Exhibit 10.15
ALLIANT TECHSYSTEMS
INC.
EMPLOYMENT
AGREEMENT
with
Daniel J. Murphy,
Jr.
This Employment Agreement (the
“Agreement”), dated as of February 1, 2004, is entered
into by and between Alliant Techsystems Inc., a Delaware
corporation (the “Company”), and Daniel J. Murphy, Jr.,
a resident of Minnesota (“you”, “your”, the
“Executive”).
RECITALS:
WHEREAS , the Company desires to continue to employ you,
and you desire to continue in the employment of the Company upon
the terms and conditions and in the capacities set forth
herein;
NOW, THEREFORE
, in consideration of the premises
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and you
hereby agree as follows:
1.
Employment and Term of
Employment. Subject to the terms and conditions of this
Agreement, the Company hereby agrees to employ you, and you hereby
agree to serve the Company, as Chief Executive Officer of the
Company for a term beginning on February 1, 2004 (the
“Effective Date”) and ending on March 31, 2007 (the
“Expiration Date”), with the term from the Effective
Date through the Expiration Date being the “Term of
Employment”. The foregoing notwithstanding, if either
party gives a valid Notice of Termination pursuant to Section 6
hereof, the Term of Employment shall not extend beyond the
expiration date specified in such Notice of Termination. If
neither you nor the Company give written notice to the other prior
to the Expiration Date, this Agreement shall automatically renew
for additional one year periods. These automatic renewals may
occur only three times after the original Expiration Date, making
the last renewal with an expiration date of March 31, 2010.
Any renewal period under this Section 1, shall extend the Term of
Employment for that additional one-year period. If the
Agreement is renewed, the “Expiration Date” shall be
March 31 of that additional one-year period.
2.
Scope of
Employment.
During the Term of Employment you
shall have and may exercise all the powers, duties and functions as
are normal and customary for the Chief Executive Officer and that
are consistent with the responsibilities set forth with respect to
such positions in the Company’s bylaws, and you shall also
perform such other duties not inconsistent with such positions as
are assigned to you, from time to time, by the Board of Directors
of the Company (the “Board”). During the Term of
Employment, you shall devote substantially all of your business
time, attention, skill and efforts to the faithful performance of
your duties hereunder. You may serve on up to two non-Company
boards of directors, provided these boards are not in conflict with
the Company or your service as a member of the Company’s
Board, and the Board has approved them.
3.
Compensation.
During the Term of Employment, in consideration
of your services hereunder, including, without limitation, service
as an officer or director of the Company or of any subsidiary or
affiliate thereof:
(a)
Starting on February 1, 2004, you
shall receive a salary at the rate of $700,000 per year (payable at
such regular intervals as other employees of the Company are
compensated in accordance with the Company’s employment
practices, but not less than monthly), which amount shall be
subject to review by the Board from time to time but not less than
once a year after January 1, 2005, and may be adjusted at its
direction, provided that such salary may not be reduced during the
Term of Employment. Any subsequent adjustments will take
place on or after April 1, 2005, in the regular compensation cycle
of the Company. In addition, the Company shall reimburse you
for your reasonable and documented expenses incurred in connection
with the business of the Company in accordance with the
Company’s normal procedures.
(b)
You shall be eligible to participate
in certain long-term performance incentive programs as determined
by the Board from time to time. Including eligibility to
participate in stock and stock option incentive programs. The
Board shall review your participation in such programs annually
after January 1, 2005.
(c)
All Company shares delivered to you
pursuant to this Section 3 or otherwise pursuant to this Agreement
or your employment shall be subject to such conditions on transfer
as may be required under the Securities Act of 1933, as amended
(the “Act”) and may bear a legend to such
effect.
(d)
The Company shall pay you an annual
incentive bonus (“Incentive Bonus”) in each fiscal year
of the Company during which you are (1) employed by the Company for
at least three months during such fiscal year, and (2) the
Company’s performance during that fiscal year equals or
exceeds the performance goals set by the Board for such fiscal
year. The Incentive Bonus shall be governed by and paid out
in accordance with the Alliant Techsystems Inc. Management
Compensation Plan (as restated effective April 1, 2002) and the
Executive Incentive Program (EIP) (together the “Management
Compensation Plan”). It is understood that this plan
may be changed from time to time. The Incentive
Bonus for your performance as Chief Executive Officer for the
Company’s fiscal year ending March 31, 2004 shall be as
follows:
•
For the period from 10/1/03 to
1/31/04, bonus of $420,000 if the Company achieves the target
performance goals set by the Board for such fiscal year and
$840,000 if and to the extent the Company achieves a level of
performance defined by the Board as
“outstanding”. This Incentive Bonus for FY04
shall be prorated by 4/12 th .
•
For the period from 2/1/04 –
3/31/04, bonus of $500,000 if the Company achieves the target
performance goals set by the Board for such fiscal year and
$1,000,000 if and to the extent the Company achieves a level of
performance defined by the Board as
“outstanding”. This Incentive Bonus for FY04
shall be prorated by 2/12 th .
Your Incentive Bonus for the fiscal year ending
March 31, 2005 shall consist of $500,000 if the Company achieves
the target performance goals set by the Board for such fiscal year
and $1,000,000 if and to the extent the Company achieves a level of
performance defined by the Board as “outstanding” (or a
prorated amount if you are employed for less than 12 months during
the fiscal year). For years ending after April 1, 2005 the
Incentive Bonus amount shall be subject to review by the Board and
may be adjusted at its discretion.
(e)
Your incentive bonus as Group V.P.
shall be prorated for FY04 by 6/12 th for your period of
performance as Group Vice President – Precision Systems and
paid in accordance with the Management Compensation
Plan.
(f)
You agree that the Company may, at
its sole discretion, defer any compensation including but not
limited to salary, bonuses, and stock awards, but excluding SERP
payments subject to Section 4(b) of this Agreement, that are not
fully deductible for federal or state income tax purposes.
The Company will defer only those amounts that would exceed the
deductibility levels under federal or state income tax laws.
Such deferrals would be into the Alliant Techsystems Inc.
Nonqualified Deferred Compensation Plan, as amended from time to
time, or any subsequent Company sponsored management compensation
deferral plan.
4.
Additional Compensation and
Benefits .
(a)
As additional compensation for your
service under this Agreement during the Term of Employment, the
Company agrees to provide you with the non-cash benefits provided
by the Company to its other officers and key employees as they may
exist from time to time (other than stock options and equity
compensation). It is understood that such benefits may change
from time to time in the Company’s discretion. Such benefits
shall include leave or paid time off (“PTO”)/vacation
time, medical and dental insurance and other health care benefits,
the Company’s basic term life insurance, and retirement and
disability benefits as may hereafter be provided by the Company in
accordance with its policies. If the Company’s basic
term life insurance benefit for you is not $1,000,000, the Company
shall provide you additional basic term life insurance coverage up
to a benefit of $1,000,000 payable to a beneficiary or
beneficiaries selected by you. Except as otherwise provided
in this Agreement, payments and benefits under any program that
provides for payments and benefits after termination of employment
will be paid or provided to you under the terms of such program
during periods following the Term of Employment.
(b)
(i)
SERP . If your employment hereunder
automatically terminates on the Expiration Date, you will be
provided with monthly retirement benefits under a nonqualified
supplemental executive retirement plan (SERP), subject to the
following terms:
(A)
Normal Form of Payments to
You . The first
SERP payment will be due on the first day of the calendar month
following your termination of employment; and the last SERP payment
will be due on the first day of the calendar month in which you die
(taken together, this is the Normal Form of payment).
(B)
Amount of Payments
. The monthly amount of each
SERP payment paid in the Normal Form will be the following
percentage (your SERP Percentage) of your Final Average Earnings,
reduced by the monthly
amount payable to you under the
Aliant Techsystems Inc. Pension and Retirement Plan, Pension Equity
Plan formula, or any successor plan (the “ATK Pension
Plan”), assuming that you receive monthly benefits from the
ATK Pension Plan in the Normal Form:
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If your termination of
employment is:
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Your SERP Percentage
Is:
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|
|
|
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On or after March 31,
2004
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|
|
|
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and before March 31, 2005
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5
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%
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|
|
|
|
|
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On or after March 31,
2005
|
|
|
|
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and before March 31, 2006
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|
15
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%
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|
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|
|
|
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On or after March 31,
2006
|
|
|
|
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and before March 31, 2007
|
|
25
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%
|
|
|
|
|
|
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On or after March 31,
2007
|
|
|
|
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and before March 31, 2008
|
|
35
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%
|
|
|
|
|
|
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On or after March 31,
2008
|
|
|
|
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and before March 31, 2009
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|
45
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%
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|
|
|
|
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On or after March 31,
2009
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|
|
|
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and before March 31, 2010
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50
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%
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|
|
|
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On or after March 31,
2010
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|
|
|
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and before March 31, 2011
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52.5
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%
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|
|
|
|
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On or after March 31,
2011
|
|
55
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%
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Nothing in this Section 4 shall be
deemed to constitute a commitment by the Company to employ you for
any particular length of time.
(C)
Determination of Final Average
Earnings . For
purposes of determining the amount of your SERP payments, your
Final Average Earnings is the monthly average of your highest
60 consecutive calendar months of Earnings you received under
this Agreement in the 120 consecutive calendar months
preceding your termination of employment. If you have less
than 120 but more than 60 consecutive calendar months of
employment under this Agreement preceding your termination of
employment, then such period of employment shall be used instead of
120 months. If you have 60 or fewer consecutive
calendar months of employment under this Agreement preceding your
termination of employment, then such period shall be used instead
of 60 months (and the 120-month rule will be
disregarded). For this purpose, partial calendar months of
continuous employment shall be disregarded. Earnings shall
have the same meaning as Earnings under the ATK Pension Plan, which
include earnings that, at your election, have been contributed to
any Company-sponsored Section 401(k) or Section 125 or similar plan
or have been deferred under any Company-sponsored nonqualified
deferred compensation plan. Such Earnings will be included in the
month they would otherwise have been paid to you.
All other compensation, including
any Company stock or in-kind compensation, and related cash
payments (such as tax gross-ups), will be disregarded in
determining Earnings.
(D)
Forfeiture if not
Vested . Except as
otherwise provided in this Section 4(b), if you do not have at
least five (5) years of continuous employment with the Company on
your termination of employment, you will not receive the SERP
payments. For this purpose, employment with the Company
before the Effective Date is included.
(E)
Reduction for Early
Commencement . If
your SERP payments are due to begin before April 1, 2008, the
amount determined in (B) above will be reduced by 1/2% for each
month that your beginning due date precedes April 1,
2008.
(F)
Optional Forms of
Payments. Notwithstanding the foregoing, if you elect a
form of payment under the ATK Pension Plan other than the Normal
Form (including any form that has survivor benefits), then the SERP
payments will also be paid in such form, with the amount of
payments being the actuarial equivalent of the Normal Form
calculated by using the actuarial assumptions then specified in the
ATK Pension Plan, except:
(1)
the discount (or interest) rate will
be the greater of (i) the rate specified in the then current
Alliant Techsystems Inc. Supplemental Executive Retirement Plan
(which may be changed or amended) (“ATK SERP”), or (ii)
6%; and
(2)
any reduction for early commencement
will be determined under Section 4(b)(i)(E) above.
(ii)
Effect of Termination by Company
Without Cause . If
the Company terminates your employment without Cause as defined in
Section 6(c) below (which does not include a termination as a
result of a change in control which is covered by paragraph
4(b)(vi)), then you will receive SERP payments, subject to the
following terms:
(A)
Normal Form of Payments to
You . The first
SERP payment (calculated under Section 4(b)(i) as modified by
the following terms of this Section 4(b)(ii)) will be due to you on
the first day of the calendar month following your termination of
employment without Cause; the last SERP payment will be due to you
on the first day of the calendar month in which you die (taken
together, this is the Normal Form of payment).
(B)
No Additional Service
Credit . Your termination
of employment for purposes of calculating your SERP Percentage
under Section 4(b)(i)(B) above will be the date of your
termination of employment without Cause. Specifically, it
will not be assumed that you remained employed by the Company
continuously from such date to the Expiration Date.
(C)
No Additional Final Average
Earnings . For
purposes of determining your Final Average Earnings under Section
4(b)(i)(C) above, the calculation will be made as of the date of
your termination of employment without Cause. Specifically,
any Earnings received by you after such date will be disregarded
and no Earnings will be attributed to the period from such date to
the Expiration Date.
(D)
Full Vesting
. Notwithstanding the
provisions of Section 4(b)(i)(D) above, you will be fully vested in
your SERP benefit.
(E)
Full Reduction for Early
Commencement . Any
reduction for early commencement under Section 4(b)(i)(E) above
will be determined by using the actual due date for commencement of
payments (that is, the first day of the calendar month following
your termination of employment without Cause). Specifically,
it will not be assumed that your SERP benefit begins on the first
day of the month following the Expiration Date.
(F)
Optional Form of
Payment.
Notwithstanding the foregoing, if you elect a form of payment under
the ATK Pension Plan other than the Normal Form (that is, other
than a fixed life annuity beginning on the first day of the
calendar month following your termination of employment without
Cause), the SERP payments will also be paid in such form, with the
amount of payments being the actuarial equivalent of the Normal
Form calculated by using the actuarial assumptions then specified
in the ATK Pension Plan, except:
(1)
the discount (or interest) rate will
be the greater of (i) the rate specified in the ATK SERP, or (ii)
6%; and
(2)
any reduction for early commencement
will be determined under Section 4(b)(ii)(E) above.
(iii)
Effect of Termination by You for
Good Reason . If
you terminate employment for Good Reason as defined in
Section 4(b)(xiv) below (other than a Qualifying Termination,
as then defined in the Company’s Income Security Plan), then
you will receive SERP payments, subject to the following
terms:
(A)
Normal Form of Payments to
You . The first
SERP payment (calculated under Section 4(b)(i) as modified by
the following terms of this Section 4(b)(iii)) will be due to you
on the first day of the calendar month following your termination
of employment for Good Reason; and the last SERP payment will be
due on the first day of the calendar month in which you die (taken
together, this is the Normal Form of payment).
(B)
No Additional Service
Credit . Your termination
of employment for purposes of calculating your SERP Percentage
under Section 4(b)(i)(B) above will be the date of your termination
of employment for Good Reason. Specifically, it will not be
assumed that you remained employed by the Company continuously from
such date to the Expiration Date.
(C)
No Additional Final
Average Earnings .
For purposes of determining your Final Average Earnings under
Section 4(b)(i)(C) above, the calculation will be made as of the
date of your termination of employment for Good Reason.
Specifically, any Earnings received by you after such date will be
disregarded and no Earnings will be attributed to the period from
such date to the Expiration Date.
(D)
Full Vesting
. Notwithstanding the
provisions of Section 4(b)(i)(D) above, you will be fully vested in
your SERP benefit.
(E)
Full Reduction for Early
Commencement . Any
reduction for early commencement under Section 4(b)(i)(E) above
will be determined by using the actual due date for commencement of
payments (that is, the first day of the calendar month following
your termination of employment for Good Reason).
Specifically, it will not be assumed that your SERP benefit begins
on the first day of the month following the Expiration
Date.
(F)
Optional Forms of
Payment.
Notwithstanding the foregoing, if you elect a form of payment under
the ATK Pension Plan other than the Normal Form (that is, other
than a fixed life annuity beginning on the first day of the
calendar month following your termination of employment without
Cause), the SERP payments will also be paid in such form, with the
amount being calculated by using the actuarial assumptions then
specified in the ATK Pension Plan, except:
(1)
the discount (or interest) rate will
be the greater of (i) the rate specified in the ATK SERP, or (ii)
6%; and
(2)
any reduction for early commencement
will be determined under Section 4(b)(iii)(E)
above.
(iv)
Effect of Termination by You for
Other Than Good Reason . Notwithstanding any other provision of
this Section 4(b), if you terminate employment with the
Company before March
