- 4 -
TERMS AND CONDITIONS OF EMPLOYMENT
LEROY A. DACK
April 16, 1999
This will confirm the terms and conditions of your
employment with Fairchild Fasteners, a division of Fairchild
Holding Corp., a subsidiary of The Fairchild Corporation.
Commencement The first date following The Fairchild
Corporation's acquisition of Kaynar
Date: Technologies Inc.
Position: Your position will be Senior Vice President
and Chief Operating Officer, U.S. Operations of
Fairchild Fasteners.
Duties: You shall report to Eric Steiner,
President of Fairchild Fasteners, and perform such
duties and assume such responsibilities as may be
consistent with your position and as the President
of Fairchild Fasteners or the Board of Directors
of The Fairchild Corporation may determine from
time to time.
You agree to devote substantially all
of your time, energy and ability to the business
of Fairchild Fasteners. However, you may, upon
approval of the President of Fairchild Fasteners,
serve as a director or trustee of other
corporations or businesses, provided that they are
not in competition with the business of Fairchild
Fasteners or any affiliate of The Fairchild
Corporation, and provided that your service does
not materially interfere with your duties to
Fairchild Fasteners.
Base Salary: Your base salary ("Base Salary") will be at a
rate not less than $195,000 per year, payable
weekly in accordance with Fairchild Fasteners'
usual payroll policies.
Performance Bonus: You will be eligible to participate in the
Fairchild Fasteners Executive Bonus Plan at a
target bonus of 90% of your Base Salary ("Target
Bonus"). The Fairchild Fasteners Executive Bonus
Plan is a performance-based incentive program that
provides a yearly payout equal to the target rate
when specified financial and personal goals are
met. The plan, and its targets and goals, may be
modified, increased, reduced or terminated from
time to time and at any time by Compensation and
Stock Option Committee of the Board of Directors
of The Fairchild Corporation.
Stock Options: You will be eligible for consideration under
The Fairchild Corporation's 1986 Non-Qualified and
Incentive Stock Option Plan, as amended. Stock
options are granted on a discretionary basis under
this plan, and you will be eligible to receive
stock options as deemed appropriate. The
President of Fairchild Fasteners will recommend to
the Compensation and Stock Option Committee of the
Board of Directors of The Fairchild Corporation
that you be awarded during your first year of
employment with Fairchild Fasteners an option to
purchase up to 10,000 shares of The Fairchild
Corporation's common stock.
Housing: Fairchild Fasteners will provide you with an
apartment located near its executive offices in
Torrance, California, to be reasonably agreed upon
by Fairchild Fasteners and you, for up to one
year.
Relocation: If you relocate your household to an area
near Fairchild Fasteners' executive offices in
Torrance, California within one year of your
commencement of employment with Fairchild
Fasteners, Fairchild Fasteners will reimburse you
for reasonable expenses you may incur in
connection with the relocation, in accordance with
Fairchild Fasteners' relocation policy.
Company Car: Fairchild Fasteners will provide you with
$950 per month in lieu of a company car, and will
reimburse you for reasonable expenses you may
incur in connection with its use for business
purposes, in accordance with Fairchild Fastener's
applicable policies and procedures
Business Expenses: Fairchild Fasteners will reimburse you for
reasonable business-related expenses that you may
incur in connection with the performance of your
duties to Fairchild Fasteners, in accordance with
Fairchild Fasteners' applicable policies and
procedures.
Vacation: Vacation will accrue based on the date of
your hire by Kaynar Technologies Inc. and its
affiliates, in accordance with Fairchild
Fasteners' vacation policies and procedures.
Other Benefits: You will be eligible to participate in
all of the employee benefit plans generally
available to employees of Fairchild Fasteners
under its Flexible Benefits Program, all on terms
and conditions commensurate with executive
officers of Fairchild Fasteners at your level.
These employee benefit plans include sick leave,
group health and dental insurance plans, a pension
plan, a retiree medical plan, a long term
disability plan, a savings (401(k)) plan, and life
insurance. You will receive credit for your prior
service with Kaynar Technologies Inc. and its
affiliates for purposes of determining vesting of
benefits under Fairchild Fasteners' 401(k) and
pension plans. You will not receive credit for
your prior service with Kaynar Technologies Inc.
and its affiliates for purposes of calculating the
amount of benefits under any pension or post-
retirement medical plan.
Physical Exam: Fairchild Fasteners' offer of employment to you is
subject to your passing a company paid physical
examination, including drug and alcohol testing,
within one month of your commencement of
employment with Fairchild Fasteners.
At Will Employment: You acknowledge and understand that Fairchild
Fasteners is an At Will employer, and you
acknowledge and agree that your employment may
therefore be terminated at any time for any reason
by you or Fairchild.
Termination: If Fairchild Fasteners terminates your
employment for any reason other than Cause (as
defined below), or you terminate your employment
for Good Reason (as defined below), you shall be
entitled to receive a lump-sum severance payment
equal to six months of your Base Salary plus 50
percent (50%) of your Target Bonus, subject to
normal withholding amounts.
Cause: Cause means any of the following: (i)
conduct, at any time, which has involved criminal
dishonesty, conviction of any felony, or
conviction of any lesser crime or offense
involving the property of Fairchild Fasteners, or
any of its subsidiaries or affiliates, (ii)
significant conflict of interest, (iii)
misappropriation of any money or other assets or
properties of Fairchild Fasteners, or that of its
subsidiaries or affiliates, (iv) willful violation
in any material respect of specific and written
lawful directions from the President of Fairchild
Fasteners or the Board of Directors of The
Fairchild Corporation that are consistent with and
clearly within the duties of your office, (v)
willful misconduct or gross negligence in
connection with the performance of any of your
material duties, (vi) chronic alcoholism or drug
addiction, (vii) any other acts or conduct which
would constitute a material breach of your
obligations to Fairchild Fasteners or The
Fairchild Corporation, and which breach is
injurious to Fairchild Fasteners or The Fairchild
Corporation, and (viii) your death, or your
disability as defined pursuant to Fairchild
Fasteners' Long-Term Disability Plan.
Good Reason: Good Reason means any of the following: (i)
a reduction in your Base Salary, (ii) a material
reduction in your employee benefits, or (iii) any
requirement that you permanently relocate your
office from Fairchild Fasteners' executive offices
in Torrance, California, except for an office
relocation that will not increase your one-way
commuting distance from such office by more than
50 miles, unless we offer to relocate you on terms
similar to those set forth herein.
No Other Agreement: You represent and warrant to Fairchild
Fasteners that you have no covenant, agreement or
understanding with, or obligation to, anyone else
which would be breached by this Agreement, or
which would subject Fairchild Fasteners or The
Fairchild Corporation to any liability as a result
of hiring and utilizing your services.
Other Agreements: You shall enter into a Confidentiality
Agreement, a Non-Compete Agreement, and an
Agreement to Assign to Fairchild Fasteners and The
Fairchild Corporation all inventions and designs,
whether patentable or not, conceived or improved
by you during your employment with Fairchild
Fasteners.
Governing Law: Our understandings regarding your employment with
Fairchild Fasteners shall be governed by
applicable federal law and the laws of the State
of California, and all disputes relating to the
terms of your employment set forth herein shall be
resolved in any state or federal court of
competent jurisdiction in the State of California.
Entire Agreement: These terms supersede all prior negotiations
and represent the entire agreement of the parties,
and our signatures hereon will bind us hereto.
* * * * *
If you agree to employment with Fairchild Fasteners on the
terms set forth in this memorandum, please sign and return a copy
to me.
FAIRCHILD FASTENERS,
a Division of Fairchild Holding Corp.
By: _______________________________________
Eric I. Steiner, President
Fairchild Holding Corp.
ACCEPTED AND AGREED TO BY
LEROY A. DACK AS OF THE DATE
FIRST ABOVE WRITTEN:
_____________________________
Leroy A. Dack