EXHIBIT 10.3
[PRIMEX TIER I AGREEMENT]
EXECUTIVE AGREEMENT
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Agreement between Primex Technologies, Inc., a Virginia corporation
("Primex"), and J. Xxxxxxx XxXxxxx (the "Executive"), dated as of May 5, 1998.
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 duties; the willful engaging by the Executive in
gross misconduct significantly and demonstrably financially injurious to
Primex; or willful misconduct by the Executive during his 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 owned by at least 300 shareholders of record after
December 31, 1996, or ceases, by action of Primex's Board of Directors, to
be either listed on a national securities exchange or authorized for
quotation on The Nasdaq Stock Market;
(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, or such subsidiary,
become(s) the "beneficial owner" (as defined in Rule 13(d)(3) under the
Act) of 15% or more of the then outstanding voting stock of Primex;
(iii) during any period of two consecutive years after 1996, 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 shareholders, was
approved by a vote of at least two-thirds of the Directors then still in
office who either were Directors at the beginning 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;
(iv) all or substantially all of the business or assets 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 aggregate 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; or
(v) Primex's Board of Directors determines that a tender offer for Primex's
shares indicates a serious intention by the offeror to acquire control of
Primex.
(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 (a) 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 (b) 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;
(ii) any person (including Primex ) publicly announces 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 Primex, a majority-owned
subsidiary of Primex, or an employee benefit plan (or related trust) of
Primex, or such subsidiary,) 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 prior to a Change in
Control 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 financial or
stock price performance provided such performance is a relevant criterion
under such plan) 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;
(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. Previous Change in Control Agreement. This Agreement supersedes and
replaces the Executive Agreement dated as of January 1, 1998 between Primex and
the Executive.
3. Term/Executive's Duties
(a) This Agreement expires at the close of business on December 31, 2002,
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,
2002 or three years following the date of a 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 best 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.
(c) The Executive agrees that in the event of any Potential Change in Control
of Primex occurring after the date hereof, the Executive will remain in the
employ of Primex until the earlier of (i) the end of the six-month period
following the occurrence of such Potential Change in Control and (ii) a
Change in Control, during which time the Executive will have an office,
title, duties and responsibilities substantially consistent with those
applicable immediately prior to the Potential Change in Control.
4. 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 10 days of the
effective date of the Termination.
(b) In the event of a Termination after a Change in Control has occurred, in
addition to the Executive Severance paid under Paragraph 4(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 10 days of the
effective date of the Termination.
(c) The Executive will not be required to mitigate the amount of any payment
provided for in paragraph 4(a) or 4(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.
5. Other Benefits and Payments
(a) (1) If the Executive becomes entitled to payment under Paragraph 4(a),
then the Executive shall be entitled to receive a lump sum payment from Primex
at the same time as the payment under Paragraph 4(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 5
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 5(a)(1). In the event the Executive receives
a payment under Paragraph 4(b), the amount required to be paid under the
preceding sentences of this Paragraph 5(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 68 years old in the case the Executive receives
a payment under Paragraph 4(b)) the lump sum payment required to be made under
this Paragraph 5(a)(1) shall be reduced such that if it were expressed as equal
monthly payments made over a 12-month period (a 24-month period in the case of
the Executive receiving a payment under Paragraph 4(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.
(2) If the Executive becomes entitled to payment under Paragraph 4(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 4(b), the insurance
coverage provided for in Paragraph 5(a) (2) will be for an additional 24-
month period.
(c) Notwithstanding the foregoing Paragraphs 5(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 5(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 4(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 subsidized early
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retirement from Xxxx under the provisions of Olin's pension plans, then,
concurrent with the payment made to the Executive under Paragraph 4(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 Xxxx 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 percentage
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then applicable in the calculation of benefits paid to employees retiring from
active service with Xxxx at age 55 under the early retirement provisions of the
Xxxx Employees Pension Plan (72% at the date hereof), third, by determining the
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lump sum 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
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from such lump sum actuarial value the lump sum actuarial value (as of the date
of Termination) of
the Executive's accrued annual benefits under all Xxxx 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 Xxxx.
6. 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 and employment 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.
7. 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 7 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.
8. 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: J. Xxxxxxx XxXxxxx
0000 Xxxxx Xxxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
If to the Company: Primex Technologies, Inc.
00000 Xxxxx 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.
9. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Florida without reference to choice of law principles thereunder.
10. 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.
11. 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.
12. 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.
13. 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 7 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 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.
14. No Employment Right. This Agreement shall not be deemed to
confer on the Executive a right to continued employment with Primex.
15. Disputes/Arbitration.
(a) Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by binding 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, as they
become due, which the Executive may incur to enforce this Agreement through
arbitration or otherwise unless the arbitration determines that the Executive
had no reasonable basis for his claim. Should Primex dispute the entitlement of
the Executive to such fees and expenses, the burden of proof shall be on Primex
to establish that the Executive had no reasonable basis for his claim.
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/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
Title: Chairman and CEO
/s/ J. Xxxxxxx XxXxxxx
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J. Xxxxxxx XxXxxxx
