Exhibit 10.26
SEPARATION
AGREEMENT
AND
GENERAL RELEASE OF
CLAIMS
This Separation Agreement and General Release of
Claims (“Agreement” or “General Release”)
is made and entered into by and between Eric S. Rangen, on behalf
of his agents, assigns, heirs, executors, administrators, attorneys
and representatives (“Mr. Rangen”), and Alliant
Techsystems Inc., a Delaware corporation, any related corporations
or affiliates, subsidiaries, predecessors, successors and assigns,
present or former officers, directors, stockholders, board members,
agents, employees, and attorneys, whether in their individual or
official capacities, delegates, benefit plans and plan
administrators, and insurers (“Company” or
“ATK”).
WHEREAS, Mr. Rangen’s employment shall end
as provided in this General Release. In consideration of Mr. Rangen
signing and complying with this General Release, ATK agrees to
provide Mr. Rangen with certain payments and other valuable
consideration described below. Further, ATK and Mr. Rangen desire
to resolve and settle any and all potential disputes or claims
related to his employment or termination of employment.
WHEREAS, ATK has expended significant time and
money on promotion, advertising, and the development of goodwill
and a sound business reputation through which it has developed a
list of customers and spent time and resources to learn the
customers’ needs for ATK’s services and products. This
information is valuable, special and unique assets of ATK’s
business, which Mr. Rangen acknowledges constitutes confidential
information.
WHEREAS, ATK has expended significant time and
money on technology, research, and development through which it has
developed products, processes, technologies and services that are
valuable, special and unique assets of ATK’s business, which
Mr. Rangen acknowledges constitute confidential
information.
WHEREAS, the disclosure to or use by third
parties of any of ATK’s confidential or proprietary
information, trade secrets, or Mr. Rangen’s unauthorized use
of such information would seriously harm ATK’s business and
cause monetary loss that would be difficult, if not impossible, to
measure.
THEREFORE, ATK and Mr. Rangen (the
“Parties”) mutually agree to the following terms and
conditions:
1.
Termination of
Employment . The Parties
agree that Mr. Rangen’s employment with ATK is terminated
effective March 31, 2006.
1
(a)
Final
Paycheck. ATK will pay Mr. Rangen for
all salary earned through the effective date of the termination of
his employment with ATK. ATK will also pay for any accrued,
but unused vacation/PTO of Mr. Rangen. Mr. Rangen’s
continuing rights, if any, under all other ATK employee benefits
plans will be governed by those plans.
(b)
Executive
Incentive Plan. Mr. Rangen will be eligible
to receive an Executive Incentive Plan (EIP) payment for
Fiscal-Year 2006. This payment will be based solely on the actual
corporate financial performance achieved, as established in the
beginning of such fiscal year, with no discretionary adjustment
made to it. This amount will be paid in a single lump sum payment
in cash (or deferred if previously elected) at the time all other
EIP participants receive payment.
(c)
Deferred
Compensation . Any compensation Mr. Rangen
deferred under the Alliant Techsystems Inc. Nonqualified Deferred
Compensation Plan (or predecessor plans) shall be paid in
accordance with his pre-selected distribution options and the terms
of that plan.
2.
Severance Benefits
. In exchange for Mr. Rangen’s
promises contained herein, ATK will provide Mr. Rangen with the
severance benefits contained in the Executive Severance Plan and
with any additional benefits identified in this Paragraph 2
(together referred to as “Severance
Benefits”):
(a)
Severance
Pay. ATK will pay Mr. Rangen a
single lump-sum severance payment in the amount of $550,400, which
is equal to twelve months of his base salary and one year annual
target cash bonus. This severance payment will be subject to all
applicable withholdings and will be taxable as payroll wages. No
401(k) deductions will be taken from the payment nor is it
pensionable earnings (for example, it is not “Earnings”
or “Recognized Compensation”) for purposes of any ATK
qualified or non-qualified employee benefits plans.
(b)
Restricted
Stock. Mr. Rangen does not have any
unvested and outstanding shares of restricted stock.
(c)
Performance
Share Incentive Stock. In accordance with Mr.
Rangen’s Performance Award Agreement, dated August 2, 2005,
Mr. Rangen understands that he will receive a prorated number of
the performance shares that were granted to him, based on the
amount of active service time during the applicable fiscal year
2005-2007 three-year period (two-thirds). Mr. Rangen further
understands that ATK will make payment of these shares to Mr.
Rangen following the completion of the performance period. ATK
currently expects that payment to be in May 2007, and that the
amount of the payment depends on whether and to what extent ATK
meets the objectives set when that performance share grant was
made.
(d)
Stock
Options. Any unvested (not
exercisable) stock options will vest and become exercisable as of
Mr. Rangen’s termination date. In accordance with Mr.
Rangen’s Non-qualified Stock Option Agreements, all stock
options that are exercisable on Mr. Rangen’s termination date
remain exercisable until the earlier of (i) the
option’s expiration date under the
2
applicable Non-qualified
Stock Option Agreement, or (ii) three years from Mr. Rangen’s
termination date.
(e)
Additional
Lump Sum. ATK will pay Mr. Rangen a
lump-sum payment in the amount of $15,000.00, less ordinary tax and
other applicable withholdings, to offset the cost of continuing
health care coverage.
(f)
Financial
Planning. ATK will pay Mr. Rangen
$24,000, less ordinary tax and other applicable withholdings, for
continued financial planning services in lieu of company provided
financial planning services.
(g)
Outplacement
Services. Mr. Rangen will be entitled
to participate in executive level outplacement services through Lee
Hecht Harrison. These services are provided for a six month period
which may start at Mr. Rangen’s election, but will continue
no later than December 31, 2006, whether or not the full six months
have been used.
(h)
Independent
Consideration. Mr. Rangen understands and
agrees that he is only eligible for Severance Benefits in the event
he signs this General Release, does not rescind/revoke this General
Release, and submits a letter confirming no rescission/revocation.
Mr. Rangen acknowledges that he is not otherwise entitled to
receive such additional and valuable consideration. Except as
otherwise provided in Paragraph 8 and 10, by Mr. Rangen’s
signature on this General Release, he waives all rights he may have
to any other benefits or cash payment, unless such waiver is
prohibited by law. Further, Mr. Rangen agrees that these Severance
Benefits are adequate consideration for the promises
herein.
(i)
Delivery of
Severance Pay and Cash Benefits. ATK shall deliver to Mr.
Rangen the cash amounts under Paragraphs 2(a), (e), and (f)
promptly after October 1, 2006, provided that the applicable
rescission period has elapsed. This delivery date may be delayed
further if necessary to comply with Section 409A of the U.S.
Internal Revenue Code of 1986, as amended from time to time but in
any event the delivery date shall not be extended beyond 30 days of
the earliest date permitted by Section 409A.
3.
Post Employment
Restrictions.
(a)
Confidentiality and
Non-Disparagement . Mr.
Rangen acknowledges that in the course of his employment with ATK,
he has had access to confidential information and trade secrets.
Mr. Rangen agrees to maintain the confidentiality of ATK’s
confidential information and trade secrets. He will not disclose or
otherwise make available to any person, company, or other party
confidential information or trade secrets. Further, Mr. Rangen
agrees not to make any disparaging or defamatory comments about any
ATK employee, director, or officer, the Company, or any aspect of
his employment or termination from employment with ATK. ATK and its
officers agree not to make any disparaging or defamatory comments
about Mr. Rangen. Nothing in this Section 3(a) shall prevent or
restrict ATK or Mr. Rangen from providing truthful information or
testimony in response to a valid subpoena issued by a court of
competent jurisdiction or as otherwise required by law.
3
(b)
Competition
Restrictions. From April
1, 2006 through March 31, 2007, Mr. Rangen agrees he will not
directly or indirectly, personally engage in, nor own, manage,
operate, join, control, consult with, participate in the ownership,
operation or control of, or be employed by any of the companies
listed on Exhibit A of this Agreement, unless he has received
express written consent by the Chief Executive Officer of ATK. In
such event, ATK may provide to such company written notice of any
confidentiality or non-disclosure agreements Mr. Rangen has with
ATK.
(c)
Non-solicitation.
From April 1, 2006 through March 31,
2007, Mr. Rangen will not, directly or indirectly solicit any of
ATK’s employees for the purpose of hiring them or inducing
them to leave their employment with ATK, nor will he provide any
person or entity with information regarding ATK employees for the
purpose of allowing that person or entity to solicit any of
ATK’s employees for hire or to leave their employment with
ATK.
(d)
Breach of Post-Employment
Restrictions. If Mr.
Rangen breaches any provisions of this General Release, he
understands and agrees that ATK may discontinue any remaining
Severance Benefits. He further agrees that if he commits such a
breach, ATK will be e
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