
"Inside Directors"); and (iii) at least one cleared officer of the Corporation
(the "Officer/Director"). The total number of the Outside Directors and
Officer/Directors shall be greater than the number of the Inside Directors.
Except as specifically provided herein, each member of the Corporation Board,
however characterized by this Section 1.1, shall have all of the rights, powers,
and responsibilities conferred or imposed upon directors of the company by
applicable statutes and regulations, and by the Corporation's charter and
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bylaws. The Chairman of the Corporation Board, as well as its principal
officers,(7) must be resident citizens of the United States who have or who are
eligible to possess DoD personnel security clearances at the level of the
Corporation's facility security clearance. In addition, the Chairman of the
Corporation Board shall not be an Inside Director. All directors of the
Corporation shall satisfy the pertinent requirements established in Section 3.__
below. The Outside Directors may not be removed without prior notice to, and
approval by, the Defense Investigative Service ("DIS"). Appointments of new or
replacement directors, other than Inside Directors, shall not become final until
approved by DIS.
1.2 Actions by the Corporation Board.
a. No action may be taken by the Corporation Board, or any
committee thereof, in the absence of a quorum as defined below.
b. A majority of the Corporation Board, including at least
one Inside Director and one Outside Director, shall be necessary to constitute a
quorum. With respect to the Defense Security Committee (see Section 7.1 below),
a majority of the Committee shall be necessary to constitute a quorum. With
respect to all other standing committees of the Corporation Board, including the
Compensation Committee (see "Article VIII below), a majority of such committee,
including at least one Outside Director and one Inside Director, shall be
necessary to constitute a quorum.
ARTICLE II
Limitations on the Corporation Board
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(7) For purposes of the Agreement, "principal officers" shall have the
meaning ascribed to it under the DoD Industrial Security Manual,
Appendix D, page 9, viz.:
. . . those persons occupying positions normally identified
as president, senior vice president, secretary, treasurer and
those persons occupying similar positions. In unusual
cases, the determination of principal officer status may
require a careful analysis of an individual's assigned
duties, responsibilities, and authority as officially recorded
by the organization. Excluded from this definition are:
(i) assistant vice presidents who have no management
responsibilities related to performance on classified
contracts, (ii) assistant secretaries, and (iii) assistant
treasurers.
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2.1 The Corporation Board shall not be authorized to take or agree to
take any of the actions specified in subsections 2.1 a. through 2.1i. below,
unless it shall have received, with respect to each such action, the prior
written approval of the Parent Corporation.
a. The sale, lease or other disposition of any of the
property, assets or business of the Corporation, or the purchase of any property
or assets by the Corporation that is other than in the ordinary course of
business;
b. The declaration or payment, directly or indirectly, of any
dividends or distributions in cash, property, or securities upon any of its
equity securities other than cash dividends out of current or retained earnings;
c. The direct or indirect redemption, purchase or other
acquisition of any equity security of the Corporation (or any non-wholly owned
subsidiary of the Corporation);
d. The grant or issuance of any stock option or stock purchase
right convertible into common stock of the Corporation to any employee of the
Corporation or its subsidiaries;
e. The entry of any employment or consulting agreements with
officers or affiliates of the Corporation;
f. The issuance or sale of any common stock or other capital
stock of the Corporation or rights to acquire its capital stock or any
securities or notes convertible into or exchangeable for its capital stock;
g. The merger, consolidation, reorganization, dissolution or
liquidation of the Corporation;
h. The filing or making of any petition under the Federal
Bankruptcy Code or any applicable bankruptcy law or other acts of similar
character; and
i. The initiation of action to terminate the Agreement, except
as provided for in Section 16.1 below.
ARTICLE III
Qualifications, Appointment, and
Removal of Directors; Board Vacancies
3.1 During the period that the Agreement is in force, the
Corporation Board shall be composed as provided in Section 1.1 hereof, and its
members shall meet the following additional requirements:
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a. Officer/Directors and Outside Directors shall be resident
citizens of the United States and have or be eligible to have DoD personnel
security clearances at the level of the Corporation's facility security
clearance.
b. Outside Directors shall have been approved by DIS as
satisfying the appropriate DoD personnel security requirements and the
applicable provisions of the Agreement.
c. Inside Directors shall not have DoD personnel security
clearances, regardless of citizenship, and they shall be formally excluded from
access to classified information by resolution of the Corporation Board.
3.2 The Parent Corporation, as the sole stockholder of the
Corporation, may remove any member of the Corporation Board for any reason
permitted by the provisions of applicable state law or the Corporation's
Certificate of Incorporation or by-laws, provided that:
a. the removal of an Outside Director shall not become
effective until that director, the Corporation, and DIS have been notified, DIS
has approved the removal, and a successor who is qualified to become an Outside
Director within the terms of the Agreement has been approved by DIS;
b. the removal of an Officer/Director shall not become
effective until that director, the Corporation, and DIS have each been notified;
c. notification to DIS of the removal of a director, when
required, shall be the responsibility of the Parent Corporation, and, except as
noted in subsection 3.2d. below, must be given at least twenty days prior to the
proposed removal date; and
d. anything foregoing to the contrary notwithstanding, if
immediate removal of any director is deemed necessary to prevent actual or
possible violation of any statute or regulation, or actual or possible damage to
the Corporation, the director may be removed at once, although DIS shall be
notified prior to or concurrently with such removal.
3.3 In the event of any vacancy on the Corporation Board however
occurring, the Corporation shall give prompt notice of such vacancy to the
Parent Corporation and DIS, and such vacancy shall be filled promptly by the
Parent Corporation. Such vacancy shall not exist for a period of more than 90
days after a director's resignation, death, disability or removal unless
expressly approved by DIS.
3.4 Except as provided by this paragraph, the obligation of a
director to abide by and enforce the Agreement shall terminate when the director
leaves office, but nothing herein shall relieve the departing director of any
responsibility that the director may have, pursuant to the laws and regulations
of the United States, not to
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disclose classified information or controlled unclassified information obtained
during the course of the director's service on the Corporation Board, and such
responsibility shall not terminate by virtue of the director leaving office. The
Corporation shall advise the departing director of such responsibility when the
director leaves office, but the failure of the Corporation to so advise the
director shall not relieve the director of any such responsibility.
ARTICLE IV
Indemnification and
Compensation of Outside Directors
4.1 The Outside Directors in their capacity as directors of
the Corporation shall vote and act on all matters in accordance with their best
efforts.(8)
4.2 The Corporation and the Parent Corporation jointly and
severally shall indemnify and hold harmless each Outside Director from any and
all claims arising from, or in any way connected to, his performance as a
director of the Corporation under the Agreement except for his own individual
gross negligence or willful misconduct. The Corporation and the Parent
Corporation shall advance fees and costs incurred in connection with the defense
of any such claim. The Parent Corporation or the Corporation may purchase
insurance to cover this indemnification.
ARTICLE V
Restrictions Binding on
Subsidiaries of the Corporation
5.1 The parties hereto agree that the provisions of the
Agreement restricting unauthorized access to classified information and
controlled unclassified information entrusted to the Corporation by entities
under FOCI, and all provisions of the Visitation Policy established in Article
XI below, shall apply to, and shall be made to be binding upon, all present and
future subsidiaries(9) of, and all companies
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(8) For purposes of the Agreement, the term "best efforts," signifies
performance of duties reasonably and in good faith, in the manner
believed to be in the best interests of the Corporation but consistent
with the national security concerns of the United States, and with such
care, including reasonable inquiry, as an ordinarily prudent person in
a like position would use under similar circumstances.
(9) The term "subsidiaries of the Corporation" shall, for the purposes of
the Agreement, include companies wholly owned by the Corporation or in
which the Corporation owns a controlling interest, either directly or
through the Corporation's ownership interest in intermediate companies.
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controlled by, the Corporation. The Corporation hereby agrees to undertake any
and all measures, and provide such authorizations, as may be necessary to
effectuate this requirement. The sale of, or termination of the Corporation's
control over, any such subsidiary or controlled company shall terminate the
applicability to it of the provisions of the Agreement.
5.2 If the Corporation proposes to form a new subsidiary, or
to acquire ownership or control of another company, it shall give notice of such
proposed action to DIS and shall advise DIS immediately upon consummation of
such formation or acquisition.
5.3 It shall be a condition of each such formation or
acquisition that all provisions of the Visitation Policy established in Article
XI, below and all of the above-described restrictive provisions of the Agreement
shall apply to each such company immediately upon consummation of such formation
or acquisition, and that the Corporation and the subsidiary or controlled
company shall execute a document agreeing that such company shall be bound
thereby; and a copy of the executed document shall be forwarded to DIS.
5.4 A document such as described in subsection 5.3 above,
shall also be executed and submitted with respect to each present subsidiary of
the Corporation, and with respect to any other company which the Corporation
presently controls.
5.5 Compliance with this Article V shall not be interpreted as
conferring the benefits of the Agreement on those companies. These companies
shall not be entitled to receive a facility security clearance, nor shall they
be entitled to access classified information, to perform classified contracts or
to participate in classified programs pursuant to the Agreement, solely by
virtue of their legal relationship with the Corporation and their execution of
the documents referred to in subsections 5.3 and 5.4 above.
* OPERATION
ARTICLE VI
Operation of the Agreement
6.1 The Corporation shall at all times maintain policies and
practices to ensure the safeguarding of classified information and controlled
unclassified information entrusted to it and the performance of classified
contracts and participation in classified programs for the User Agencies in
accordance with the DoD Security Agreement (DD Form 441), the Agreement,
appropriate contract provisions regarding security, United States export control
laws, and the DISP.
a. The following additional protections shall be
established in the by-laws and/or resolutions of the governing boards, as
appropriate, of the
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Corporation, AXA, The Equitable Companies Incorporated, Xxxxxxxxx, Xxxxxx &
Xxxxxxxx, Inc., DLJ Capital Investors, Inc., DLJ Merchant Banking, Inc. and the
Parent Corporation, acknowledged as provided in subsections 6.1b through 6.1d
below, and shall control the actions of the parties hereto during the terms of
the Agreement;
b. Pursuant to a resolution of the Corporation Board, which
shall not be repealed or amended without approval of DIS, the Corporation shall
exclude the Affiliates and all members of the Boards of Directors and all
officers, employees, agents and other representatives of each of them, from
access to classified information and controlled unclassified information
entrusted to the Corporation. The above exclusions shall not, however, preclude
the exchange of classified information or controlled unclassified information
between the Corporation and any Affiliates when such exchange is permissible
under the DISP and applicable United States laws and regulations;
c. Pursuant to a resolution of the Parent Corporation's Board
of Directors, which shall not be repealed or amended without approval of DIS,
the Parent Corporation shall formally acknowledge and approve the Corporation's
resolution referred to in subsection 6.1b, above, and shall additionally
resolve:
(i) to exclude itself and all Affiliates and all members
of the Boards of Directors and all officers, employees, agents and other
representatives of all of the foregoing, from access to classified information
and controlled unclassified information entrusted to the Corporation, except as
expressly permissible pursuant to subsection 6.1b above, and shall additionally
resolve:
(ii) to grant the Corporation the independence to
safeguard classified information and controlled unclassified information
entrusted to it; and
(iii) to refrain from taking any action to control or
influence the performance of the Corporation's classified contracts or the
Corporation's participation in classified programs.
d. AXA shall formally acknowledge and approve the Corporation
resolution referenced in 6.1b above, and the Parent Corporation resolutions
referenced in 6.1c above.
ARTICLE VII
Defense Security Committee
7.1 There shall be established a permanent committee of the
Corporation Board, to be known as the Defense Security Committee ("DSC"),
consisting of all Outside Directors and Officer/Directors to ensure that the
Corporation maintains policies and procedures to safeguard classified
information and controlled unclassified information in the possession of the
Corporation and to ensure that the
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Corporation complies with the DoD Security Agreement (DD Form 441), the
Agreement, appropriate contract provision regarding security, United States
Government export control laws and the DISP.
7.2 The DSC shall designate one of the Outside Directors to
serve as Chairman of the DSC.
7.3 The members of the DSC shall exercise their best efforts
to ensure the implementation within the Corporation of all procedures,
organizational matters and other aspects pertaining to the security and
safeguarding of classified and controlled unclassified information called for by
the Agreement, including the exercise of appropriate oversight and monitoring of
the Corporation's operations to ensure that the protective measures contained in
the Agreement are effectively maintained and implemented throughout its
duration.
7.4 The Chairman of the DSC shall designate an
Officer/Director to be Secretary of the DSC. The Secretary's responsibility
shall include ensuring that all records, journals and minutes of DSC meetings
and other documents sent to or received by the DSC are prepared and retained for
inspection by DIS.
7.5 A Facility Security Officer ("FSO") shall be appointed by
the Corporation and shall be the principal advisor to the DSC concerning the
safeguarding of classified information. The FSO's responsibility includes the
operational oversight of the Corporation's compliance with the requirements of
DISP.
7.6 The members of the DSC shall exercise their best effort to
ensure that the Corporation develops and implements a Technology Control Plan
("TCP"), which shall be subject to inspection by DIS. The DSC shall have
authority to establish the policy for the Corporation's TCP. The TCP shall
prescribe measures to prevent unauthorized disclosure or export of controlled
unclassified information consistent with applicable United States laws.
7.7 A Technology Control Officer ("TCO") shall be appointed by
the Corporation and shall be the principal advisor to the DSC concerning the
protection of controlled unclassified information and other proprietary
technology and data. The TCO's responsibilities shall include the establishment
and administration of all intracompany procedures, including employee training
programs, to prevent the unauthorized disclosure or export of controlled
unclassified information and to ensure that the Corporation otherwise complies
with the requirements of United States Government export control laws.
7.8 Discussions of classified and controlled unclassified
information by the DSC shall be held in closed sessions and accurate minutes of
such meetings shall be kept and shall be made available only to such authorized
individuals as are so designated by the DSC.
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7.9 Upon taking office, the DSC members, the FSO, and the TCO
shall be briefed by a DIS representative on their responsibilities under the
DISP, United States Government export control laws, and the Agreement.
7.10 Each member of the DSC shall exercise their best efforts
to ensure that all provisions of the Agreement are carried out; that the
Corporation's directors, officers, and employees comply with the provisions of
the Agreement; and that DIS is advised of any known violation of, or known
attempt to violate, any provisions of the Agreement, appropriate contract
provisions regarding security, United States Government export control laws, and
the DISP.
7.11 Each member of the DSC shall execute, for delivery to
DIS, upon accepting his appointment and thereafter at each annual meeting of the
Corporation with DIS as established by the Agreement, a certificate
acknowledging the protective security measures taken by the Corporation to
implement the Agreement. Each member of the DSC shall further acknowledge his
agreement to be bound by, and to accept his responsibilities under the Agreement
and acknowledge that the United States Government has placed its reliance on him
as a United States citizen and as the holder of a personnel security clearance
to exercise his best efforts to ensure compliance with the terms of the
Agreement and the DISP.
7.12 Obligations and Certification of Cleared Officers.
a. Each officer of the Corporation with a personnel
security clearance shall exercise his best efforts to ensure that the terms and
conditions of the Agreement are complied with by the parties hereto.
b. Upon effective date of the Agreement and annually
thereafter, each such officer shall execute, for delivery to DIS a certificate
(i) acknowledging the protective security measures taken by the Corporation to
implement the Agreement; and (ii) acknowledging that the United States
Government has placed its reliance on him as resident citizen of the United
States, and as a holder of a personnel security clearance, to exercise his best
efforts to ensure compliance with the terms and conditions of the Agreement by
the parties hereto.
7.13 Obligations and Certification of Inside Directors
a. Inside Directors shall:
(i) not have access to classified information and
controlled unclassified information entrusted to the Corporation except as
permissible under the DISP and applicable United States Government laws and
regulations;
(ii) refrain from taking any action to control or
influence the Corporation's classified contracts, its participation in
classified programs, or its
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corporate policies concerning the security of classified information and
controlled unclassified information;
(iii) neither seek nor accept classified
information or controlled unclassified information entrusted to the Corporation,
except as permissible under the DISP and applicable United States Government
laws and regulations; and
(iv) advise the DSC promptly upon becoming aware of
(1) any violation or attempted violation of the Agreement or contract provisions
regarding industrial security, export control, or (2) actions inconsistent with
the DISP or applicable United States Government laws or regulations.
b. Upon accepting appointment and annually thereafter,
each Inside Director shall execute, for deliver to DIS, a certificate affirming
such Inside Director's agreement to be bound by, and acceptance of the
responsibilities imposed by, the Agreement, and further acknowledging and
affirming the obligations set forth in 7.13a above.
ARTICLE VIII
Compensation Committee
8.1 The Corporation Board shall establish a permanent
committee of the Board, consisting of at least one Outside Director and one
Inside Director, to be known as the Compensation Committee. The Compensation
Committee shall be responsible for reviewing and approving the Corporation Board
recommendations for the annual compensation of the Corporation's principal
officers, as defined herein.
ARTICLE IX
Annual Review and Certification
9.1 Representatives of DIS, the Corporation Board, the
Corporation's Chief Executive Officer, the Corporation's Chief Financial
Officer, and the FSO shall meet annually to review the purpose and effectiveness
of the Agreement and to establish a common understanding of the operating
requirements and how they will be implemented. These meetings shall include a
discussion of the following:
a. whether the Agreement is working in a satisfactory
manner;
b. compliance or acts of noncompliance with the
Agreement, DISP rules, or other applicable laws and regulations;
c. necessary guidance or assistance regarding problems
or impediments associated with the practical application or utility of the
Agreement; and
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d. whether security controls, practices or procedures
warrant adjustment.
9.2 The Chief Executive Officer of the Corporation and the
Chairman of the DSC shall jointly submit to DIS one year from the effective date
of the Agreement and annually thereafter an implementation and compliance
report. Such reports shall include the following information:
a. a detailed description of the manner in which the
Corporation is carrying out its obligation under the Agreement;
b. a detailed description of changes to security
procedures, implemented or proposed, and the reasons for those changes;
c. a detailed description of any acts of noncompliance,
whether inadvertent or intentional, with a discussion of what steps were taken
to prevent such acts from occurring in the future;
d. a description of any changes, or impending changes,
to any of the Corporation's top management including reasons for such changes;
e. a statement, as appropriate, that a review of the
records concerning all visits and communications between representatives of the
Corporation and the Affiliates have been accomplished and the records are in
order;
f. a detailed chronological summary of all transfers of
classified or controlled unclassified information, if any, from the Corporation
to the Affiliates, complete with an explanation of the United States
Governmental authorization relied upon to effect such transfers. Copies of
approved export licenses covering the reporting period shall be appended to the
report; and
g. a discussion of any other issues that could have a
bearing on the effectiveness or implementation of the Agreement.
ARTICLE X
Duty to Report Violations of the Agreement
10.1 The Parties to the Agreement, except DoD, agree to report
promptly to DIS all instances in which the terms and obligations of the
Agreement may have been violated.
* CONTACTS AND VISITS
ARTICLE XI
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Visitation Policy
11.1 The Chairman of the DSC shall designate an Outside
Director who shall have authority to review, approve, and disapprove requests
for visits(10) to the Corporation by all personnel who represent the Affiliates,
including all of the directors, officers, employees, representatives, and agents
of each, and proposed visits to any Affiliate by all personnel who represent the
Corporation, (including all of its directors, employees, officers,
representatives, and agents, except for the Inside Directors), as well as visits
between or among such personnel at other locations (hereinafter "visit" or
"visits"). A record of all visit requests, including the decisions to approve or
disapprove, and information regarding consummated visits, such as date, place,
personnel involved and summary of material discussion or communication, shall be
maintained by the designated Outside Director and shall be periodically reviewed
by the DSC.
11.2 Except for certain Routine Business Visits, as defined in
Section 11.5 below, all visits must be approved in advance by the Outside
Director designated by the Chairman of the DSC. All requests for visits shall be
submitted or communicated to the FSO for routing to the designated Outside
Director. Although strictly social visits at other locations between the
Corporation personnel and personnel representing the Affiliates are not
prohibited, written reports of such visits must be submitted after the fact to
the FSO for filing with, and review by, the designated Outside Director and the
DSC.
11.3 A written request for approval of a visit must be
submitted to the FSO no less than seven (7) calendar days prior to the date of
the proposed visit. If a written request cannot be accomplished because of an
unforeseen exigency, the request may be communicated via telephone to the FSO
and immediately confirmed in writing; however, the FSO may refuse to accept any
request submitted less than seven (7) calendar days prior to the date of the
proposed visit if the FSO determines that there is insufficient time to consider
the request. The exact purpose and justification for the visit must be set forth
in detail sufficient to enable the designated Outside Director to make an
informed decision concerning the proposed visit, and the FSO may refuse to
accept any request that the FSO believes lacks sufficient information. Each
proposed visit must be individually justified and a separate approval request
must be submitted for each.
11.4 The FSO shall advise the designated Outside Director of a
request for approval of a visit (other than a Routine Business Visit) as soon as
practicable after
--------
(10) As used in the Agreement, the term "visits" includes meetings at any
location within or outside the United States, including but not limited
to any facility owned or operated by the Corporation or any Affiliates,
whether occurring in person or via electronic means, including but not
limited to telephone conversations, teleconferences, video conferences,
or electronic mail.
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receipt of the written request. The designated Outside Director shall evaluate
the request as soon as practicable after receiving it. The Outside Director may
approve or disapprove the request, or disapprove the request pending submittal
of additional information by the requester. The Outside Director's decision
shall be communicated to the requestor by any means and it shall be confirmed in
writing, when practicable, at least one day prior to the date of the proposed
visit, but in no event later than six calendar days after its receipt by the
FSO. A chronological file of all documentation associated with meetings,
visitations, and communications (contact reports), together with records of
approvals and disapprovals, shall be maintained by the FSO for inspection by the
DIS. At the time of each DSC meeting, the Outside Directors of the Corporation
shall review such documentation filed since the last meeting to ensure adherence
to approved procedures by the requesters and the designated Outside Director to
verify that sufficient and proper justification has been furnished for approved
visits.
11.5 Routine Business Visits
a. Routine Business Visits, as defined in 11.5b below,
may be approved by the FSO, in the FSO s discretion, without advance approval by
the designated Outside Director. Requests for Routine Business Visits must be
submitted in advance, and in writing, to the FSO, and shall state the basis upon
which the requester deems the visit to be a Routine Business Visit. Such
requests must include sufficientt information to enable the FSO to make an
informed decision concerning the proposed visit. The FSO, in the FSO's
discretion, may refuse to accept any request that the FSO believes lacks
sufficient information and may refer any request to the designated Outside
Director for evaluation, notwithstanding its designation as a Routine Business
Request. Any request that the FSO believes is not properly characterized as a
Routine Business Visit shall be referred to the designated Outside Director, who
shall evaluate the request in accordance with the terms of the Agreement.
b. Routine Business Visits are in general those that
are made in connection with the regular day-to-day business operations of the
Corporation, do not involve the transfer or receipt of classified information or
controlled unclassified information and pertain only to the commercial aspects
of the Corporation's business. Routine Business Visits include:
(i) Visits for the purpose of discussing or
reviewing such commercial subjects as the following: company performance versus
plans or budgets; inventory, accounts receivable, accounting and financial
controls; business plans and implementation of business plans; and
implementation of technical development programs;
(ii) Visits of the kind made by commercial
suppliers in general regarding the solicitation of orders, the quotation of
prices, or the provision of products and services on a commercial basis;
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(iii) Visits concerning fiscal, financial, or
legal matters involving compliance with the requirements of any foreign or
domestic governmental authority responsible for regulating or administering the
public issuing of or transactions involving stock and securities; and
(iv) Visits concerning marketing and technical
activities relating to the import or export of products requiring compliance
with regulations of United States departments or agencies, including but not
limited to the Departments of Defense, Commerce, State, and Treasury.
11.6 Special Provision Concerning Subsidiaries
Anything to the contrary notwithstanding, the notice and
approval of visitation restrictions contemplated in the Agreement shall not
apply to visits between the Corporation and its subsidiaries. However, visits
between the Corporation's subsidiaries and any Affiliate shall be subject to the
visitation approval procedures set forth herein.
11.7 Discretion to Alter Notice or Approval Requirements
Anything foregoing to the contrary notwithstanding, the
DSC, in its reasonable business discretion and consistent with its obligations
to safeguard classified information and controlled unclassified information in
the Corporation's possession may, with the approval of DIS:
a. designate specific categories of visit requests
other than those enumerated above as "Routine Business Visits" not requiring the
advance approval of the designated Outside Director; or
b. determine that, due to extraordinary circumstances
involving the security of classified information and/or controlled unclassified
information, certain specific types of visits which that might otherwise be
considered "Routine Business Visits" under the terms of the Agreement are to be
allowed only if the approval of the designated Outside Director is obtained in
advance.
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11.8 Maintenance of Records for DIS Review
A chronological file of all visit requests, reports of
visits, and contact reports, together with appropriate approvals or disapprovals
pursuant to the Agreement shall be maintained by the DSC for review by DIS.
* REMEDIES
ARTICLE XII
DoD Remedies
12.1 DoD reserves the right to impose any security safeguard
not expressly contained in the Agreement that it believes is necessary to ensure
that the Affiliates are denied unauthorized access to classified and controlled
unclassified information.
12.2 Nothing contained in the Agreement shall limit or affect
the authority of the head of a United States Government agency(11) to deny,
limit or revoke the Corporation's access to classified and controlled
unclassified information under its jurisdiction if the national security
requires such action.
12.3 The Parties hereby assent and agree that the United
States Government has the right, obligation and authority to impose any or all
of the following remedies in the event of a material breach of any term of the
Agreement:
a. The novation of the Corporation's classified
contracts to another contractor. The costs of which shall be borne by the
Corporation;
b. The termination of any classified contracts being
performed by the Corporation and the denial of new classified contracts for the
Corporation;
c. The revocation of the Corporation's facility
security clearance;
d. The suspension or restriction of any or all
visitation privileges; and
e. The suspension and debarment of the Corporation
from participation in all Federal government contracts, in accordance with the
provisions of the Federal Acquisition Regulations.
12.4 Nothing in the Agreement limits the right of the United
States Government to pursue criminal sanctions against the Corporation, or any
Affiliates, or any director, officer, employee, representative, or agent of any
of these companies, for violations of the criminal laws of the United States in
connection with their
--------
(11) The term "agency" has the meaning provided at 5 United States Code
552(f).
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performance of any of the obligations imposed by this Agreement, including but
not limited to any violations of the False Statements Act 18 U.S.C. 1001, or the
False Claims Act 18 U.S.C. 287.
* ADMINISTRATION
ARTICLE XIII
Notices
13.1 All notices required or permitted to be given to the
Parties to the Agreement shall be given by mailing the same in a sealed postpaid
envelope, via registered or certified mail, or sending the same by courier or
facsimile, addressed to the addresses shown below, or to such other addresses as
the Parties may designate from time to time pursuant to this Section:
For the Corporation: Fiberite, Inc.
0000 X. Xxxxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
For the Parent Corporation: Fiberite Holdings, Inc.
x/x XXX Merchant Banking, Inc.
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
For DIS: Defense Investigative Service
Department of Defense
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
For AXA: AXA
00 Xxxxxx Xxxxxxxx
00000 Xxxxx, Xxxxxx
ATTN; Xxxxxxxxx Xxxx, Central
Legal Department
For the Equitable Companies
Incorporated: The Equitable Companies Incorporated
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ATTN: Xxxxxxx Xxxxxxxxx
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For Xxxxxxxxx, Lufkin &
Xxxxxxxx, Inc.: Xxxxxxxxx, Lufkin & Xxxxxxxx, Inc.
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ATTN: Xxx Xxxxxxx
For DLJ Capital Investors, Inc.: DLJ Capital Investors, Inc.
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ATTN: Xxx Xxxxxxx
For DLJ Merchant Banking, Inc.: DLJ Merchant Banking, Inc.
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ATTN: Xxxx X. Xxxxxx
ARTICLE XIV
Inconsistencies with Other Documents
14.1 In the event that any resolution, regulation or bylaw of
any of the Parties to the Agreement is found to be inconsistent with any
provision hereof, the terms of the Agreement shall control.
ARTICLE XV
Government Law; Construction
15.1 The Agreement shall be implemented so as to comply with
all applicable United States laws and regulations. To the extent consistent with
the right of the United States hereunder, the laws of the State of Delaware
shall apply to questions concerning the rights, powers, and duties of the
Corporation and the Parent Corporation under, or by virtue of, the Agreement.
15.2 In all instances consistent with the context, nouns and
pronouns of any gender shall be construed to include the other gender.
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* TERMINATION
ARTICLE XVI
Termination, Amendment and
Interpretations of the Agreement
16.1 The Agreement may only be terminated by DIS as follows:
a. in the event of a sale of the business or all the
Shares to a company or person not under FOCI;
b. when DIS determines that existence of the Agreement
is no longer necessary to maintain a facility security clearance for the
Corporation;
c. when DIS determines that continuation of a facility
security clearance for the Corporation is no longer necessary;
d. when DoD determines that there has been a breach of
the Agreement that requires it to be terminated or when DoD otherwise determines
that termination is in the national interest;
e. ten (10) years from the effective date of the
Agreement if, at least ninety (90) days before that date, the Parent Corporation
and the Corporation petition DIS to terminate the Agreement;
f. when the Parent Corporation and the Corporation for
any reason and at any time petition DIS to terminate the Agreement. However, DIS
has the right to receive full disclosure of the reason or reasons therefor, and
has the right to determine, in its sole discretion, whether such petition should
be granted.
16.2 If DoD determines that the Agreement should be terminated
for any reason, DIS shall provide the Corporation and the Parent Corporation
with thirty (30) days written advance notice of its intent and the reasons
therefor.
16.3 The DoD is expressly prohibited from causing a
continuation or discontinuation of the Agreement for any reason other than the
national security of the United States.
16.4 The Agreement may be amended by an agreement in writing
executed by all the Parties.
16.5 The Parties agree that with respect to any questions
concerning interpretations of the Agreement, or whether a proposed activity is
permitted under the Agreement, shall be referred to DIS and the DoD shall serve
as final arbiter/interpreter of such matters.
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ARTICLE XVII
Place of Filing
17.1 Until the termination of the Agreement, one original counterpart
shall be filed at the principal office of the Corporation, located in Tempe,
Arizona, and such counterpart shall be open to the inspection of the Parent
Corporation during normal business hours.
* EXECUTION
The Agreement may be executed in several counterparts, each of which
shall be deemed to be an original, and all of such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, the Parties hereto have duly executed the Agreement
which shall not become effective until duly executed by the DoD.
AXA
/s/ By /s/
_________________________________ _____________________________________
Signature of Witness Name: Xxxxxx Xxxxxx
Title: Chairman & Chief
Executive Officer
The Equitable Companies Incorporated
/s/ By /s/ Xxxxxx X. Xxxxxx
_________________________________ _____________________________________
Signature of Witness Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
and Deputy Council
Xxxxxxxxx, Lufkin & Xxxxxxxx, Inc.
/s/ By /s/
_________________________________ _____________________________________
Signature of Witness Name:
Title:
DLJ Capital Investors, Inc.
/s/ By /s/
_________________________________ _____________________________________
Signature of Witness Name:
Title:
-00-
00
XXX Xxxxxxxx Xxxxxxx,Xxx.
/s/ By /s/
_____________________________________ _____________________________________
Signature of Witness Name:
Title:
Fiberite, Inc.
/s/ By /s/ Xxxxx Caredo
_____________________________________ _____________________________________
Signature of Witness Name:
Title:
Fiberite Holdings, Inc.
/s/ By /s/ Xxxx X. Xxxxxx
_____________________________________ _____________________________________
Signature of Witness Name:
Title:
THE DEPARTMENT OF DEFENSE
By /s/
_____________________________________ _____________________________________
Signature of Witness Name:
Title:
Effective Date 4/9/96
------------------------
(Date of DoD signature)
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