EXHIBIT 10.12
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EXECUTIVE AGREEMENT
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Agreement between Primex Technologies, Inc., a Virginia corporation
("Primex"), and Xxxxx X. Xxxxxxx (the "Executive"), dated as of January 1,
1997.
Primex and the Executive agree as follows:
1. Definitions
As used in this Agreement:
(a) "Cause" means the willful and continued failure of the
Executive to substantially perform his or her duties; the willful engaging by
the Executive in gross misconduct significantly and demonstrably injurious to
Primex; or conduct by the Executive in the course of his or her employment
which is a felony or fraud. No act or failure to act on the part of the
Executive will be considered "willful" unless done or omitted not in good faith
and without reasonable belief that the action or omission was in the interests
of Primex or not opposed to the interests of Primex.
(b) "Change in Control" means:
(i) Primex ceases to be, directly or indirectly, owned by
at least 1,000 stockholders;
(ii) A person, partnership, joint venture, corporation or
other entity, or two or more of any of the foregoing acting as a "person"
within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended (the "Act"), other than Primex, a majority-owned subsidiary of
Primex or an employee benefit plan (or related trust) of Primex, such
subsidiary or Xxxx Corporation, a Virginia corporation ("Olin"), become(s) the
"beneficial owner" (as defined in Rule 13d-3 under such Act) of 15% or more of
the then outstanding voting stock of Primex;
(iii) During any period of two consecutive years, individuals
who at the beginning of such period constitute Primex's Board of Directors
(together with any new Director whose election by Primex's Board of Directors
or whose nomination for election by Primex's stockholders was approved by a vote
of at least two-thirds of the Directors then still in office who either were
directors at the beginning
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of such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the directors then in
office; or
(iv) All or substantially all of the business of Primex is
disposed of pursuant to a merger, consolidation or other transaction in which
Primex is not the surviving corporation or Primex combines with another
company and is the surviving corporation (unless the shareholders of Primex
immediately following such merger, consolidation, combination, or other
transaction beneficially own, directly or indirectly, more than 50% of the
voting stock or other ownership interests of (x) the entity or entities, if
any, that succeed to the business of Primex or (y) the combined company).
(c) "Disability" means that the Executive has suffered an
incapacity due to physical or mental illness which meets the criteria for
disability established at the time under Primex's short-term disability plan.
(d) "Executive Severance" means:
(i) twelve months of the Executive's then current monthly
salary (without taking into account any reductions which may have occurred at
or after the date of a Change in Control); plus
(ii) an amount equal to the greater of the Executive's
average annual award actually paid under Primex's short-term annual incentive
compensation plans or programs ("ICP") for the three years (or for such fewer
years as the ICP may have been in effect) immediately preceding the date of
Termination or the Executive's then current ICP standard annual award.
(iii) The Executive will not be entitled to receive any other
severance otherwise payable to the Executive under any other severance plan of
Primex.
(iv) If on the Termination date the Executive is eligible
and is receiving payments under any then existing Primex disability plan, then
the Executive agrees that all such payments may, and will be, suspended and
offset for 12 months following the Termination date. If after such period the
Executive remains eligible to receive disability payments, then such payments
shall resume in the amounts and in accordance with the provisions of the
applicable Primex disability plan.
(e) "Potential Change in Control" means:
(i) Primex has entered into an agreement the consummation
of which would result in a Change in Control;
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(ii) any person (including Primex ) publicly announces
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an intention to take or to consider taking actions which if consummated would
constitute a Change in Control;
(iii) Primex learns that any person (other than an employee
benefit plan (or related trust) of Primex, a subsidiary of Primex or Olin) has
become the beneficial owner directly or indirectly of securities of Primex
representing 9.5% or more of the combined voting power of Primex's then
outstanding securities ordinarily entitled to vote in elections of directors;
or
(iv) the Board of Directors of Primex adopts a resolution to
the effect that, for purposes of this Agreement, a Potential Change in Control
of Primex has occurred.
(f) "Termination" means:
(i) The Executive is discharged by Primex other than for
Cause;
(ii) The Executive terminates his or her employment in the
event that:
(1) Primex requires the Executive to relocate the
Executive's then office to an area which is not within reasonable commuting
distance, on a daily basis, from the Executive's then residence, except that a
requirement to relocate the Executive's office to Primex's corporate
headquarters is not a basis for Termination;
(2) Primex reduces the Executive's base salary or
fails to increase the Executive's base salary on a basis consistent (as to
frequency and amount) with Primex's exempt salary system as then in effect or,
in the event of a Change in Control, as in effect immediately prior to the
Change in Control;
(3) Primex fails to continue the Executive's
participation in its benefit plans (including incentive compensation and
stock-based incentives) on substantially the same basis, both in terms of the
amount of the benefits provided (other than due to Primex's or a relevant
operation's earnings performance) and the level of the Executive's
participation relative to other participants as exists on the date hereof;
provided that, with respect to annual and long term incentive compensation
plans, the basis with which the amount of benefits and level of participation
of the Executive shall be compared shall be the average benefit awarded to the
Executive under the relevant plan during the three years (or such fewer years as
such plans may have been in effect) immediately preceding the date of
Termination;
(4) The Executive suffers a Disability which prevents
the Executive from performing the Executive's duties with Primex for a period
of at least 180 consecutive days;
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(5) Following a Change in Control, Primex fails to
substantially maintain its benefit plans as in effect at the time of the Change
in Control, unless reasonably equivalent arrangements (embodied in an on-going
substitute or alternative plan) have been made with respect to such plans; or
(6) The Executive's duties, position or reporting
responsibilities are diminished.
2. Term/Executive's Duties.
(a) This Agreement expires at the close of business on December
31, 2000, unless prior to that date there is a Change in Control, in which case
this Agreement will expire on the later of the close of business on December 31,
2000 or three years following the date of the Change in Control; provided that
the expiration of this Agreement will not affect any of the Executive's rights
resulting from a Termination prior to such expiration. In the event of the
Executive's death while employed by Primex, this Agreement shall terminate and
be of no further force or effect on the date of his or her death; provided that
the Executive's death will not affect any of the Executive's rights resulting
from a Termination prior to death.
(b) During the period of the Executive's employment by Primex,
the Executive shall devote his or her full time efforts during normal business
hours to Primex's business and affairs, except during reasonable vacation
periods and periods of illness or incapacity. Nothing in this Agreement will
preclude the Executive from devoting reasonable periods required for service as
a director or a member of any organization involving no conflict of interest
with Primex's interest, provided that no additional position as director or
member shall be accepted by the Executive during the period of his employment
with Primex without its prior consent. The initial 1997 annual base salary of
the Executive shall be $425,000 and his initial 1997 EVA bonus standard shall
be $275,000.
(c) The Executive agrees that in the event of a Potential Change
in Control of Primex occurring after the date hereof, the Executive will remain
in the employ of Primex for a period of six months from the occurrence of such
Potential Change in Control, during which period the Executive will have an
office, title, duties and responsibilities substantially consistent with those
applicable immediately prior to the Potential Change in Control.
3. Executive Severance Payment
(a) In the event of a Termination occurring before the expiration
of this Agreement, Primex will pay the Executive a lump sum in an amount equal
to the Executive Severance. The payment will be made within 30 days of the
Termination.
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(b) In the event of a Termination after a Change in Control has
occurred, in addition to the Executive Severance paid under Paragraph 3(a)
above, Primex will pay a Change in Control severance premium to the Executive
in an amount equal to two times the Executive Severance. The Change in Control
severance premium, if it becomes due, will be made within 30 days of the
Termination.
(c) The amount due under paragraph 3(a) or 3(b) will be reduced
to the extent that, if the amounts were paid in monthly installments, no
installment would be paid after the Executive's seventieth birthday.
(d) The Executive will not be required to mitigate the amount of
any payment provided for in paragraph 3(a) or 3(b) by seeking other employment
or otherwise, nor shall any compensation received by the Executive from a third
party reduce such payment. Except as may otherwise be expressly provided
herein, nothing in this Agreement will be deemed to reduce or limit the rights
which the Executive may have under any employee benefit plan, policy or
arrangement of Primex.
4. Other Benefits and Payments
(a) (1) If the Executive becomes entitled to payment under
Paragraph 3(a), then the Executive shall be entitled to receive a lump sum
payment from Primex at the same time as the payment under Paragraph 3(a) is made
equal to the amount contributed or credited by Primex to the Executive's
accounts in all defined contribution plans of Primex (whether or not "qualified"
plans) during the 12 months preceding the Executive's Termination provided that
in the event there are fewer than 12 months in such period the payment required
shall be increased proportionately to make it equivalent to a 12 month period.
The "amount contributed or credited by Primex" as defined in this Paragraph 4
shall not include any employee contributions, employer matching contributions,
dividends or investment gains or losses credited to the Executive's accounts,
but only the Primex contributions made or, in the case of supplementary plans,
credited, to the accounts. Such payment shall be in lieu of any such
contributions or credits by Primex to its defined contribution plans with
respect to the period after the Executive's Termination. If Primex is required
by law to contribute to such plans with respect to the period after the
Executive's Termination, any such contribution shall reduce the payout otherwise
due Executive under this Paragraph 4(a)(1). In the event the Executive receives
a payment under Paragraph 3(b), the amount required to be paid under the
preceding sentences of this Paragraph 4(a)(1) shall be tripled. Notwithstanding
the foregoing, in the event at the date of Termination the Executive is more
than 69 years old (or more than 67 years old in the case the Executive receives
a payment under Paragraph 3(b)) the lump sum payment required to be made under
this Paragraph 4(a)(1) shall be reduced such that if it were expressed as equal
monthly payments made over a 12-month period (a 36-month period in the case of
the Executive receiving a payment under Paragraph 3(b)) and paid in monthly
installments on the first of every month following Termination no such monthly
payments would be received by the Executive beyond his or her seventieth
birthday.
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(2) If the Executive becomes entitled to payment under Paragraph
3(a), for the 12 months from the date of the Termination the Executive will
continue to enjoy coverage under all Primex medical, dental, and life insurance
plans to the extent the Executive was enjoying such coverage immediately prior
to the Termination. The Executive shall accrue no vacation during the 12 months
following the date of Termination but shall be entitled to payment for accrued
and unused vacation for the then current year. If the Executive receives the
Executive Severance (including the amount referred to in Paragraph 1(d)(ii)),
the Executive shall not be entitled to an ICP award for the calendar year of
Termination if Termination occurs during the first calendar quarter. Even if the
Executive receives the Executive Severance (including the amount referred to in
Paragraph 1(d)(ii)), if Termination occurs during or after the second calendar
quarter, the Executive shall also be entitled to a prorated ICP award for the
calendar year of Termination which shall be determined by multiplying his or her
then current ICP standard by a fraction the numerator of which is the number of
weeks in the calendar year prior to the Termination and the denominator of which
is 52. The Executive shall accrue no ICP award during the 12 months following
the date of Termination.
(b) If the Executive receives payment under Paragraph 3(b), the
insurance coverage provided for in Paragraph 4(a) (2) will be for an additional
24-month period.
(c) Notwithstanding the foregoing Paragraphs 4(a)(2), and (b), no
such insurance coverage will be afforded by this Agreement with respect to any
period after the Executive's seventieth birthday.
(d) In the event of a Termination, the Executive will be entitled
at Primex's expense to outplacement counseling and associated services in
accordance with Primex's customary practice at the time (or, if a Change in
Control shall have occurred, in accordance with such practice immediately prior
thereto) with respect to its senior executives who have been terminated other
than for cause. It is understood that the counseling and services contemplated
by this Paragraph 4(d) are intended to facilitate the obtaining by the Executive
of other employment following a Termination, and payments or benefits by Primex
in lieu thereof will not be available to the Executive.
(e) If the Executive (i) receives the payment under Paragraph 3(b),
(ii) has an accrued vested benefit under Olin's qualified pension plan as of
the date of Termination and (iii) at age 55, would not qualify for
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subsidized early retirement from Olin under the provisions of Olin's pension
plans, then, concurrent with the payment made to the Executive under Paragraph
3(b), the Executive will receive a lump sum payment from Primex to make up for
the lost subsidy calculated as follows:
FIRST, by calculating the annual benefit which would otherwise be
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payable to the Executive at age 65 under all Olin pension plans assuming the
Executive had terminated his or her employment with Primex on the date of the
Change in Control, SECOND, by multiplying such annual benefit by the
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percentage then applicable in the calculation of benefits paid to employees
retiring from active service
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with Olin at age 55 under the early retirement provisions of the Olin Employees
Pension Plan (72% at the date hereof), THIRD, by determining the lump sum
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actuarial value (as of the date of Termination) of annual payments beginning at
age 55 as calculated in the second step and FOURTH, by deducting from such lump
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sum actuarial value the lump sum actuarial value (as of the date of Termination)
of the Executive's accrued annual benefits under all Olin pension plans. Lump
sum actuarial value shall be determined in accordance with Olin's actuarial
assumptions for its nonqualified defined benefit plans.
(f) During the term of the Executive's employment with Primex,
Primex will provide the Executive (1) with an automobile or car payment
equivalent at the Executive's option, (2) with a club membership and (3) with
financial counseling services, in each case on the same terms and conditions as
Xxxx most recently provided to the Executive while the Executive was an
employee of Olin.
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5. Participation in Change in Control/Section 4999 of Internal Revenue
Code
(a) In the event that the Executive participates or agrees to
participate by loan or equity investment (other than through ownership of less
than 1% of publicly traded securities of another company) in a transaction
("acquisition") which would result in an event described in paragraph 1(b)(i)
or (ii), the Executive must promptly disclose such participation or agreement
to Primex. If the Executive so participates or agrees to participate, no
payments due under this Agreement or by virtue of any Change in Control
provisions contained in any compensation or benefit plan of Primex will be paid
to the Executive until the acquiring group in which the Executive participates
or agrees to participate has completed the acquisition. In the event the
Executive so participates or agrees to participate and fails to disclose his or
her participation or agreement, the Executive will not be entitled to any
payments under this Agreement or by virtue of Change in Control provisions in
any Primex compensation or benefit plan, notwithstanding any of the terms
hereof or thereof.
(b) Any payments made pursuant to this Agreement or by virtue of
Change in Control provisions in any Primex compensation or benefit plan which
are subject to tax under Section 4999 of the Internal Revenue Code or a
successor provision ("4999") will be increased so that after paying the tax
imposed by 4999 and the income tax on the amount of the increase provided by
this paragraph (b), the Executive will have received a net payment equal to that
which he or she would have received if 4999 did not apply.
6. Successors; Binding Agreement
(a) Primex will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of Primex, by agreement, in form
and substance satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that Primex
would be required to perform if no such succession had taken place. Failure of
Primex to obtain such assumption and agreement prior to the effectiveness of
any such succession will be a breach of this Agreement and entitle the
Executive to compensation from Primex in the same amount and on the same terms
as the Executive would be entitled to hereunder had a Termination occurred on
the succession date. As used in this Agreement, "Primex" means Primex as
defined in the preamble to this Agreement and any successor to its business or
assets which executes and delivers the agreement provided for in this Paragraph
6 or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law or otherwise.
(b) This Agreement shall be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.
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7. Notices. For the purpose of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
If to the Company: Primex Technologies, Inc.
00000 0xx Xxxxxx Xxxxx
Xx. Xxxxxxxxxx, XX 00000-0000
Attention: Corporate Secretary
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
8. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Florida.
9. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is agreed to
in writing signed by the Executive and Primex. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
10. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same Agreement.
11. Withholding of Taxes. Primex may withhold from any benefits payable
under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or governmental regulation or ruling.
12. Non-assignability. This Agreement is personal in nature and
neither of the parties hereto shall, without the consent of the other, assign
or transfer this Agreement or any rights or obligations hereunder, except as
provided in paragraph 6 above. Without limiting the foregoing, the Executive's
right to receive payments hereunder shall not be assignable or transferable,
whether by pledge, creation of a security interest or otherwise, other than a
transfer by his or her will or by the laws of descent or distribution, and, in
the event of any attempted assignment or transfer by the Executive contrary to
this Paragraph, Primex shall have no liability to pay any amount so attempted
to be assigned or transferred.
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13. No Employment Right. This Agreement shall not be deemed to confer
on the Executive a right to continued employment with Primex.
14. Disputes/Arbitration.
(a) Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration at Primex's
corporate headquarters in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction; provided, however, that the Executive shall
be entitled to seek specific performance of the Executive's right to be paid
during the pendency of any dispute or controversy arising under or in
connection with this Agreement.
(b) Primex shall pay all reasonable legal fees and expenses which
the Executive may incur to enforce this Agreement unless the Executive had no
reasonable basis for his or her claim. Should Primex dispute the entitlement
of the Executive to such fees and expenses, the burden of proof shall be on
Olin to establish that the Executive had no reasonable basis for his or her
claim.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above set forth.
PRIMEX TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Pain
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Title: Vice President
/s/ Xxxxx X. Xxxxxxx
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Executive
